TMI Blog2023 (1) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... the PCIT was justified in assuming the jurisdiction u/s 263 of the Act by setting aside the assessment order. We therefore modify the order passed u/s.263 with a direction to the AO to examine the issue afresh and decide the allowability in accordance with law. Appeal by the assessee is dismissed. - ITA No. 271/Bang/2022 - - - Dated:- 12-12-2022 - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND MS. PADMAVATHY S, ACCOUNTANT MEMBER Appellant by : Shri G. Sathyanarayana, CA Respondent by : Shri K. Sankar Ganesh, Jt.CIT(DR)(ITAT), Bengaluru. ORDER Per Padmavathy S., Accountant Member This appeal by the assessee is against the order of the Principal Commissioner of Income Tax [PCIT], Bengaluru - 1, Bengaluru, passed u/s. 263 of the Income-tax Act, 1961 [the Act] dated 17.2.2022 for the assessment year 2017-18 on the following grounds:- The grounds stated herein are independent and without prejudice to each other: Ground 1: General 1.1 The impugned order of the learned Pr.CIT is based on incorrect appreciation of facts and incorrect interpretation of law and therefore is bad in law. 1.2 The learned Pr.CIT has erred in law and on facts in directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment basis and on own land basis. The assessee filed the return of income for AY 2017-18 on 23.2.2018 declaring total income of Rs.1,87,38,950. The case was selected for scrutiny under CASS and the statutory notices were duly served on the assessee. The AO completed the assessment proceedings u/s. 143(3) accepting the returned income. 3. The PCIT on verification of assessment records noticed that the assessee has debited the P L account for an amount of Rs.3,89,84,200 as advance written off under the head cost of land . The PCIT further noticed that the AO did not call for any details with regard to the amount written off and the assessee did not furnish any evidence with regard to the advances received towards purchase of land and the reasons for write off. To this extent, the PCIT considered the assessment order to be erroneous and prejudicial to the interests of the revenue and accordingly issued a show cause notice to the assessee. The assessee submitted that during the course of business, the assessee had given land advances to various landlords and land aggregators and in some cases, due to various reasons the land could not be acquired and also the advances could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court . Conclusion Decision: Considering the facts of the case and the decision of Supreme Court mentioned supra, I am of the opinion that assessment order u/s 143(3) dated 17-12-2019 is erroneous and prejudicial to the interests of the revenue. Accordingly, the assessment order dated 17-12-2019 is set-aside with the directions to the assessing officer to verify the genuineness of the transactions/agreements made with various parties along with applicability of provisions to Section 51/56(1)(ix) in the hands of other parties and then verify that whether the advances written off are in compliance with CBDT Circular No. 12/2016 and whether the conditions laid u/s. 36(2) of Income Tax Act are satisfied. Accordingly, the proceedings u/s.263 is disposed off with above directions. 4. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 8. The phrase should have been done as provided in the newly inserted Explanation means the verification/ enquiry which ought to have been done. In other words, as per clause (a) to Explanation to section 263, the order passed without making enquiries or verification which should have been made is erroneous insofar as it is prejudicial to the interests of the revenue. It may be said that the Income Tax Act nowhere provides the exact modalities to be followed to verify a specific claim made by the assessee prerogative of the AO to decide the extent of verification. However, it is necessary for the AO to record the extent of verification carried out by him and to record that he has taken a considered view on the matter by proper application of mind while allowing the claim of the assessee in the matter. 9. We notice that the Hon ble Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 263 of the Act and can correct the order which is erroneous and prejudice to the interest of the revenue, just because the assessing authority does not spell out the reasons and therefore can avoid scrutiny under Section 263 of the Act, is an argument which is not logical or rational and not acceptable and at any rate on the authority of the Supreme Court in the case of Malabar Industries Co. (supra) is not an acceptable submission. 23. Though learned counsel for the assessee have placed strong reliance on two judgments of the Bombay High Court and the Delhi High Court in the cases of Gabriel India Ltd. and Ashish Rajpal (supra) respectively and the Delhi High Court, in fact, has made reference to the decision of the Supreme Court in the case of Max India Ltd. (supra), with great respect, we are unable to apply the ratio of these two decisions to the present circumstance and we are quite satisfied that the law declared by the Supreme Court not only in the case of Electro House (supra) and also in the case of Malabar Industries Co. (supra) fully covers the situation, no further need to discuss with any greater elaboration on the view expressed by the Bombay and the Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission of this nature would be to give a free hand to the assessing authority, just to pass orders without reasoning and to spell out reasons only in a situation where the finding is to be against the assessee or any claim put forth by the assessee is denied. 28. We are of the clear opinion that, there cannot be any dichotomy of this nature, as every conclusion and finding by the assessing authority should be supported by reasons, however brief it may be, and in a situation where it is only a question of computation in accordance with relevant articles of a double taxation avoidance agreements and that should be clearly indicated in the order of the assessing authority, whether or not the assessee had given particulars or details of it. It is the duty of the assessing authority to do that and if the assessing authority had failed in that, more so in extending a tax relief to the assessee, the order definitely constitutes an order not merely erroneous but also prejudicial to the interest of the revenue and therefore while the commissioner was justified in exercising the jurisdiction under Section 263 of the Act, the tribunal was definitely not justified in interfering with thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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