TMI Blog2023 (4) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... o enquiry. The section does not contemplate so, Commissioner has to demonstrate as to how the order is erroneous and only thereafter for verification purposes, he can set aside. In the present case, when the assessee brought it to the notice of the ld. Commissioner that block of assets have been sold and which does not give rise to any capital gain, then he should have recorded specific finding as to how this claim of the assessee is factually incorrect and only thereafter the issue can be set aside to the ld. Assessing Officer for verification of those details and re-adjudication. It is to be appreciated that both the authorities were aware about the fact that block of assets have been sold. AO has specifically took into cognizance this fact and thereafter disallowed the depreciation. Thus it cannot be said that AO has not conducted inquiry and has not gone through the complete details before accepting the claim of assessee. AO has made reference to these facts as also the balance-sheet. The impugned order is not sustainable, it is quashed. Appeal of the assessee is allowed. - I.T.A. No. 2219/KOL/2018 - - - Dated:- 27-3-2023 - Shri Rajpal Yadav , Vice - President ( KZ ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets and has not brought to tax the resultant short term capital gain of Rs. 1,39,15,682/- arises out of the said transaction . 5. The assessee filed written submission and the relevant part of the written submission has been noticed by the ld. CIT in the impugned order. We deem it appropriate to take note of this submission of the assessee including finding of the ld. CIT, which reads as under:- (a) The partners, Piru Dutta, Mousumi Dutta, Sk. Nazrul Islam, Sk Saukat Ali and Montajara Begum were owners of the sold out rice mill, Ganapati Agro Product. The mill was constructed the partners. (b) M/s. Ganapati Agro Product was not the owner of the rice mill. The partners used Trade name for carrying on rice milling business. Hence, the sold out rice mill property would not be assessed on excess sum if any got after sale price of aforesaid rice mill as short-term or long-term capital gains in the hands of the M/s. Ganapati Agro Product. More so 'Ganapati Agro Product is an artificial person in the eye of law and as such the real owners are partners. (c) The rice mill was sold on 17th March, 2013. Out of the sale consideration of Rs. 2,04,48,979/-, the purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the vendor against the sale of rice mill premises, including land, building, furniture, fixture and plant machineries owned by M/s. Ganapati Agro Product. The assessed market value as determined by the registration authorities was Rs. 2,04,48,979/. 4.4. Therefore, the difference between the sales consideration and the written down value as available in the balance sheet of the assessee firm attracts short term capital gain/loss as per Income Tax Act, 1961 in the hand of M/s. Ganapati Agro Product. 4.5. In view of the above, the submission of the assessee is not tenable and accordingly rejected. 5. It is explicitly evident from the available documents that the assessing officer had not examined/verified the issue of short term capital gain arises out of the transaction of sale of block of fixed assets, evidence by the sale deed registered on 17.03.2012 and has not taken it into account for computation of total income of the assessee firm during the assessment stage u/s. 147/143(3) of the Act. Therefore, the order passed by the Assessing Officer u/s. 147/143(3) of the Act on 29/08/2017 is deemed to be erroneous in so far as it is prejudicial to the interests of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner or Deputy Commissioner or the Income Tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s. 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,76,00,000/-. The ld. CIT only took into consideration the Written Down Value of the assets in the books of account and failed to recognize the loan liability. This transaction is not to be examined in isolation. The assessee has disposed of its assets and the purchaser has discharged the liability. In this factual background, no short-term capital gain has arisen to the assessee and if arisen, then it is to be set off with the ultimate loss going to be suffered by the assessee on account of loan liability, thus in practicality, no gain to the assessee. The ld. Commissioner has not recorded any factual finding when assessee has brought all these details to its notice. He simply set aside the assessment for de novo enquiry. The section does not contemplate so, the ld. Commissioner has to demonstrate as to how the order is erroneous and only thereafter for verification purposes, he can set aside. In the present case, when the assessee brought it to the notice of the ld. Commissioner that block of assets have been sold and which does not give rise to any capital gain, then he should have recorded specific finding as to how this claim of the assessee is factually incorrect and only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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