TMI Blog2023 (6) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... quiry. Our view is fortified by the decision of CIT vs. Nirav Modi [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] . We set aside the order of the PCIT and restore that of the Assessing Officer framed under section 143(3)/147. Decided in favour of assessee. - ITA No. 1279/DEL/2020 - - - Dated:- 9-6-2023 - Shri N.K. Billaiya, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Niraj Jain, CA, Shri P.K. Misra, CA. For the Revenue : Mohd. Gayasuddin Ansari, CIT-DR. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is directed towards the order of the PCIT, Hisar dated 12.03.2020 framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'The Act']. 2. The sum and substance of the grievance of the assessee is that the PCIT erred in assuming jurisdiction under section 263 of the Act and further erred in holding that the assessment order dated 29.12.2017 framed under section 143(3) r.w.s 147 of the Act is erroneous and prejudicial to the interest of the revenue. 3. Representatives of both the sides were heard at length. Case records carefully perused. Judicial decisions relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 674/- per share for share of M/s Quality Foils (India) Pvt. Ltd. and Rs. 42.37/- per share for share of M/s Quality Stainless Pvt. Ltd., Hisar as per rule 11 UA. Further, the assessee has sold the shares to the companies operated by the accommodation entries provider, who has admitted in his statement, that he has provided the accommodation entries on commission basis. Hence, the assessee has used the colorable device to evade the tax on the actual long term capital gain which would have been generated on the actual fair market value calculated as per rule 11 UA. 3.14 The Hon'ble Apex Court in his decision in the McDowell Co. Ltd Vs CTO, reported in 1985(3)SCC 230 (SC 5 Members Bench), has held as under: Tax planning may be legitimate if it is within the framework of law , but colorable devices cannot be part of tax planning. It is wrong to say that it is honourable to avoid payment of tax by dubious methods. It is obligation of every citizen to pay tax honestly without resorting to subterfuges 3.15 In view of the above, it is very much clear that the assessee has used the colorable device to avoid the payment of tax by dubious method, which is also taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Foils Pvt (India) Ltd. However, you negated to have taken the balance amount of Rs.60 lakhs out of the aforementioned Rs. 1.25 Crore) contending that you have not taken any sum of Rs.30 lakhs on 25.09.2009 from At All Time Your Security Pvt. Ltd. and Rs. 30 lakhs from Euphoria Capital Pvt. Ltd. on 27.09.2009 and also requested that the position may be got rechecked / verified.' 3. During the assessment proceedings, the AO enquired the position from the ADIT (Inv.)-2(1), New Delhi vide letter No.8012 dated 07.12.2017 and ADIT (Inv.), New Delhi, vide his letter dated 12.12.2017 provided the evidence in respect of the entries of Rs.30 lakhs from M/s Euphoria Capital Pvt. Ltd. on 27.09.2009. However, the AO did not confront the same to you and finalized the assessment proceedings without verification of the issue. The AO should also have obtained the Vijaya Bank A/c statement of M/s Euphoria Capital Pvt. Ltd. / At All Time Your Security Pvt. Ltd. to verify the above entries. 4. In view of the above facts, failure on the part of the Assessing Officer to examine the issues discussed hereinabove have prima facie rendered the assessment order erroneous in so far as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contending that the assessee has not taken any sum of Rs.30 lakhs on 25.09.2009 from At All Time Your Security Pvt. Ltd. and Rs.30 lakhs from Euphoria Capital Pvt. Ltd. on 27.09.2009 and also requested that the 'position may he got rechecked/verified. During the assessment proceedings, the AO enquired the position from the ADIT (Inv.)-2(l), New Delhi vide letter No.8012 dated 07.12.2017 and ADIT (Inv.), New Delhi, vide his letter dated 12.12.2017 provided the evidence in respect of the entries of Rs.30 lakhs from M/s Euphoria Capital Pvt. Ltd. on 27.09.2009. However, the AO did not confront the same to the assessee and finalized the assessment proceedings without verification of the issue. The AO should also have obtained the Vijaya Bank A/c statement of M/s Euphoria Capital Pvt. Ltd. I At All Time Your Security Pvt. Ltd. to verify the above entries. From the above discussion, it is apparent that the Assessing Officer passed the assessment order without conducting proper inquiry I verifying the facts of the above said issue. In view of above, I am of the opinion that the AO has not applied his mind and passed the order in mechanical fashion which has resulted into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous . 12. The Hon'ble Bombay High Court in the case of Gabriel India Ltd 203 ITR 108 has held as under: The power of suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions erroneous , erroneous assessment and erroneous judgment have been defined in Black's Law Dictionary. According to the definition, erroneous means involving error; deviating from the law . Erroneous assessment refers to an assessment that deviates from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be the subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] 71 Taxmann.com 272 (Bombay). 14. The Hon'ble High Court of Gujarat in the case of CIT vs. Nirma Chemical Works Ltd. 309 ITR 67 has observed as under: if assessment order were to incorporate the reasons for upholding the claim made by an assessee, the result would be an epitome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing. A.Y. 2009-10 Officer issued a query memo to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent- Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was sat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
