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TMI Blog2023 (7) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 without independent application of mind and solely on the basis of Revenue Audit Objection, which is bad in law and without jurisdiction. 3) The impugned order is bad in law and on facts. 4) The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice." 2. Succinctly stated, the assessee had e-filed his return of income for A.Y.2016-17 on 03.09.2016, declaring an income of Rs. 8,46,640/- a/w. agricultural income of Rs. 6,30,349/-. Original assessment was, thereafter, framed by the A.O vide his order passed u/s. 143(3) of the Act dated 30.11.2018 wherein his returned income was accepted as such. 3. The Pr. CIT after culmination of the assessment proceedings, called for the assessment records of the assessee. On a perusal of the records, it was observed by the Pr. CIT that the assessee during the year under consideration a/w. another person had sold agricultural land situated at Village: Baroda to NRDA in lieu of compensation of Rs. 5,60,05,400/-. The Pr. CIT observed that it was the claim of the assessee that as the aforesaid agricultural land was situated beyond the municipal limits of Raipur and thus, was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into service by the Ld. AR to drive home his contentions. 8. At the very outset of the hearing of the appeal, Shri S.R. Rao, Ld. Authorized Representative (for short 'AR') for the assessee had assailed the validity of the jurisdiction that was assumed by the Pr. CIT u/s. 263 of the Act. Elaborating on his aforesaid claim, it was submitted by the Ld. AR that as the Pr. CIT had assumed jurisdiction u/s. 263 of the Act merely on the basis of an "audit objection" and had failed to independently apply his mind, therefore, the proceedings initiated by him were liable to be vacated on the said count itself. Carrying his contention further, the Ld. AR took us through the "Show cause" notice (SCN) dated 11.03.2021 that was issued by the Pr. CIT u/s. 263 of the Act, Page 1-3 of APB. Reiterating his earlier contention, it was averred by the Ld. AR that as the Pr. CIT had merely on the basis of an "audit objection" dislodged the well-reasoned order of the A.O in exercise of his revisional jurisdiction u/s. 263 of the Act, therefore, his order could not be sustained and was liable to be quashed. The Ld. AR in order to buttress his aforesaid claim that where the Pr. CIT/CIT had issued notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant 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 Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order 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. (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 sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court." Further, on a careful perusal of the aforesaid statutory provision, we find that pursuant to the insertion of "Explanation 2" to Section 263 of the Act, i.e., vide Finance Act, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the word 'record' used in Sec. 263 (1) of the Act would not mean the record as it stands at the time of examination by the Commissioner, but it means the record as it stands at the time the order in question was passed by the ITO?" After exhaustive deliberation on the scope of the term "record" as was contemplated in Section 263 of the Act, it was held by the Hon'ble Apex Court that it was open to the Commissioner to take into consideration all the records available at the time of examination by him. For the sake of clarity the relevant observations of the Hon'ble Apex Court are culled out as under: "It, therefore, cannot be said, as contended by the learned counsel for the respondent, that the correct and settled legal position, with respect to the meaning of the word "record" till 1st June, 1988, was that it meant the record which was available to the income Tax Officer at the time of passing of the assessment order. Further, we do not think that such a narrow interpretation of the word "record' was justified, in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems had not been considered and decided in the appeal filed by the assessee." In that case the assessment was completed o 31.3.1978 and the Income Tax Officer while computing loss and income of the assessee had accepted the claim of the assessee in respect of those three items. Obviously in the appeals filed by the assessee those items were not the subject-matter of the appeals as the decision in respect thereof was in its favour. In respect of those three items the Commissioner had exercised his power under Section 263 of he income-Tax Act and , therefore, the question which had arisen for consideration was "whether on the facts and in the circumstances of the case, the order of assessment passed by the ITO u/s 143(3) read with section 144B on 31.7.1978 had merged with that of the Commissioner (appeals) dated 15.10.1979 in respect of the three items in dispute so as to exclude the jurisdiction of the Commissioner of Income-Tax under sec 263?" Thus the amendment made in clause @ was held applicable to the orders passed before 1st June, 1988. In South India Steel Rolling Mills, Madras vs. Commissioner of Income Tax, Madras [1997 (9) SCC 728], the Commissioner in exercise of his po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thus to consider the Valuation Report submitted by the Departmental Valuation Cell subsequent to the passing of the assessment order and, so the order passed by him was legal. The High Court was wrong in taking a contrary view. We, therefore, allow this appeal, set aside the judgment and order passed by the High Court and answer the question referred to the High Court in the negative i.e. in favour of the Revenue and against the assessee. In view of the facts and circumstances of the case, there shall be no order as to costs." Also support is drawn from the memorandum explaining the provisions of the Finance Bill, 1988, vide which an amendment was made available on the statute as regards the meaning of the term "record" in the "Explanation" to Section 263 of the Act, as under (relevant extract) : "48. x xxxxxxxx (a) On the interpretation of the term 'record'. It has been held in some cases that the word 'record' in section 263 (1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any proceeding and if he considers that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of Revenue,, he may pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the same or directing a fresh assessment. By the Finance Act, 1988, an Explanation was substituted with effect from 1st June, 1988, to the relevant sections of the Income-tax Act, Wealth-tax Act and Gift-tax Act to clarify that the term "record" would include all records relating to any proceeding available at the time of examination by the Commissioner. Further, it was also clarified that the Commissioner is competent to revise an order of assessment passed by the Assessing Officer on all matters except those which have been considered and decided in an appeal. The above Explanation was incorporated in the Finance Act, 1988, to clarify this legal position to have always been in existence. Some Appellate Authorities have, however, decided that the Explanation will apply only prospectively, i.e., only to those orders which are passed by the Commissioner after 1.6.1988. Such an interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der so passed shall be deemed to be erroneous in so far it is prejudicial to the interest of the revenue u/s. 263 of the Act. As observed by the Pr. CIT, and, rightly so, as the A.O had failed to verify the maintainability of the assessee's claim that the transaction of sale of land at Village: Baroda to NRDA was exempt from tax and in absence of any supporting material had summarily accepted his claim, therefore, it was clearly a case where the order on the said aspect had been passed without making any enquiry or verification which should have been made.
15. We, thus, in terms of our aforesaid observations finding no reason to dislodge the well-reasoned order of the Pr. CIT, who by specifically referring to "Explanation 2" to Section 263 of the Act had held the order passed by the A.O u/s. 143(3) dated 30.11.2018 as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act, uphold the same. Accordingly, finding no merit in the appeal filed by the assessee, we dismiss the same.
16. In the result, the appeal filed by the assessee is dismissed in terms of our aforesaid observations.
Order pronounced in open court on 04th day of July, 2023. X X X X Extracts X X X X X X X X Extracts X X X X
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