TMI Blog2023 (7) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(37) of the Act; and (iii) the lands were acquired not for any agriculture purposes as the same were acquired by NRDA. We are unable to concur with the Ld. AR that the Pr. CIT had merely acted upon the suggestion of the audit party and had failed to independently apply his mind while assuming jurisdiction 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. 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) as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act, uphold the same. Decided against assessee. - ITA No. 192/RPR/2022 - - - Dated:- 4-7-2023 - Shri Ravish Sood, Judicial Member And Shri Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee that the agricultural land sold by him was not a capital asset was not supported by any documentary evidence, viz. (i) that no certificate from the land records authority certifying that the agricultural land sold by the assessee was situated beyond the specified distance from the municipal limits as mentioned in Section 2(14)(iii) of the Act was available on record; (ii) that no documents were available on record which would corroborate that the lands in question were used for agricultural purposes for two years immediately preceding the date of transfer as per clause (ii) of Section 10(37) of the Act; and (iii) the lands were acquired not for any agriculture purposes as the same were acquired by NRDA. 5. The Pr. CIT on the basis of his aforesaid deliberations, was of the view that as the land sold by the assessee was a capital asset, therefore, his share of profit earned on the sale of the same was liable to be brought to tax in his hands under the head long term capital gain (LTCG). Accordingly, the Pr. CIT held a conviction that as the A.O had failed to apply his mind to the aforesaid issue which was one of the reason for selection of his case for scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Additional Commissioner of Income Tax and Others (1977) 108 ITR 407 (Cal. HC) (ii) Arihant Jewellers Private Limited Vs. Pr. Commissioner of Income Tax, Raipur, ITA No.61/RPR/2021 dated 01.04.2022. (iii) Akhilesh Jain Vs. Pr. Commissioner of Income Tax, Raipur, ITA No.60/RPR/2021 dated 01.04.2022 On the basis of his aforesaid contention, it was submitted by the Ld. AR that as the order u/s. 263 of the Act had been passed by the Pr. CIT, Raipur merely on the suggestion of the audit party and not on the basis of any independent application of mind by him, therefore, the same was liable to be struck down on the said count itself for want of valid assumption of jurisdiction by him. 9. Per contra, Shri S.K Meena, Ld. Departmental Representative (for short DR ) relied on the order passed by the Pr. CIT u/s. 263 of the Act. 10. Having given a thoughtful consideration to the contentions advanced by the Ld. authorized representatives of both the parties in the backdrop of the orders of the lower authorities and material available on record, we are unable to concur with the contention advanced by the Ld. AR. As the Pr. CIT had embarked upon the proceedings u/s. 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or 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. Explanation 2. For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, (a) the order is 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 orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed without making enquiry or verification which should have been made. 12. Apropos the scope of the term record , the same can be traced in the Explanation 1(b) of Section 263 of the Act. The aforesaid meaning of the term record was substituted and made available on the statute vide the Finance Act, 1988 w.e.f 01.06.1988. For the sake of clarity the meaning of the term record as contemplated in Explanation 1(b) of Sec. 263 is culled out as under (relevant extract): Explanation 1. For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (a) (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 [Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or ] Commissioner; (c) .. (emphasis supplied by us) On a careful perusal of the aforesaid meaning of the term record as had been envisaged in the aforesaid statutory provision, it transpires that the same shall include and shall be deemed always to have included all records relating to any proceeding under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made such enquiry as he deems necessary in order to find out if any order passed by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-Tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him. Moreover, in view of the clear words used in clause (b) of the explanation to Section 263(1), it has to he held that while calling for and examining the record of any proceeding under Section 263(1) it is and it was open to the Commissioner not only consider the record of that proceeding but also the record relating to that proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e death of one of the two partners, before the expiry of eight years the assessee firm was not entitled to the benefit of the development rebate under Section 33(1) (a) of the Act. The said order passed by the Commissioner was challenged before the Tribunal but the assessee's appeal had failed. At its instance the following question was referred to the Madras High Court:- Whether on the facts and circumstances of the case the revision of assessment under section 263 by the Commissioner for withdrawing the development rebate granted for Assessment years 1962-63, 1963-64, 1967-68 and 1968-69 is proper and justified. The High Court also decided against the assessee. In the appeal filed by the assessee the order of Commissioner was challenged inter alia on the ground that the power under Section 263 could have been invoked on the basis of the record as it stood when the order was passed by the Income Tax Officer and that it was not open to the Commissioner to take into account dissolution of the assessee firm, which took place after passing of the assessment order because that circumstance was not disclosed by the record which was before the Income Tax Officer. Rejecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to revise the order on the basis of the record as is available to the Commissioner at the time of examination. xxxxxxxxx To eliminate litigation and to clarify the legislative intent in respect of the provisions in the three Direct tax Acts, it is proposed to clarify the legal position in this regard the Explanation to the relevant Sections. The proposed amendments are intended to make it clear that 'record' would include all records relating to any proceedings under the concerned direct tax laws available at the time of examination by the commissioner. The relevant part of the explanation after its substitution read as follows: Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub- section,- (a) ................ (b) record includes all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (b) ........................... As certain doubts regarding the meaning of the term record still persisted, therefore, a further amendment was carried out by the Legislature while enacting the Finance Act, 1989. The memorandum explaining the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be deemed to have always been in existence. Amendments on the above lines have been proposed in section 25 of the Wealth-tax Act and section 24 of the Gift-tax Act also. We, thus, in terms of our aforesaid observations are of the considered view, that the information/objection gathered by the Pr. CIT from the audit party vide its memo/letter dated 23.07.2019 squarely falls within the scope and ken of the term records as used in Section 263 of the Act. 13. As observed by us hereinabove, the Pr. CIT after consulting the assessment records of the assessee, had observed that though the latter s case was, inter alia, selected for scrutiny assessment under CASS in order to verify as to whether or not his claim that his share of substantial profit of Rs. 2.59 crore (approx.) on sale of agricultural land at Village : Baroda was exempt from tax, but the A.O had failed to apply his mind on the said issue. The Pr. CIT in order to fortify his aforesaid conviction had categorically observed that the claim of the assessee that the land under consideration was not a capital asset was not supported by any documentary evidence, viz. (i) that no certificate from the land records aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
