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TMI Blog2023 (7) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT has issued show cause notice dated 24.01.2022 fixing the date of hearing on 03.02.2022 since the notice was sent to the e-mail ID and assesse did not come to know about the said show cause notice of the Pr. CIT and consequently the impugned order was also passed ex-parte. 3. Thus, he has submitted that delay is covered by the judgment of Hon'ble Supreme Court in case Suo-moto Cognizance of extending the Limitation reported in 441 ITR 722 (SC). Since the assessee was not aware about show cause notice as well as the impugned order passed by the Pr. CIT prior to the occasion when the counsel of the assessee noticed from the e-filing portal of the Income Tax department about the proceedings u/s 263 of the Act and the impugned order passed u/s 263 of the Act. He has thus, submitted that the delay in filing the present appeal is neither intentional nor deliberate but due to the reasons as explained, therefore, the delay in filing the appeal may be condoned and the appeal of the assessee be decided on merits. 4. On the other hand Ld. DR has submitted that the reasons explained by the assessee for delay in filing the appeal have not shown a sufficient cause for the delay. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression 'sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justicethat being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy." [Emphasis Supplied] 7. The Hon'ble Supreme Court in the case of N. Balakrishnan vs. M. Krishnamurthy as reported in (1998) 7 SCC 123 has categorically held that: "The reason for such a different stance is thus: The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. Time limit fixed for approaching the court in different situations in not because on the expiry of such time a bad cause would transform into a good cause. Rule of limitation are not meant to destroy the right of parties, They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly, the object of providing a legal remedy is to repair the dama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment and the assessee did not respond to the said show cause notice which shows that the assessee might not be aware about the show cause notice issued by the Pr. CIT. The delay up to 30th May 2022 is covered by the Judgment of Hon'ble Supreme Court in case of Suo-moto Cognizance of extending the Limitation(supra) wherein the Hon'ble Supreme Court has finally issued the direction in Para 5 as under: "5. Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions: (i) The order dated 23-3-2020 is restored and in continuation of the subsequent orders dated 8-3-2021, 27-4-2021 and 23-9- 2021, it is directed that the period from 15-3-2020 till 28-2- 2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. (ii) Consequently, the balance period of limitation remaining as on 3-10-2021, if any, shall become available with effect from 1- 3-2022. ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pr. CIT erred in setting-aside the order as passed by the Assessing Officer by invoking the provisions of section 263 of the Income-Tax Act, 1961 and directing the Assessing Officer to frame the assessment de novo after considering Fair Market Value of the property as on 01- 04-1981 to be Rs. 3,39,339/- as per the report of the DVO thereby resulting in indexed cost of acquisition to be Rs. 26,63,811/- and taxable long-term capital gain to be Rs. 8,49,77,273/- as against the amount of taxable long-term capital gain of Rs. 90,34,341/- determined by the Assessing Officer in the assessment order even when the said amount of capital gain was duly examined by the Assessing Officer at the time of original assessment proceedings. 4. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by him. " 10. The assessment u/s 143(3) r.w.s. 147 of the Act was completed on 31.12.2019 at total income of Rs.91,54,071/- against the return income of Rs.1,19,730/-. Subsequently on examination of the assessment record the Pr. CIT noticed certain discrepancies which are enumerated in the show cause notice dated 06.01.2022. The only issue taken up by the Pr. CIT whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.04.1981. Therefore, the issue of determination of fair market value as on 01.04.1981 was involved in the appeal filed by the assessee before the Ld. CIT(A) and hence the commissioner cannot invoke the provisions of section 263 on the issue which is subject matter of the appeal before the Ld. CITA). He has contended that jurisdiction of the Pr. CIT to invoke the provisions of section 263 on the issue which is pending in the appeal before the Ld. CIT(A) is barred as per the provision of section 263. 12. The second leg of argument of the Ld. AR is that the AO has taken a possible view in adopting the fair market value of the land as on 01.04.1981 then the Pr. CIT cannot be permitted to invoke the provision of section 263 of the Act merely because he does not agree with the view of the AO. He has relied upon the judgment of Hon'ble Calcutta High Court in the case of Reliance Jute and Industries Ltd. vs. ITO 150 ITR 643 , the judgment of Hon'ble Rajasthan High Court in case of Pr. CIT vs. Om Rudra Priya Holiday Resort Pvt. Ltd. 109 taxmann.com 63 and submitted that the Hon'ble High Court has held that when the Assessing Officer has conducted a detailed inquiry on the issue and called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not sustainable in law and liable to be set aside. 15. On the other hand, ld. DR has submitted that the AO has under assessed the amount of capital gain on sale of land if fair market value determined by the DVO is taken into consideration. The said report was received subsequent to completion of the assessment order and therefore, it is a material which has come on record though subsequent to making assessment which can be a basis of invoking the provision of section 263 of the Act. He has submitted that the Pr. CIT has relied upon the judgment of Hon'ble Supreme Court in case of CIT v. Shree Manjunathesware Packing Products & Camphor Works 231 ITR 53 (SC) and therefore the impugned order is proper invalid. He has relied upon the impugned order of the Pr. CIT. 16. We have considered the rival submission as well as relevant material on record. The assessee filed his return of income on 31.03.2013 declaring total income of Rs.1,19,730/- and agricultural income of Rs.6,81,730/-. On the basis of the information received from ADIT (investigation) -II Indore regarding sale of immovable property by the assessee for a consideration of Rs.10,48,09,000/- during the year under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1882); or" 17. The AO issued a notice u/s 142(1) dated 03.12.2019 with Annexure which reads as under: ANNEXURE Assessment Proceedings in your case is pending for AY 2012-13. In this regard, you are requested to comply to the following points: Please furnish complete computation of Long Term Capital Gain claimed alongwith documentary evidence to substantiate your claim. PUJA JAIN WARD 3(4) INDORE (in case the document is digitally wred please refer Digital Signature at the bottoms of the page) 18. The AO asked the assessee to furnish complete computation of long term capital gain along with documentary evidence to substantiate the claim. In response to notice u/s 142(1) assessee filed reply dated 11.12.2019 giving the details of the amount of sale consideration of agricultural land in question received by the assessee during the span of five years and the investment made by the assessee in purchase of agricultural land as well as residential house during those five years. Thus, the assessee explained that from financial years 2011-12 to 2015-16 the assessee received total consideration of Rs.10,48,09,000/- against which total investment in the agricultural lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cil is Rs.7,86,06,750/- Then for 100 it will be Rs.7,86,06,750x100 785 Rs. 1,00,13,598/- Fair market value of the asset as on 01.04.1981 by calculating on this method will be Rs. 1,00,13,598/- Indexed cost of acquisition of the said asset would be Rs.1,00,13,598 785/100 =Rs.7,86,06,7441-1- Hence, long term capital gain derived by the assessee Sale consideration Rs.10,48,09,000/- Indexed cost of acquisition Rs.7,86,06,744/- Long term Capital Gain Rs.2,62,02,256 Eligible investment as tabulated in Table no.3 Rs.90,34,341/- 19. Thus as manifest from the assessment order that the AO did not accept the claim of the assessee regarding fair market value of the land as on 01.04.1981 and referred the matter to the DVO, however, the report of the DVO was not received till the limitation of framing assessment, therefore, the AO himself has recomputed the capital gain as well as determined the fair market value of the asset as on 01.04.1981 by adopting the reverse indexation method. Therefore, it is not the case that the AO has accepted the claim of fair market value of the assessee as on 01.04.1981 but the AO himself has determined fair market value of the agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 7. There can be no doubt that the provision cannot be invoked to correct each 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. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 8. The phrase prejudicial to the interests of the revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. Vs. S.P. Jain and Another [31 ITR 872], the High Court of Karnataka in Commissioner of Income- tax, Mysore Vs. T. Narayana Pai [98 ITR 422], the High Court of Bombay in Commissioner of Income-tax Vs. Gabriel India Ltd. [203 ITR 108] and the High Court of Gujarat in Commissioner of Income-tax Vs. Smt. Minalben S. Parikh [215 ITR 81] treated loss of tax as prejudicial to the interests of the revenue. Mr. Abaraham relied on the judgment of the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case in hand when the AO has adopted one of the possible method of determination of fair market value which is more than the value as determined by the registered valuer then a different value determined by the DVO in the report which is received after the completion of the assessment would not render the order of the AO being erroneous and prejudicial to the interest of the Revenue. 21. The decision as relied upon by the Pr. CIT in case of CIT v. Shree Manjunathesware Packing Products & Camphor Works (supra) would not applicable in the case in hand when the Assessing Officer himself has determined the fair market value as on 01.04.1981 by adopting one of the permissible method. 22. The another point raised by the assessee is regarding the issue of determination of the fair market value as on 01.04.1981 was subject matter of the appeal before the Ld. CIT(A) and therefore, the jurisdiction of the Commissioner is barred to invoke the provision of section 263 of the Act. The assessee has challenged the order of the AO and raised the following grounds before the Ld. CIT(A): "1. That on the facts and in the circumstances of the case and in law, the Ld Assessing Officer erred in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case and in law the Ld Assessing officer erred in estimating the fair market value of the 1 and as on 01-04-1981 was at Rs 1,00,13,598/- only in place of fair market value as per reverse indexation as calculated comes to Rs 1,25,1 6,998/- 11. That on the facts and in the circumstances of the case and in law the Ld Assessing officer erred in charging interest under section 234A, 234 B and 234C of the Act. The amount of interest as charged under these sections are excessive the same now requires to be charged as per law. 12. The appellant craves leave to add, alter or modify any ground of appeal as taken by it." 23. Thus, the assesse has raised specific issues before ld. CIT(A) regarding the validity of reference made by the AO to DVO for want of any enabling provisions u/s 55A prior to amendment as well as determination of fair market value as on 01.04.1981 by the AO. It is evident from the record that the issue of determination of fair market value as on 01.04.1981 was very much subject matter of the appeal before the Ld. CIT(A) and therefore, powers of the Pr. CIT u/s 263(1) as per clause(c) of explanation (1) are extended only to such matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such dealing should be calculated at the rate of 4% of the turnover. The Assessing Officer accepted the assessee's later contention, made additions at 4% of the GP on the purchases and granted adjustment of the already offered GP @ 1.79% and made limited additions. The assessee had carried the matter in appeal before the Commissioner (Appeals) and argued that the entire addition should be deleted. When such appeal was pending, the Commissioner issued a notice for revision of the order of assessment on the ground that the Assessing Officer having held that the entire purchases were bogus, he erred in limiting the addition only to a small portion of the same on gross profit rate. When this show cause notice was pending, the Appellate Commissioner decided the assessee's appeal against the order of assessment and held that the Assessing Officer could not have made the addition of Rs. 9.57 lacs on GP basis. In such background, the assessee had challenged the notice of revision issued by the Commissioner of Income Tax. The Court while quashing the notice observed as under:- "12. Equally importantly, the issue itself had travelled before the Appellate Commissioner at the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered and decided in such appeal. This provisions thus statutorily recognizes the principle of merger and avoids any conflict of opinion between two quasi judicial authorities of the same rank. This issue has been considered at length by Division Bench of this Court in case of CIT V. Nirma Chemicals Works (P) Ltd. [2009] 182 taxmann.com 183/309 ITR 67 (Guj). It was held as under: "20. The stand of the revenue that the assessment order was silent as regards eligibility or otherwise of section 80-I of the Act cannot thus be accepted. As noted hereinbefore the entire section lays down a complete codified scheme in itself for deciding not only the eligibility but also for the computation of the relief to which the assessee is entitled. When the section talks of profits and gains derived from an industrial undertaking the requirement is in relation to the industrial undertaking to which the section applies and which fulfills all the conditions laid down in sub-section (2) of section 80-I of the Act. It is not possible to read the provisions in any other manner whatsoever. Hence, the contention that the eligibility or otherwise u/s.80-I of the Act was never the subject matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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