TMI Blog2023 (11) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie, the consequential order indicates that the said order is erroneous and is prejudicial to the interest with the Revenue warranting invocation of Section 263 of the Income Tax Act, 1961 as there is no proper reasoning and proper application of mind. Thus, there is no comparison between the case of the petitioner and petitioner's co-sister Shanmugapriya's case, who succeeded before the Tribunal [ 2016 (7) TMI 1529 - ITAT CHENNAI] for the same assessment year. There, the Tribunal vide its final order was of the view that when the assessee's mother-in-law late Smt.Prema had declared 3650 grams of gold jewellery under VDI Scheme, the Assessing Officer was expected to give credit to the extent of 3605 grams of gold in the hands of the petitioner's co-sister out of 6136.90 gms of unaccounted gold found in the hands of petitioner's co-sister. There, during the search operation 6136.90 gms of unaccounted gold was found in the hands of petitioner's co-sister. Out of 6136.90 gms of gold, 3650 gms was set off as that of the gold of her mother-in-law late Smt.Prema, who had declared the aforesaid grams of gold under VDI Scheme, 1997. In the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r verification, which should have been made. Hence, what is relevant for clause (a) of Explanation 2 to Section 263 is whether the Assessing Officer has passed the order after carrying out enquiries or verification, which a reasonable and prudent officer would have carried out or not. Therefore, the order passed by the Assessing Officer is not only erroneous but also prejudicial to the interest of Revenue. Hence, in my considered view, it is a fit case for invoking provisions of Section 263 of Income tax Act 1961. 20. In view of the foregoing discussion, the consequential order passed on 29.10.2019 for the AY 2012-13 is thus held to be erroneous and prejudicial to the interest of revenue and the same is set-aside u/s 263 of the Act to the Assessing Officer to make the order afresh, after conducting necessary verification/enquiries in accordance with law and to carry out the reconciliation on the quantum of jewellery, keeping in view my observations made in the preceding paras and after giving due opportunity to the assessee. For this purpose, the Assessing Officer is directed to get necessary reconciliation from the assessee with respect of the jewellery declared under VDIS, j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as streedhan during their marriage cannot be totally ruled out. In the circumstances, I am of the view that concealment is not established beyond doubt. Simply because the appellant failed to file appeal against the quantum addition, penalty cannot be automatic. Hence the penalty order cannot be sustained. 8. The Department preferred an appeal before the Income Tax Appellate Tribunal in I.T.A.No.1450/Mds/2016. The petitioner also filed Cross Objection in C.O.No.150/Mds/2016. The Tribunal allowed the Revenue's Appeal and dismissed the Cross Objection filed by the petitioner with the following observations: 7.1.The assessee relied on the decision of Sir Shadilal Sugar and General Vs CIT 168 AR 705 regarding mens rea this aspect has been considered by the Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Textiles Processors 306 ITR 277 held that penalty under section 271(1)(c) is civil liability and for attracting such civil liability, wilful concealment is not an essential ingredient as is case in matter of prosecution under section. The assessee also relied on the judgment of Hon'ble Supreme Court in the case of CIT Vs. Suresh Chandra Mittal [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to do the reconciliation by offering an explanation, which has been stated in these appeals as well as in the said miscellaneous petition before the Tribunal. 12. For the above reasons, TCA.No.82 of 2019 is allowed, the order passed by the Tribunal is set aside and the matter is remanded to the Assessing Officer to afford an opportunity to the assessee to reconcile the quantum of jewellery. The Assessing Officer shall also take note of the decision in the case of Shanmugapriya and pass fresh orders on merits and in accordance with law uninfluenced by any of his observations made in the earlier order dated 23.9.2014. Consequently, the substantial questions of law are left open. No costs. 13. So far as TCA.No.954 of 2018 is concerned, this appeal is directed against the order dated 07.9.2018 in the miscellaneous petition rejecting the same as being barred by limitation. Now that we allowed TCA.No.82 of 2019 and remanded the matter to the Assessing Officer for a fresh decision, no adjudication is required in TCA.No.954 of 2018. Accordingly, TCA.No.954 of 2018 is closed and the substantial questions of law are left open. No costs. 11. Pursuant to the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation 1(c) to Section 263(1) of the Income Tax Act, 1961 and submits that the orders that were passed earlier on 23.09.2014 merged with the order of the Commissioner of Income Tax (Appeals) as also with the order dated 03.07.2019 of this High Court and therefore, there is no scope for invoking Section 263(1) of the Income Tax Act, 1961. 16. It is submitted that the 2nd respondent failed to note that the 1st respondent had acted reasonably in accordance with the directions of this Court's order dated 03.07.2019 and dropped the penalty after enquiry. 17. It is submitted that in respect of penalty, the issue has been already dealt before CIT (Appeals), Income Tax Tribunal and this Court and the assessment attained finality. Hence, the 2nd respondent has no jurisdiction to give direction to revise the assessment under Section 263 of the Income Tax Act, 1961. 18. It is submitted that the 2nd respondent exceeded his jurisdiction by directing the 1st respondent to act according to his direction for levy of difference of tax after making reconciliation on the quantum of jewellery declared under the VDIS Scheme. 19. It is therefore submitted that the 2nd respondent wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: 263. Revision of orders prejudicial to revenue. [Explanation 1.] For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (c) where any order referred to in this subsection and passed by the Assessing Officer had been the subject matter of any appeal 5 [filed on or before or after the 1st day of June, 1988], the powers of the 1 [Principal Commissioner or Commissioner] under this sub-section shall extend 11[and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal. 29. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd,. Vs. CIT , [2000] 243 ITR 83 (SC) has considered the scope of Section 263 of the Income Tax Act, 1961. In paragraph No.10, it has held as follows: 10. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also of the opinion that the assessment order was not only erroneous but prejudicial to the interest of the Revenue also. In the facts and circumstances of the case, it cannot be said that the Commissioner exercised the jurisdiction under Section 263 not vested in it. The erroneous assessment order has resulted into loss of the Revenue in the form of tax. Under the Circumstances and in the facts and circumstances of the case narrated hereinabove, the High Court has committed a very serious error in setting aside the order passed by the Commissioner passed in exercise of powers under Section 263 of the Income Tax Act. 32. In Principal Commissioner of Income-tax, Assam Vs. Oil India Ltd. , [2019] 103 taxmann.com 339 (Gauhati), it was held that the power to invoke the jurisdiction under Section 263 of the Income Tax Act, 1961 is only in respect of erroneous portion of the order of the Assessing Officer causing prejudicial interest to the Revenue and such portion of the order not being a part of the consideration in any appeal. 33. In Commissioner of Income-tax-III Vs. Sanvijay Rolling Engg. Ltd. , [2022] 137 taxmann.com 123 (Bombay), a finding was recorded that the dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same assessment year. There, the Tribunal vide its final order dated 15.07.2016 was of the view that when the assessee's mother-in-law late Smt.Prema had declared 3650 grams of gold jewellery under VDI Scheme, the Assessing Officer was expected to give credit to the extent of 3605 grams of gold in the hands of the petitioner's co-sister out of 6136.90 gms of unaccounted gold found in the hands of petitioner's co-sister. 39. There, during the search operation 6136.90 gms of unaccounted gold was found in the hands of petitioner's co-sister. Out of 6136.90 gms of gold, 3650 gms was set off as that of the gold of her mother-in-law late Smt.Prema, who had declared the aforesaid grams of gold under VDI Scheme, 1997. In the present case, 2034.1 gms of gold was found at the residence of petitioner's son R.Sabapathy on 18.08.2011. 40. Whereas, in the present case, the petitioner has declared 101442.5 gms under the same VDI Scheme, 1997. During the search operation in the petitioner's son's residence viz., R.Sabapathy's residence, where 2034.1 gms of gold was found is claimed to be 101442.5 gms declared by the petitioner in VDI Scheme, 1997. 41. The H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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