TMI Blog2024 (3) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... law related to them. The deeming provision contained in Explanation 2 to section 263(1) inserted w.e.f. 01.06.2015 referred to by the Ld. PCIT is inapplicable to the assessee s case in view of admitted submission of details, e.g. income from dealing in shares and securities (NET); sale and purchase of shares and securities along with proof of transaction ledger/trading account, DEMAT account; Form -10DB and evidence of dividend income in the form of Dividend Advice issued by Taurus Mutual Fund and JM Financial Mutual Fund before the Ld. AO/PCIT in reply to questionnaires. This amply demonstrates that adequate requisite enquiry was made by the Ld. AO on the issue of excess claim of exemption of dividend income and necessary verification was made by him examining the details and documentary evidence produced before him by the assessee. This finding recorded by the AO in the assessment order could not be controverted by the Ld. PCIT. The direction of thePCIT to the AO to examine and reconcile claim of dividend income and its exemption is therefore unwarranted and to say the least superfluous. The remaining direction of the PCIT to the AO to reconcile the information on purchase of mut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Assessing officer (rather the material is already as a part of assessment record at the e-portal of Income tax website) after due deliberation he had passed the assessment order u/s 143(3) of the act. 4. On the facts and circumstances of the case and in law, the Learned Principal Commissioner of Income Tax, Noida erred in passing the revisional order dated 27.03.2022 under section 263 of the act only on the basis of surmises, conjecture and whims that either the material is not filed by the appellant in the assessment proceedings or Learned AO has not take the cognizance of the same which is bad in law. 5. The appellant craves leave to add/modify/alter/delete any or all Grounds of Appeal. 3. The appeal is late by 27 days. Vide application for condonation of delay filed on 20.07.2023, it is submitted that the delay is in filing of appeal in physical form, though the assessee had e-filed appeal before the Tribunal in time. It is urged that the delay, if any, be condoned. 3.1 After hearing the Ld. Representative of the parties, we condone the delay and proceed to decide the appeal on merits. 4. Before the Tribunal, the assessee has moved an application on 21.12.2023 for admission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid issues mentioned in CASS reasons; accepted the income returned and completed the assessment on 07.12.2019 u/s 143(3) of the Act. 6. The Ld. PCIT examined the case records of the assessee. To him it appeared that impugned assessment order is erroneous and prejudicial to the interest of revenue. He, therefore invoked his powers u/s 263 of the Act and issued show-cause notice/hearing dated 08.02.2022 to the assessee pointing out certain discrepancies to which the assessee filed detailed reply on 15.02.2022 (reproduced in para 3 and 4 pages 2-21 of the order u/s 263 of the Act). The Ld. PCIT considered the submissions / Paper Book filed by the assessee in para 5 of his order and set aside the impugned assessment order observing and directing the Ld. AO in para 5.8 as under:- 5.8 Accordingly, by exercise of powers conferred under Section 263, I set aside the assessment order dated 07.12.2019 u/s 143(3) of the Income Tax Act 1961 for AY 2017-18 and direct the Assessing Officer to conduct specific inquiry on following issues and pass an appropriate consequential order as per provisions of the Income Tax Act, 1961, after giving due and adequate opportunity of hearing to the assessee:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 2 of the assessment order, the Ld. AO says that he issued the above notices along with questionnaire to examine and verify the correctness or otherwise of the reasons for which the assessee s case was selected for scrutiny. Clarification and justification was sought from the assessee. The Ld. AO admitted that the assessee complied and filed necessary details along with the documentary evidence which he examined. Thereafter he proceeded to discuss each reason assigned for selection of the case for scrutiny separately and devoted one para each (para 3 to 6) for dealing with the above said four reasons (issues) detailing therein the issue involved, submission of the assessee and his findings based on the documentary evidence produced by the assessee before him. It is after such an exhaustive exercise undertaken by him that the Ld. AO reached the conclusion that no adverse inference against the assessee can be drawn with regard to any of the issue examined by him and consequently accepted the income declared by the assessee in its return. 11. Such an assessment has been taken up by the Ld. PCIT for the exercise of revisional jurisdiction u/s 263 of the Act. Before we proceed fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Revenue unless the view taken by the ITO is unsustainable in law . 12. The Hon ble Supreme Court reiterated the above observation in CIT vs. Greenworld Corporation (2009) 181 Taxman 111 (SC) / (2009) 314 ITR 81 (SC). The Hon ble Apex court observed as under:- Section 263 provides for a revisional power. It has its own limitations. An order can be interfered with suo-moto by the said authority not only when an order passed by the Assessing Officer is erroneous but also when it is prejudicial to the interest of the revenue. Both the conditions precedent for exercising the jurisdiction under section 263 of the Act are conjunctive and not disjunctive. The scope of provisions of section 263 is no longer res integra. The power to exercise suo-moto revision in terms of section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein, viz.,(1) the order is erroneous and (2) by virtue of order being erroneous, prejudice has been caused to the interest of the revenue, exist. An order of assessment passed by an Assessing Officer, therefore, it should not be interfered with only because another view is possible. 13. In CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.12.2019 pursuant to the said notice is placed at pages 310-311 of the Paper Book. For ready reference it is reproduced below:- Excess Claim of exemption of Dividend Income The Assessee Firm had made investments in various equity shares and units of mutual funds which yield Dividend Income during the year. The summery of such dividend Income is as under: Particulars Amount (Rs.) Dividend on Equity Shares 4,37,595 Dividend on units of Mutual Funds 8.89,01,128 Total Dividend Income 8,93,38,723 The Entire amount has been claimed as exempted income in the Income Tax Return filled. Such Dividend Income is included in the Income from dealing in Shares and Securities and disclosed under the head REVENUE FROM OPERATION in the Financial Statement. For your kind perusal, we are enclosing the statement of mutual fund/portfolio statement as per Annexure B It needs to be considered here that as per Section 115 BBDA of the I-T Act, 1961. dividend income distributed or paid by companies is subject to tax in excess of Rs 10 lakh. This does not include dividend distributed by mutual funds. Dividend income earned from investment in units of mutual fund is still exempt u/s 10(35) of the I-T Act. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed as exempt u/s 10(35) of the Act as revealed from computation of income appearing at page 75 of Paper Book. 18. The reason for total credit of Rs. 10,18,34,536/- to the P L Account was explained to the Ld. PCIT as the amount representing sale of services and other income without including dividend income because while computing income of Rs. 10,18,34,536/- the assessee added back NET income from dealing in shares and securities duly considering therein dividend income of Rs. 8,93,38,723/-. To make it clearer and to remove any doubt the assessee explained that minus income (loss) of Rs. 67,36,180/- from dealing in shares and securities (including the exempt dividend income) has duly been disclosed in expenditure side of the P L Account in the return. The assessee thus refuted the allegation of no dividend income declared leveled by the Ld. PCIT and consequent denial of exemption thereof. 19. At pages 11-12 of order u/s 263 of the Act, the Ld. PCIT has extracted the questionnaire issued by the Ld. AO vide notice u/s 142(1) of the Act dated 13.09.2019, 03.10.2019, 17.10.2019 and 02.12.2019 with regard to dealing in shares and securities and income from dividend. It was brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of admitted submission of details, e.g. income from dealing in shares and securities (NET); sale and purchase of shares and securities along with proof of transaction ledger/trading account, DEMAT account; Form -10DB and evidence of dividend income in the form of Dividend Advice issued by Taurus Mutual Fund and JM Financial Mutual Fund before the Ld. AO/PCIT in reply to questionnaires dated 13.09.2019, 03.10.2019, 17.10.2019 and 02.12.2019. This amply demonstrates that adequate requisite enquiry was made by the Ld. AO on the issue of excess claim of exemption of dividend income and necessary verification was made by him examining the details and documentary evidence produced before him by the assessee. This finding recorded by the Ld. AO in the assessment order could not be controverted by the Ld. PCIT. The direction of the Ld. PCIT to the Ld. AO to examine and reconcile claim of dividend income and its exemption is therefore unwarranted and to say the least superfluous. 23. The remaining direction of the Ld. PCIT to the Ld. AO to reconcile the information on purchase of mutual fund units and to examine the sources of investment therein is beyond the reason being not even part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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