Income Tax Appellate Tribunal - Ahmedabad
Bhartiben M. Kelawala, Bharuch vs Assessee
-1-
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
Before S/Shri Mahavir Singh, JM and D.C.Agrawal, AM
IT(SS)A No.84/Ahd/2007
Block period 1.4.1996 to 13.8.2002
Smt. Bhartiben M. Kelawala Vs. Commissioner of
4/5 Swami Vivekanand Income-tax-III, Baroda.
Society, Nr. Pritam society
No.1, Bharuch.
PAN AEEPK 2832 G
(Appellant) .. (Respondent)
Assessee by :- Shri M. K. Patel, AR
Revenue by:- Shri B. S. Sandhu, CIT,DR
ORDER
Per D. C. Agrawal, Accountant Member.
This is an appeal filed by the assessee raising following grounds :-
(1) That the ld. CIT-III, Baroda has grievously erred in assuming the jurisdiction under section 263(1) of the Income-tax Act, 1961 and thereby canceling the order under section 158BC r.w.s. 158BG of the Income-tax Act, 1961.
(2) That the ld. CIT-III, Baroda has grievously erred in mentioning in para 9 of the order under appeal that the order under section 158BC r.w.s. 158BG of the Act was passed by the AO, Ward1, Bharuch whereas in fact the said order was passed by the Dy.
CIT, Cen. Cir.1, Baroda.
(3) That the ld. CIT-III, Baroda have grievously erred in directing the AO to make a fresh assessment whereas the original assessment was passed after getting the approval of the Addl. CIT, Cen. Range, Baroda and after thorough examination of all the relevant seized materials, bank transactions, etc. and hence granting of one more innings to the Department is totally unwarranted and unjustified in law.
(4) That on facts and in law the original order not being erroneous and prejudicial to the interest of revenue, the order passed by the ld. CIT-III, Baroda under section 263(1) of the Income-tax Act, 1961 deserves to be quashed.
2. The only issue involved in the appeal is whether ld. CIT was justified in canceling the order passed u/s 158 BC of the AO, u/s 263 and directing him to pass fresh assessment by examining all the bank transactions.
3. The facts of the case are that search u/s 132(1) was conducted at the premises of the assessee and her group on 13.8.2002. In response to notice u/s 158BC assessee filed return of undisclosed income at Rs.1,48,500/-. It included the undisclosed income and deposits in S.B. account No.23743 of Bank of Baroda, Bharuch. The AO accepted the returned undisclosed income by observing as under :-
"2. The first notice u/s 143(2) was issued on 03.03.2003. The second notice u/s 143(2) was issued by the undersigned on 16.04.2004. In response to notices u/s 143(2) and 142(1) of the Act, 1961, Shri M. K. Rao, C.A. Shri Mukesh M. Kelawala, the husband of the assessee and Shri Satish Mehta, Accountant attended from time to time and submitted the details called for."
3. After discussion, the returned income of the assessee is accepted. Total undisclosed income as per block return dtd.11.02.2003 :Rs.1,48,500/-"
4. The ld. CIT called for the assessment record of the assessee and noticed that assessee and her husband Shri Mukesh M. Kelawala had made undisclosed investment in M/s Ekta Corporation to the extent of 2 Rs.23,66,500/-. This was revealed from the documents found and seized during the course of search. Out of this, Shri Mukesh M. Kelawala disclosed Rs.22,39,295/- only as his share of undisclosed investment in M/s Ekta Corporation by filing his block return. The difference amounting to Rs.1,27,205/- was considered as made by assessee as investment in M/s Ekta Corporation was found to be in joint names. The ld. CIT accordingly issued following show cause notice u/s 263 to her:
"TIME BARRING No.BRD/CIT-III/u/s 263/BMK/2006-07 Dt.07.03.2007 To Smt. Bhartiben M. Kelawala 4/5 Swami Vivekanand Society, Nr. Pritam Society, No.1, Bharuch.
Madam, Sub: Notice u/s 263 of Income-tax Act, 1961-for the Block period 1.4.1996 to 13.8.2002 -regarding.
The record of block assessment leading to passing of order u/s 158BC r.w.s. 158BG in your case as well as in the case of Shri Mukesh M. Kelawala for the above mentioned period were called for and examined.
2. From the documents found and seized during the search, it came to notice that undisclosed investment in M/s Ekta Corporation was made by you and your husband Shri Mukesh M. Kelawala to the tune of Rs.23,66,500/-. Out of this Shri Mukesh M. Kelawala disclosed Rs.22,39,295/- only as undisclosed investment in M/s Ekta Corporation in his block return of income. On perusal of documents, records and appellate orders it came to notice that you had made an investment of Rs.1,27,205/- in M/s Ekta Corporation over and above the amount of Rs.1,48,500/- as disclosed by you in block return of income which is required to be taxed in your hand. Thus the order dated 30.18.2004 passed in your case under section 158BC r.w.s. 158BG is erroneous in so far as it is prejudicial to the interest of revenue.
3. You are hereby given an opportunity of being heard and show cause as to why the order passed by the AO should not be enhanced or cancelled by directing him to make fresh assessment in accordance with law.3
4. You are requested to appear before the undersigned either personally or through your authorised representative on 14.03.2007 at 11.30 P.M at my office in room no.215, 2nd floor, Aayakar Bhavan Annexe, Race Course Circle, Baroda along with all the supporting evidence on which you wish to rely upon in this regard. In case of non-compliance it will be presumed that you have nothing to say and the matter will be decided on merits.
Yours faithfully, Sd/- Promila Bhardwaj) Commissioner of Income-tax-III Baroda."
In response to this, the assessee furnished following explanation :-
"Dear Madam, This has reference to your notice u/s 263 of the act asking me to attend your office on 21.03.2007, since my husband is incapacitated, I shall no be able to attend the hearing personally and I authorize Mr. Mukund K. Rao, Charatered Accountant to attend on my behalf and submit my following paper :
A. First and foremost, I wish to point out that the provision of section 263 of the act would not be applicable to order passed u/s 158BC of the act since the chapter XIV-B of the act is a self contained code wherein all provision are incorporated. The provision of u/s 158BG of the act required prior approval before passing of the order by (Joint) Commissioner or by (Joint) Director. This basically implies that the order u/s 158BC have been passed after having examined all the issues which leaves no scope for application of any other section of this act.
Hence in my humble opinion the provision of section 263 cannot be applied in my case.
B. Not withstanding what stated in above point 'A' in my return of income for the block period 1.04.1996 to 13.08.2002 I have clearly shown undisclosed investment of Rs.1,50,000/- in M/s Ekta Corporation. Copy of my details of undisclosed income and investment for the said block period is enclosed for your reference. During the course of search, post search and even thereafter through out the assessment proceeding, no facts of investment over and above Rs.1,48,500/- was pointed out. The amount of Rs.1,27,205/- is therefore fully covered by the 4 investment of Rs.1,50,000/- as shown in the return of block period.
You are requested to take my this reply on record and drop the proceeding u/s 263 of the act and oblige."
In nutshell it was explained that (i) order u/s 158BC was passed after examining all the issues and (2) investment of Rs.1,27,205/- is fully covered by the disclosure of Rs.1,48,500/- made by her in the block return.
5. The ld. CIT, however, being not satisfied proceeded to pass his order u/s 263. He indicated in the order u/s 263 that Shri Mukesh M. Kelawala and the assessee became partners in the firm of M/s Ekta Corporation on 24.9.1997. This firm acquired a plot in Survey No.79 measuring 3175 sq.mts. at village Ghadokol, Ankleshwar on 30.10.1996 for Rs.10 lacs. The firm underwent change in constitution whereby assessee and her husband Shri Mukesh M. Kelawala acquired 35% and 50% in the profits respectively and the rest 15% was left for Shri Gulam Mohmed Shaikh. On the date of change in the constitution i.e. 24.9.1997, the plot was valued at Rs.32.70 lacs and 85% share there was worked out at Rs.27,60,500/-. Mr. Mrs. Kelawala had already made investment of Rs.3,96,000/- as reflected in the books and further investment of Rs.23,66,500/- was made for acquiring shares in profit of the firm. Shri Mukesh M. Kelawala declared undisclosed income of Rs.22,39,295/- as his part of investment in the firm. He also stated that undisclosed investment to the tune of Rs.1,50,000/- was made by his wife. A sum of Rs.1,00,000/- was withdrawn by her from S.B. a/c No.23743 with Bank of Baroda on 6.1.1998 and another sum of Rs.50,000/- was withdrawn from the same account on 30.7.2002. The department sought to assessee 5 the sum of Rs.1,27,205/- (being difference between Rs.23,66,500/- the sum required to be and explained sum of Rs.22,39,295/- declared as undisclosed income by Shri Mukesh M. Kelawala) in the hands of Shri Mukesh M. Kelawala but the Tribunal deleted the addition on the ground that his wife, the present assessee had made investment after withdrawal from her bank account and, therefore, the sum could not be assessed in the hands of Shri Mukesh M. Kelawala. On these facts, ld. CIT had given above notice and after considering the reply filed by the assessee, rejected both the contentions by observing as under :-
"7. The assessee's reply has been carefully considered. As regards the assessee's objection as at (A) above, it may be pointed out that as per the provisions of section 158BH of the Income-tax act, 1961, all other provisions of Income-tax Act, 1961 apply to the assessment made under Chapter XIV-B. Accordingly, block assessments made u/s 158BG are also covered. The objection is, therefore, rejected.
8. As regards the assessee's contention at (B) above, it may be worthwhile to reiterate that the new partnership firm when Smt Bharatiben M. Kelawala and Shri Mukesh M. Kelawala became partners in M/s. Ekta Corporation, came into being on 24.9.1997. The assessee and her husband held 35% and 50% share accordingly. In other words, the partnership deed was finalised on 24.9.1997. lt is only when the investments as required are made that a partnership deed can be finalized. Accordingly, it is reasonable to hold that the investments, in new M/s. Ekta Corporation by Smt. Bhartiben M, Kelawala and her husband Shn Mukesh M. Kelawala were made on or before 29.9.1997 but not later. The assessee's plea that in her return for the block period 1.4.1996 to 13.8.2002 she had clearly shown undisclosed investment of Rs. L50,000/- in M/s. Ekta Corporation does not hold water for the simple reason that the withdrawals had been made from S.B. account No. 23743 on 6.1.1998 and 31.7.20112 i.e. much after the finalization of the partnership. It is. therefore, neither feasible nor logical to believe that the investments on 24.9.I997 were made out of funds withdrawn in 1998 and 2002. The facts and circumstances are a clear pointer to the inevitable conclusion that Smt, Bharatiben M Kelawala made an unexplained 6 investment of Rs. !,27,205/- in M/s. Ekta Corporation ou 24.9.1997 over and above the sum of Rs. 1,50,000/- shown by her m block return of income,
9. The replies submitted by the assessee's representative on 21.3.2007 are completely silent on this aspect taken by the Department. Under the circumstances and having regard to the entirety of facts of the case, the order u/s 158BC r.w.s. 158BG passed by the AO, Ward-1, Bharuch on 30,8,2004, determining total income at Rs.1,48,500/-. is hereby cancelled. The Assessing Officer is directed to make fresh assessment by thoroughly examining all_the bank transactions and after taking into account other material facts, if any."
6. Before us, the ld. AR for the assessee submitted that ld. CIT could not have set aside the assessment under section 263 because it will create a procedural bottle neck. He submitted that block assessment under Chapter XIV-B could be completed within 2 years from the end of the months when search took place. There is no provision in Chapter XIV-B which would allow any extension of limitation in completing block assessment under any circumstances. He submitted that search in the case of the assessee was carried out on 13.8.2002. Therefore, in any case block assessment has to be completed by 31.8.2002, even if it was to be set aside by ld. CIT under section 263. Since ld. CIT has himself passed his order on 30.3.2007 AO could not have framed the assessment by 31.8.2004. Therefore, the order of ld. CIT was without jurisdiction. He referred to the decision of Hon. Gujarat High Court in the case of Cargo Clearing Agency vs. ACIT (2008) 307 ITR 1 (Guj). Ld. AR specifically referred to the following portion from the above judgment for his proposition - "time limit for completion of block assessment has been provided in section 158BE of the Act. It indicates that the same has to be within one year/ two years from the end of the month in which the last of the authorizations for search under section 132 of the Act was executed, 7 etc. For the present, it is not necessary to refer to the other provisions of the said section. However, Explanation 2 as appearing in section 158BE of the Act gives an indication as to what would be the date on which an authorisation shall be deemed to have been executed. Under clauses (a) and (b) of Explanation 2, different points of time have been specified. But in no case, can one envisage the applicability of the period of limitation prescribed under section 153 of the Act for completion of assessments and reassessments. The Revenue cannot contend that for the purpose of reassessing the so-called escaped undisclosed income the Revenue will resort to the limitation under section 153 of the Act, because undisclosed income has to be assessed in the manner provided and by adopting the procedure provided in Chapter XIV-B of the Act. Nor is it possible to resort to limitation under section 158BE of the Act because the said period of limitation has already expired. At the cost of repetition in this context one has to refer to the language employed in section 158BA of the Act where there is a positive mandate to the Assessing Officer to assess the undisclosed income in accordance with the provisions of Chapter XIV-B of the Act, notwithstanding anything contained in any other provisions of the Act. As against that section 158BH states that except as otherwise provided in Chapter XIV-B of the Act, all other provisions of the Act shall apply to assessment made under this Chapter. Therefore, once period of limitation has been prescribed under section 158BE of the Act the time limit for completion of assessment of undisclosed income has to be as provided under the said section. If the contention of the Revenue is accepted section 158BE becomes unworkable The limitation prescribed from the date of last of the authorizations, or in case of requisition under section 132A of the Act, has already expired. This is one more inherent pointer which flows on a conjoint reading of the provisions of Chapter XIV-B of the Act to indicate that the Legislature does not intend to reopen 8 assessments completed under Chapter XIV-B of the Act assessing the undisclosed income by adopting the special procedure provided in the said Chapter."
According to him the limitation for completing the block assessment is provided only in Chapter XIV-B and therefore, in any case block assessment has to be completed within two years.
7. On merit, the ld. AR submitted that AO had carried out all the enquiries relating to the issues. He was satisfied and had come to the conclusion that sum of Rs.1,27,205/- is covered by the disclosure of Rs.1,48,500/- made by the assessee in the block return.
8. He also referred to the decision of Hon. Supreme Court in CIT vs. Max India Ltd. 295 ITR 282(SC) for the proposition that the law prevalent at the time when CIT sought to revise the order should be applied and not the law amended subsequently retrospectively.
9. Finally he submitted that by passing order under section 263 ld. CIT has paved the way for violating time limit prescribed under section 158BE.
10. On our asking ld. AR fairly submitted that neither the AO had put up any question regarding investment made in M/s Ekta Corporation nor the assessee has herself furnished any reply, on this issue.
11. The ld. DR on the other hand, submitted that AO had in fact not carried out any enquiry on the issue as to when investment in M/s Ekta Corporation was made. It is a fact on record that change in constitution in 9 Ekta Corporation had taken place on 24.9.1997 when money was required to be paid to outgoing partners and investment by the Kelawala couple was made at that time in M/s Ekta Corporation. However, the withdrawal from the bank account as claimed by the assessee was only made on 6.1.1998 and 31.7.2002. Therefore, investment in Ekta Corporation could not be covered by disclosure of Rs.1,48,500/-. In any case ld. DR submitted that AO had not carried out any enquiry and ld. CIT had only directed to make fresh assessment by thoroughly examining all the bank accounts. Regarding technical issue of limitation ld. DR submitted that the decision of Hon. Gujarat High Court in Cargo Clearing Agency (supra) would not be applicable because that case was in relation to reopening of block assessment by invoking provisions of section 148(1). There is specific bar in section 158 BC against invoking provisions of section 148(1) to assessment framed under chapter XIV-B. This decision, therefore, could not be applied in the case covered under section 263. He then referred to section 158BH which provided for applicability of the provisions of Income-tax Act except those which are provided in Chapter XIV-B. He submitted that if provisions of section 143(2) and its proviso can be invoked in block assessment proceedings then there is no reason that provision of section 263 cannot be invoked and ld. CIT cannot set aside the block assessment if other conditions are satisfied.
12. We have considered the rival submissions and perused the material on record. In our considered view ld. CIT was fully justified in canceling the order under section 263. The ld. AR could not point out as to whether the AO during the course of block assessment proceedings put up any question about the investment in Ekta Corporation or the period when money was withdrawn from her bank accounts. Prima facie the withdrawl 10 of the money from bank account was much after the date when change in constitution of firm Ekta Corporation had taken place and accordingly Mukesh M. Kelawala and assessee were required to make payment for acquiring higher shares of profit in the firm. Since enquiries were in fact not carried out by the AO, ld. CIT was justified in revising the order and directing the AO to thoroughly examine bank statements and pass fresh assessment. Hon. Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has held that where AO did not make proper enquiries called for in the circumstances of the case and assessment order did not show that AO has considered all aspects of the case, the exercise of jurisdiction by the Commissioner under section 263(1) was justified. Hon. Apex Court in this regard has observed as under :-
"The Commissioner noted that the Income-tax Officer passed the order of "nil" assessment without application of mind. Indeed, the High Court recorded the finding that the Income-tax Officer failed to apply his mind to the case in all perspective and the order passed by him was erroneous. The resolution passed by the board of the appellant-company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts, the conclusion that the order of the Income-tax Officer was erroneous was irresistible. The High Court had rightly held that the exercise of jurisdiction by the Commissioner under section 263(1) was justified."
This judgment was followed by following Courts/Tribunal Benches in coming to the conclusion that where AO did not make proper enquiries then order of the AO would be erroneous and prejudicial to the interest of Revenue and, therefore, the ld. CIT would be justified in refusing the same:
111. CIT v. Deepak Kumar Garg [2008] 299 ITR 0435- [M.P.]
2. Rajalakshmi Mills Ltd v ITO. (2009) 121 ITD 343 (Chennai) (SB).
3. Rajiv Agnihotri vs. CIT (2009) 23 DTR 476 (Del.)(Trib.)
4. Duggal and Co. v. CIT [1996] 220 ITR 0456- [Del]
5. CIT v. South India Shipping Corporation Ltd. [1998] 233 ITR 0546- [Mad]
6. CIT v. Emery Stone Mfg. Co. [1995] 213 ITR 0843- [Raj] Therefore, we reject the arguments of ld. AR on this point.
13. Now we deal with the main contention raised by ld. AR that ld. CIT could not have exercised jurisdiction under section 263 because it would enable the AO to pass fresh assessment order beyond time limit prescribed under section 158BE. For this contention he has relied on the decision of Hon. Gujarat High Court in Cargo Clearing Agency (supra). In our considered view as also as per argument by ld. DR, above judgment was on the issue whether notice u/s 148(1) can be issued to reassess any escaped income in block assessment. Hon. Gujarat High Court held that the AO has no jurisdiction to reopen block assessment by issuing notice u/s 148(1). It was held that Chapter XIV-B provides for a special procedure for assessment of search cases. It provides for computation of undisclosed income in the manner as laid down in section 158BB. One cannot envisage escapement of undisclosed income once a search has taken place, all the material discovered in search is processed and undisclosed income is brought to tax. On the other hand, section 147 applies for assessing escaped income in regular assessment. In Chapter XIV-B there cannot be a case of non-disclosure of material fact as every thing has been discovered and unearthed by way of search. The block assessment has to be carried out on the basis of material and information found as a result of search and on the basis of enquiries carried out thereafter. Further there is always an application of mind of Commissioner or Director while giving approval as per section 158BG. It 12 was to ensure that there is no undisclosed income escaping assessment and also there is no high pitch assessment. Chapter XIV-B provides separate time limit to complete block assessment as per section 158BE. The provisions laid down u/s 147 to 153 pertaining to reassessment are separate and distinct from each other and scheme under Chapter XIV-B for the purposes of block assessment is separate. Section 158 BH provides that where there is a conflict between the two scheme of procedure, the provision of Chapter XIV-B of the Act shall prevail and hold primacy. In nut shell the Hon. Gujarat High Court held that notice under section 148(1) cannot be issued to assess any escaped income in case of assessment framed under Chapter XIV-B as there cannot be any escapement of concealed income as every thing has been discovered, unearthed or brought to surface. There cannot be escapement behind concealment.
14. When we examine the provisions of section 158BC and find that there is a specific provision made therein by way of first proviso in clause (A) thereof as under.
Provided that no notice under section 148 is required to be issued for the purposes of procedure under this Chapter. Thus there is a specific bar in the statute itself for taking action under section 148 in a block assessment. No such provision is made for debarring the Commissioner from taking action under section 263. On the other hand, section 263 provides that Commissioner can call for and examine records of any proceedings under this Act. Thus a jurisdiction is given to the Commissioner to call for record of any proceedings under this Act meaning thereby that he can also call for records of proceedings carried 13 out under Chapter XIV-B. Unless there is a specific bar or prohibition on the power of the Commissioner, he cannot be prevented from calling record of proceedings carried out by the AO under Chapter XIV-B.
15. Further, it is provided under section 263 that "if Commissioner considers that any order passed therein by the AO........." It means and it covers any order passed by the AO under Income-tax Act. Chapter XIV- B is undisputedly enacted within Income-tax Act and order passed by the AO u/s 158BC or 158BD is without any dispute an order under Income- tax Act. Then CIT would be within his jurisdiction to consider the order passed under section 158BC as erroneous in so far it is prejudicial to the interest of Revenue. The word 'order' mentioned in section 263 which could be the subject matter of revision by the CIT would mean an order determining the rights and liabilities of the assessee under Income-tax Act. An order u/s 158BC or 158BD does determine rights and liabilities of the assessee subjected to search.
16. Thereafter only requirement with the CIT is to hold that order which is subject to revision is erroneous in so far as it is prejudicial to the interest of Revenue. We have already held above that where order is passed by an Assessing Officer without carrying out proper enquiries would be erroneous in so far as it is prejudicial to the interest of Revenue.
17. The contention of ld. AR is basically focused on limitation on the issue. We are unable to agree with this contention. We have already discussed that the case of Cargo Clearing Agency (supra) is not applicable in the matter of revision under section 263 and further we also hold that the observation of Hon. Gujarat High Court regarding limitation is applicable only in a case of reopening block assessment under section 14 148(1). It cannot be for general application for all other actions to be taken under Income-tax Act. In our considered view the provisions of section 158BH would be applicable in respect of proceedings under section 263 also. This section reads as under :-
158BH. Application of other provisions of this Act.--Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter.
This provision has been interpreted by Hon. Apex Court in ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) wherein it is held that by virtue of section 158BH it would be necessary to issue the notice under section 143(2) before framing block assessment. The observations of Hon. Apex Court in this regard are as under :-
"If the Assessing Officer, for any reason, repudiates the return filed by an assessee in response to notice under section 158BC(a) of the Income-tax Act, 1961 relating to a block assessment, the Assessing Officer must necessarily issue notice under section 143(2) of the Act within the time prescribed in the proviso to section 143(2).
By making the issue of notice mandatory, section 158BC, dealing with block assessments, makes such notice the very foundation for jurisdiction. Such notice is required to be served on the person who is found to have undisclosed income.
Section 158BC provides for enquiry and assessment. After the return is filed, clause (b) of section 158BC provides that the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and "the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply". This indicates that this clause enables the Assessing Officer, after the return is filed, to complete the assessment under section 143(2) by following the procedure like issue of notice under section 143(2) /142. This does not provide accepting the return as provided under section 143(1)(a) : the officer has to complete the assessment under section 143(3) only. If an assessment is to be completed 15 under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of the block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and is not curable. Therefore, the requirement of notice under section 143(2) cannot be dispensed with."
In respect of applicability of section 127 Hon. Apex Court in K.P. Md. Salim vs. CIT (2008) 300 ITR 302 (SC) held that section 127 would apply in block assessment also by virtue of section 158BH:
"The power under section 127 of the Income-tax Act, 1961, to transfer cases from one Assessing Officer to another can also be exercised in respect of block assessments. The word "any" in that section must be read as "all".
The power to transfer is in effect a machinery provision. It must be given full effect. It must be construed in a manner so as to be workable. It should be construed to effectuate the charging section so as to allow the authorities concerned to do so in a manner wherefor the statute was enacted.
Decision of the Kerala High Court in K. V. Kader Haji v. CIT [2004] 268 ITR 465 affirmed."
Once the provisions of section 158BH has been interpreted so to enable the applicability of all other provisions of the Act which are not specifically provided in Chapter XIV-B, then there is no reason to hold that provisions of section 263 would not be applicable to block assessment.
18. Once provisions of section 263 are applicable to block assessment then thereafter question of restricting completion of fresh assessment by provisions of section 158BE would not arise. Since Sec.158BE does not prescribe any limit for completing assessment after it is being set aside by 16 CIT, then by virtue of section 158BH limitation as laid down in section 153(2A) would be applicable. Therefore, it is not a case where limitation for completing assessment after revision is not available under Income- tax Act. It is not proper to hold that once limitation for completing fresh assessment after revision is not provided under section 158BE then CIT cannot revise the assessment under section 263. In our considered view the revision under section 263 is independent and different from completion of fresh assessment after revision. If for some reason AO does not confine to a limitation prescribed under I.T. Act or there is a dispute on issue of limitation for completing fresh assessment then it will not take away the jurisdiction of CIT to revise the assessment and also block assessment by exercising his power under section 263. When we precondition the issue of limitation in completing fresh assessment, for determining whether CIT could exercise his power under section 263 it would mean that new condition is being attached under section 263 for exercising jurisdiction there-under i.e. if AO can complete fresh assessment within limitation then CIT will hold jurisdiction u/s 263 to revise an order and if AO could not complete fresh assessment within limitation, then CIT will not hold jurisdiction to revise the erroneous order of A.O. In our view this is akin to legislation. No new condition can be seen or read in exercising of any provision if they are not specifically provided there-under. The only condition for invoking provisions of section 263 is that order of the AO is erroneous in so far as it is prejudicial to the interest of Revenue and no more. Whether AO would complete fresh assessment within a limitation or not, or whether there is a dispute on the limitation or whether provisions for limitation under IT Act to complete assessment by AO after revision are applicable or not, are alien to the exercise of jurisdiction by the Commissioner under section 263.
1719. As a result, we hold that ld. CIT was justified in canceling the assessment under section 263. Both on technical ground as well as on merit the appeal filed by the assessee is dismissed.
20. In the result, the appeal filed by the assessee is dismissed.
Order was pronounced in open Court on 9/7/2010
Sd/- Sd/-
(Mahavir Singh) (D.C.Agrawal)
Judicial Member Accountant Member
Ahmedabad,
Dated :9/7/2010
Mahata/-
Copy of the Order forwarded to:-
1. The Assessee.
2. The Department.
3. The CIT(Appeals)-
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Ahmedabad
Fit for publication.
(Judicial Member) (Accountant Member)
18