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Income Tax Appellate Tribunal - Mumbai

Acit 1(3)(1), Mumbai vs Reliance Money Infrastructure Ltd, ... on 18 March, 2021

IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 2300/Mum/2019 (A.Y: 2012-13) ACIT 1(3)(1) Vs. Reliance Money Rm No. 540, 5 t h Floor, Infrastructure Ltd., Aayakar Bhavan, MK 7 t h Floor, B Wing, Road, Mumbai. Trade World, Kamla Mills Compound, SB Marg Lower Parel, Mumbai - 400013 PAN/GIR No. : AADCR2730G Appellant .. Respondent Appellant by : Shri Bharat Andhale, DR Respondent by : Shri Jitendra Sanghavi, AR Date of He aring 28.01.2021 Date of P ronouncement 18.03.2021 आदे श / O R D E R PER PAVAN KUMAR GADALE JM:

The appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) -3, Mumbai, passed u/s. 143(3) r.w.s 263 and 250 of the Income Tax Act, 1961. The revenue has raised the following grounds:

1. ""Whether on the facts and circumstances of the case and in law, the Ld. C.I.T. (A) was justified in annulling the assessment order passed u/s. 143(3) r.w.s. 263 of the Act on 06.12.2017 on the ground that the H'ble ITAT has quashed ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai -2- the proceedings u/s.263 of the Act which is subject to adjudication before the Hon'ble Bombay High Court.

2. "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fact that the decision of the H'ble ITAT quashing the proceedings u/s.263 of the Act is not accepted by the Department and appeal u/s.260A has been filed by the Department against the said order.

Without prejudice to the above grounds, the following grounds of appeal are also raised:

3, "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fact that, during the assessment proceedings the assessee has filed revised computation of income wherein it has reduced the claim of depreciation from Rs.8,66,52,484/- to Rs.80,25,356/- . By claiming higher depreciation originally and subsequently reducing it during the course of assessment proceedings is indicative of the fact th at the assessee had furnished inaccurate particulars which would attract the provisions of Sec.271(1)(c) of the Income Tax Act, 1961.

4"Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fact that, during the assessment proceedings the assessee has filed revised computation of income wherein it has reduced the claim of deduction of Rs.34,86,256/- on account of incentive paid in F.Y. 2011-12 relevant to A.Y. 2011-12. By claiming wrong claim of expenses in originally and subsequently reducing it during the course of assessment proceedings is indicative of the fact that the assessee had furnished inaccurate particulars which would attract the provisions of Sec.27 1(1)(c) of the Income Tax Act, 1961.

5, "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fac t that, during the assessment proceedings the assessee has ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai -3- filed revised computation of income wherein it has reduced the profit on sale of assets of Rs.5,17,82,414/- credited to the P&L A/c. under the head miscellaneous receipts as not liable to tax and correspondingly reduced sale proceeds thereof amounting to Rs.5,86,19,472/- from the block of assets for the purpose of depreciation and reduced the depreciation claim accordingly. By claiming wrong claim in originally and subsequently reducing it during the course of assessment proceedings is indicative of the fact that the assessee had furnished inaccurate particulars which would attract the provisions of Sec.271(1)(c) of the Income Tax Act, 1961.

6. "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fact that, the Pr.CIT in the order u/s.263 had observed that headging and transportation cost is roughly 1072% of the cost of goods sold is unsually high expenditure allowed in the assessment completed u/s.143(3).

7. "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fact that, in the Pr.CIT in the order u/s.263 had observed that the assessee company has purchased equity share capital of M/s. Reliance Infrastructure Finance P. Ltd. at par for Rs.5.25 crores from M/s. Emerging Money Mall Ltd., which was itself purchased from Reliance Capital Ltd. which should not have been accepted by the A.O. in the assessment completed u/s.143(3).

8. "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating the fact that, the Pr.CIT in the order u/s.263 had observed that, the issue of claim of deduction for demerger expenses u/s.35DD should not have been accepted by the A.O. in the assessment completed u/s.143(3).

9. "Whether on the facts and circumstances of the case and in law, the Ld.C.I.T. (A) was justified in not appreciating ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai -4- the fact that, the Pr.CIT in the order u/s.263 had observed that, the claim of deduction for excess payment of incentive over provision amounting to Rs.1,40,72,956/- should not have been accepted by the A.O in the assessment completed u/s 143(3).

10. The appellant caves leave to amend or alter any ground or ad a new ground which may be necessary.

2.The Brief facts of the case are that the assessee company is engaged in the business of financial services and filed the return of income on 29.09.2012 with total income of Rs. Nil and current year loss of Rs.11,93,01,363/-.The assessee company has filed the revised return of income on 29.03.2014 with higher claim of TDS. The assessment was completed u/s 143(3 of the Act on 24.03.2015 with assessed total loss of Rs.

8,89,70,396/-. Subsequently, the Pr.CIT invoked the provisions of Sec. 263 of the Act and revision order dated 31.03.2017 was passed setting aside the assessment order dated 24.03.2015 and directed the A.O to adjudicate afresh with directions. Against the order u/s 263 of the Act, the assessee has filed an appeal with the Hon'ble Tribunal. Whereas the A.O. as per the directions of the Pr.CIT has passed the assessment order u/s 143 (3) r.w.s 263 of the Act on 6-12-2017.

M/s Reliance Money Infrastructure Ltd., Mumbai -5-

3. Aggrieved by the order the assessee company has filed an appeal with the CIT(A), whereas the Ld.CIT(A) considered the grounds of appeal, submissions of the assessee, and the findings of the Assessing officer. The Ld.CIT(A) also dealt on the provisions of Sec. 263 of the Act and observed at page 5 para 5.2 to 5.6 of the order and allowed the assessee appeal which is read as under;

"5.2 I find that even before the impugned order was passed, the Honble Tribunal had quashed the order of the Pr.CIT. Therefore, the order of the Pr.CIT had ceased to exist before the passing of the impugned order. Therefore, the impugned order which was passed pursuant to the order of the Pr.CIT is void. I, therefore, annul the assessment u/s 251(1) 1 (a) of the Act. In this connection, reliance is placed on the decision of CIT'Vs. Adit Deetopers [2013] 39 taxmann.com 109 (Bombay) wherein the Honble Bombay High Court has held that where order of revision passed by the Commissioner u/s. 263 of the Act had been set aside, the assessment order passed u/s. 143(3) r.w.s. 263 of the Act in pursuance of such revision order automatically became infructuous.

5.3 In the case of CIT Vs. Saravana Developer [2016] 68 taxmann.com 148 (Rar.), the Hon'ble Karnataka High Court has held that:

"21. The ITAT having considered the material placed before it, rightly set-aside the order passed under Section 263 of the Act, as not sustainable. Accordingly, the assessee's appeal is allowed as the consequential order passed under Section 143(3), read with Section 263 of the Act does not survive for consideration as having become infructuous. No exception can be found with the reasoned order passed by the ITAT."

5.4 In the case of Yes Bank Ltd. Vs. DCIT (I.T.A. No. ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai -6- 1100/Mum-2014) (Order dated 28.09.2015, the Hon'ble Mumbai Tribunal has held that:

"2. The section and the subsection under which the assessment is made makes .z!dear that the original assessment order was set aside by the, CIT invoking the powers conferred upon him by the provisions of section 263 of the Act. We find that the order of the CIT made u/s. 263 of the Act was appealed by the assessee before the Tribunal and the Tribunal in ITA No.23/Mum/2012, qua pare 27 and 28 of its order has held the revision proceedings infirm and illegal and consequentially restored the regular assessment dated 31.10.2009.

3. "Sublato fundament° cadit opus" meaning thereby that, in case the foundation is removed, super structure falls. In the present case also the foundation i.e. order made u/s. 263 has been removed by the Tribunal in ITA No.23/Mum/2012, hence the structure i.e. the assessment made u/s. 143(3) rw.s- 263 of the Act falls. Hence, the appeal filed by the assessee becomes otiose."

5.5 Further, in the Appellant own case in A.Y. 2011-12, the Pr.CIT has passed the order u/s 263 of ,the Act. The Hon'ble Tribunal had quashed the order of the Pr.CIT jr I.T.A. No. 3330/Mum/2016 dated 23.12.2016. The order of Pr.C1T had ceased to exist since the Hon'ble Tribunal has quashed the order of the Pr.CIT. However, the AO has passed the reassessment order u/s 143(3) r.w.s. 263 of the Act in pursuant to the order passed by the Pr.CIT af ter quashing the order of the Pr.CIT by the Hon'ble Tribunal. In that case, my predecessor has held that the impugned order passed u/s 143(3) r.w.s. 263 of the Act which was passed pursuant to the order of the Pr.CIT is void. Therefore, my predecessor annulled the reassessment order u/s 251(1)(a) of the Act. 5.6 In the light of the discussions in para 5.1 to- para 5.5, I annul the reassessment order passed u/s 143(3) r.w.s. 263 of the Act dated 06.12.2017 u/s 251(1)(a) of the Act. In the result, ground of appeal No. 1 is allowed."

M/s Reliance Money Infrastructure Ltd., Mumbai -7-

4. Aggrieved with the Ld.CIT(A) order, the revenue has filed the appeal with the Hon'ble Tribunal. At the time of Hearing, the Ld.DR submitted that the Ld.CIT(A) has erred in annulling the assessment order passed u/s 143(3) r.w.s 263 of the Act relying on the Hon'ble Tribunal decision. Further, the Ld.DR emphasized that the revenue has not accepted the decision and the order of the Hon'ble tribunal is contested before the higher forums. Contra, the Ld. AR supported the order of the CIT(A) and filed the paper book and further relied on the order of the Hon'ble Tribunal for the A.Y 2012-13 and prayed for dismissal of revenue appeal.

5. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue that the revenue is contesting against the order of the Ld.CIT(A) annulling the assessment order passed u/sec143(3) r.w.s 263 of the Act based on the decision of assessee's own case for the same assessment year were the Hon'ble tribunal has treated the revision order passed u/sec263 of the Act as invalid. The contentions of the Ld.DR are that the Hon'ble Tribunal decision is not accepted by the revenue and appeal u/sec260A of the act was filed before the jurisdictional Hon'ble High court. We find that the Hon'ble Tribunal in ITA.No.3259/Mum/2017 ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai -8- dated 6-10-2017 has observed at page 54 para 26 and 27 of the order, which is read as under;

"26. In view of the foregoing discussions , we note that the AO has passed the assessment order af ter obtaining and calling for detail s/clarifications of all the seven issues raised by the Pr CIT in the revisionary proceedings and thereafter framed the assessment whereas the ld Pr.CIT has not specified in his order as to how the order of the AO is erroneous so as to prejudicial to the interest of the revenue. The Pr. CIT has even made roving direction that the AO may examine any other issue which may come to his notice in the set aside proceedings. Thus evidently it is not a case of no inquiry or wrong application of law or wrong assumption of facts and therefore the revisionary jurisdiction exercised by the PCIT is not proper and as per the provisions of the section itself. We are of the considered opinion that in the present case the AO has specifically called for explanation from the assessee on all points during the course of assessment proceeding and thereaf ter has taken a possible view. Moreover, it is not necessary for the AO to give detailed findings or elaborate in the assessment order on each and every issue which has been examined during the course of scrutiny proceedings. Besides, the case of the assessee is squarely covered by the ratio laid down in the various case laws referred to by the ld AR discussed briefly hereinabove while a series of cases relied upon by the revenue have been carefully perused and are found to be distinguishable on facts and are not applicable. The amendment to section 263 is also prospective. Thus, the reversionary proceedings u/s 263 of the Act are not validly initiated in view of the facts that the issues raked up by the Pr.CIT stand examined by the AO in the assessment proceedings and the ld Pr CIT has failed to state as to how the order of AO is erroneous and not in accordance with law or settled legal position. Even on merit, the assessee is entitled to all the deductions/claims as per the provisions of the Act. Considering all these facts in totality and respectfully following the ratio laid down in the various decisions of the ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai -9- Jurisdictional and other High Courts ,we are of the considered view that the jurisdiction by the Pr.CIT u/s 263 of the Act was invalidly assumed. Accordingly we set aside the proceedings u/s 263 of the Act as being invalid and also consequent order of PCIT u/s 263 of the Act.

27. In the result, the appeal of the assessee is allowed.

6. When the revision order u/s 263 of the Act was set-aside being invalid and any subsequent proceedings shall become infructuous. The Ld.DR could not controvert the findings of the Ld.CIT(A) with any new cogent material or information but relied on the Assessing officer order. Accordingly, we do not find any infirmity in the order of Ld.CIT(A) who has relied on the Hon'ble tribunal decision and passed a reasoned order and we upheld the same and dismiss the grounds of appeal of the Revenue.

7. In the result, the appeal filed by the revenue is dismissed.

Order pronounced in the open court on 18.03.2021 Sd/- Sd/-

(RAJESH KUMAR) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 18.03.2021 KRK, PS ITA No. 2300/Mum/2019 M/s Reliance Money Infrastructure Ltd., Mumbai

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Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. संबं धत आयकर आयु त / The CIT(A)

4. आयकर आयु त(अपील) / Concerned CIT

5. वभागीय !त!न ध, आयकर अपील$य अ धकरण, अहमदाबाद / DR, ITAT, Mumbai

6. गाड) फाईल / Guard file.

आदे शानुसार/ BY ORDER, स या पत !त //True Copy//

1. ( Asst. Registrar) ITAT, Mumbai