Income Tax Appellate Tribunal - Mumbai
Karthik Financial Services Ltd, Mumbai vs Cit 5, Mumbai on 26 February, 2019
1 आयकर अपीलीय अिधकरण "एच" ायपीठ मुंबई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI माननीय ी मनोज कुमार अ वाल, लेखा सद एवं माननीय ी रवीश सूद , ाियक सद के सम ।
BEFORE HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON'BLE SHRI RAVISH SOOD, JM आयकर अपील सं ./I.T.A. No.4132/Mum/2013 (िनधा रण वष / Assessment Year: 2008-09) Karthik F inancial Services Ltd . Commissi oner o f Income Ta x-5 Essar House, 11 बनाम/ Aa yk ar Bhawan Keshavrao Kha dye Marg V s. Mum bai - 400 020 Mahal axmi , Mum bai - 400 034 था यी ले खासं ./PAN : AABCK-0657-P (अपीलाथ!/Appellant) : ("#थ! / Respondent) Assessee by : Shri Vijay Mehta & Anuj Kisnadwala, Ld. ARs Revenue by : Shri Suhas Kulkarni, Ld. DR सुनवाई की तारीख/ : 28/12/2018 Date o f Hearing घोषणा की तारीख / : 26 /02/2019 Date of P ronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeal by assessee for Assessment Year [AY] 2008- 09 contest the invocation of revisional jurisdiction u/s 263 by Ld. Commissioner of Income-Tax-5 [CIT], Mumbai on 26/03/2013. Although the assessee has raised as many as 10 grounds of appeal, the effective main ground of appeal is ground number-3 whereas the other grounds are in support of the main ground. Ground Number-3 reads as under: -
2The assumption of jurisdiction under Section 263 of the Act by CIT is beyond the scope of provisions contained in Section 263 of the Act. Therefore, the order is not sustainable in law and liable to be quashed.
2.1 Facts germane to the issue are that the assessee being resident corporate entity stated to be an investment company engaged in investment in shares and debentures of unlisted companies was assessed for impugned AY in scrutiny assessment u/s 143(3) on 24/12/2010 accepting returned loss of Rs.552.34 Lacs reflected by the assessee in its return of income e-filed on 20/09/2008. The said loss comprised-off of Business Loss of Rs.0.15 Lacs and Long-Term Capital Loss [LTCL] of Rs.552.18 Lacs.
2.2 Subsequently, upon perusal of case records, the aforesaid order was subjected to revisional jurisdiction u/s 263 by Ld. CIT vide show-
cause notice dated 12/02/2013 wherein the stated order was held to be erroneous and prejudicial to the interest of the revenue on following grounds: -
(i) During the year, it was noticed that the purchase cost of shares in respect of M/s Shipping Dot Com India Pvt. Ltd. is at Rs.5,71,00,000/- and M/s Essar Spactel Pvt. Ltd. is at Rs.22,97,48,750/-. However, in the balance sheet, the amount is reflected at Rs.28,69,48,650/-. Thus, there is a difference of Rs,1,00,100/- in the purchase value of shares. Therefore, the AO has failed to examine this issue correctly.
(ii) On perusal of the details of the sundry debtors submitted by the assessee, it is seen that there is a mistake in computation of closing balance of sundry debtors. The opening balance during the year was at (-) Rs.4,87,51,050/-, the addition was Rs.16,19,42,600/- and deletion / reduction during the year was at Rs.20,58,21,700/-. Hence, the value of closing debtors should be at (-) Rs.9,26,30,150/- instead of Rs.48,71,950/. The assessing officer has failed to verify this issue.
(iii) The business of the assessee company has been described as investment in shares and debentures of unlisted Companies. Therefore, the sale amount is to be treated as turnover and nature of income should 3 be shown as business income instead of capital gain as claimed by the assessee company.
(iv) Further, it is seen that statutory audit u/s 44AB of the Act was not done.
The AO has failed to initiate penalty proceedings on this account.
2.3 Although the assessee defended the same vide replies dated 01/03/2013 & 08/03/2013, however, the same could not find favor with Ld. CIT. Resultantly, finding no merits in assessee's submissions, the assessment order was cancelled u/s 263 and Ld. AO was directed to pass the assessment order de novo after affording reasonable opportunity of being heard to the assessee. The assessee, in its replies, rebutted the observation of revisional authority by pointing out that there was no difference in cost of shares reflected in the Balance Sheet. Regarding sundry debtors balances, it was submitted that there was only a typographical error in mentioning the amount of opening balance which was shown as negative instead of a positive amount. The assessee further submitted that investments were held as capital investments and not as stock-in-trade and therefore, resultant profits / gains were rightly assessable under the head Capital Gains as done by Ld. AO and consequentially, the provisions of Section 44AB were not applicable to the facts of the case. However, rejecting the same, Ld. CIT upheld the revisional jurisdiction and directed the Ld. AO to reframe the assessment as under: -
5. In the light of the above facts, the assessment order passed is hereby cancelled u/s 263 of the Act. The A.O. is directed to pass the assessment order de novo after according adequate opportunity of hearing to the assessee.4
Aggrieved by aforesaid directions, the assessee is in further appeal before us.
3.1 The Ld. Authorized Representative for Assessee [AR], Shri Vijay Mehta, drawing our attention to the financial statements as well as other documents as placed in the paper-book, vehemently contested the above stated observations made by Ld. CIT on which the assessment framed by Ld. AO was held to be erroneous and prejudicial to the interest of the revenue. It was submitted that revision was being invoked on erroneous assumption of facts. Reliance was placed on catena of judicial pronouncements, few of which could be tabulated in the following manner: -
No. Case Laws Authority Citation
1. ACIT Vs. J.K.D'Costa Hon'ble Delhi High 133 ITR 7
Court SLP dismissed (147 ITR 1]
2. Smithkline Beecham Consumer ITAT, Chandigarh 68 ITD 163
Healthcare Ltd. Vs DCIT
3. Century Plyboards (I) Ltd. Vs CIT ITAT, Kolkata ITA No. 643/Kol/2014
20/01/2016
4. Sterling Biotech Ltd. Vs CIT ITAT, Mumbai ITA 2750-56/Mum/2016
29/06/2016
5. Surya Alloy Industries Ltd. Vs CIT ITAT, Kolkata ITA No. 769/Kol/2013
04/03/2015
6. Rashtriya Chemicals & Fertilizers Ltd. Vs ITAT, Mumbai ITA No. 3265/Mum/2017
CIT 14/02/2018
CIT must examine the explanation given by assessee before setting aside the matter
7. Metacaps Engineering & Mahendra ITAT, Mumbai 86 Taxmann.com 128 Construction Co.JV 8 CIT Vs Vikas Polymers Hon'ble Delhi High 341 ITR 537 Court
9. CIT Vs DG Housing Projects Ltd. Hon'ble Delhi High 343 ITR 329 Court
10. CIT Vs Superman Knitters P Ltd Hon'ble P & H High 387 ITR 494 Court
11. AV Industries Vs ACIT ITAT, Mumbai ITA No. 3469/Mum/2010 26/11/2015
12. Gaurav Mathrawala Vs CIT ITAT, Mumbai ITA No. 2378/Mum/2015 06/01/2016 5 3.2 Per Contra, Ld. Departmental Representative [DR] submitted that non-consideration of certain vital aspects, as noted by Ld. CIT, while framing the assessment made the order erroneous as well as prejudicial to the interest of the revenue and therefore, the jurisdiction was rightly invoked which was the only recourse available to revenue under the circumstances.
4.1 We have carefully heard the rival contentions and perused relevant material on record including impugned order, Assessment framed by Ld. AO, documents placed in the paper book, financial statement, Memorandum & Articles of Association of the Assessee company and judicial pronouncements as relied upon by respective representatives before us.
4.2 Upon perusal of impugned order, it is noted that the assessment order has been held to be erroneous & prejudicial to the interest of the revenue mainly on four grounds, each of which has been dealt with by us in the succeeding paragraphs.
4.3 The first ground which has led the Ld. CIT to form the aforesaid belief is the fact that there was a difference of Rs.1,00,100/- in the purchase value of certain shares reflected by the assessee in the Balance Sheet. The cost of shares, as per Ld. CIT, should have been Rs.28,68,48,750/- as against Rs.28,69,48,650/- reflected by the assessee in the Balance Sheet. However, upon perusal of Balance Sheet as kept on page no. 6 of the paper-book, it is observed that as on 31/03/2007 the value of shares of Shippingstop Dot com (I) P. Ltd. & Essar Spacetel P. Ltd. has been reflected as Rs.5,71,00,000/- & 6 Rs.22,97,48,750/- respectively. The aggregate of the two comes to Rs.28,68,48,750/- which matches with the correct amount as noted by Ld. CIT. The statement of long-term capital loss as per assessee's computation of income has been placed on page-24 of the paper book. The figures stated in this statement are in total agreement with computation of income, profit & loss account and purchase cost as reflected in the balance sheet. The figures as on 31/03/2008 are reflected as nil. Apparently, the figures of Rs.28,69,48,650/- as noted by Ld. CIT has been picked up from cash flow statement as placed on page no. 10 of the paper book. However, the figures reflected in the cash flow statement also completely matches with the Balance Sheet of the assessee. Hence, we find the stated observation to be factually incorrect and therefore, there could not no occasion to consider the assessment order erroneous on this point.
4.4 The aforesaid conclusion is further fortified by the fact that during quantum assessment proceedings, the assessee, vide replies dated 03/08/2010, 15/12/2010 & 20/12/2010 [page nos. 12 to 24] had submitted the computation of detailed head-wise working of income, party-wise details of purchases & sales above Rs.10 Lacs, Long Term Capital Gains / loss workings as per Income Tax Act and profit / loss as per books of accounts on sale of investments which indicate that there was no discrepancy in the figures of cost of shares as reflected in the Balance Sheet and as reflected in the computation of income. All these details were made available with Ld. AO, who with due application of mind as well as after due examination, accepted the 7 assessee's working. Consequently, the observations made by Ld. CIT on this account are factually incorrect and therefore the same could not form the basis of invoking revisional jurisdiction u/s 263. 4.5 The second observation made by Ld. CIT stem from the fact that closing value of a sundry debtor namely Essar Investments Ltd., as per Ld. CIT should have been Rs. (-)9,26,30,150/- as against Rs.48,71,950/- reflected by the assessee in the books of accounts, as computed in the following manner: -
No. Particulars Amt. (Rs.)
1. Opening Debtors -4,87,51,050/-
2. Additions during the year 16,19,42,600/-
3. Deletion / Reduction during the year -20,58,21,700/-
4. Closing Debtors -9,26,30,150/-
This discrepancy arises in view of the fact that the opening value of sundry debtors, in fact, was a positive value instead of a negative value and the same was merely a Typographical Error which crept in assessee's submissions filed during assessment proceedings to Ld. AO. The detail of the same has been placed on page no. 21 of the paper-book. Nevertheless, the relevant details including the correct balances of sundry debtors were duly filed by the assessee to Ld.AO during assessment proceedings vide its replies dated 15/12/2010 & 20/12/2010, the copies of which have been placed on record. The discrepancy was also duly explained by the assessee vide its reply dated 01/03/2013 in response to show-cause notice issued by Ld. CIT wherein it was submitted that there was typographical error in mentioning the amount of opening balance which was wrongly shown 8 as negative instead of a positive. However, the said typographical error, as per assessee's submissions, had no impact on the Balance Sheet or the assessment order since closing sundry debtors balances were tallying with amount reflected in the Balance Sheet. The account confirmation of the said debtors was also placed on record to fortify the said fact. However, Ld. CIT without considering the explanation / details submitted by the assessee simply set aside the matter. The same, in our opinion, is not line with settled legal position since it was obligatory on the part of Ld. CIT to deliberate upon the replies submitted by the assessee and weigh the same to arrive at a conclusion that whether the order under question, in terms of assessee's reply, could be termed as erroneous as well as prejudicial to the interest of the revenue or not. The co-ordinate bench of this Tribunal, in its decision titled as Metcapas Engineering & Mahendra Construction Co. (JV) Vs. CIT [86 Taxmann.com 128 11/09/2017], which has been authored by one of us, after considering catena of judicial pronouncements, has succinctly put forward the legal position, in this regard, in the following manner: -
4. We have given a thoughtful consideration to the order passed by the CIT and are unable to persuade ourselves to uphold the same. We find that as per the mandate of Sec. 263, a statutory obligation is cast upon the CIT to afford an opportunity of being heard to the assessee, before an order passed by the A.O is revised in exercise of the revisional jurisdiction vested with him under the said statutory provision. The underlying purpose of affording of such an opportunity of being heard to the assessee is to give an opportunity to him to explain as to how the order passed by the A.O on the issues on which the same is sought to be revised by the CIT, is not erroneous and prejudicial to the interest of the revenue. We are of the considered view that the very purpose of affording of an opportunity of being heard to the assessee, on the issues on which the order passed by the A.O is sought to be revised by the CIT would be lost and rendered otiose, in case the reply of the assessee explaining as to why the order sought to be revised is not erroneous and 9 prejudicial to the interest of the revenue is not judicially deliberated upon by the CIT. We are of the considered view that it is obligatory on the part of the CIT to consider the reply of the assessee in respect of the issues on which the order of the A.O is sought to be revised by him. It is only if the conviction of the CIT that the order of the A.O is erroneous and prejudicial to the interest of the revenue outweighs the reply/explanation furnished by the assessee, that the CIT remains vested with the jurisdiction to proceed with and revise the order of the A.O. We though are not oblivious of the fact that the view that an order passed by the A.O is found to be erroneous and prejudicial to the interest of the revenue remains within the exclusive realm of the wisdom of the CIT, but then the legislature by contemplating an opportunity of being heard to the assessee, can thus safely be held to have presupposed due application of mind by the revisional authority before revising the order passed by the A.O. We are of the considered view that the CIT after receiving the reply/objections of the assessee in respect of the issues on which the order of the A.O is sought to be revised, in all fairness, is required to deliberate on the same, and thereafter on the basis of logical reasoning conclude as to whether in the backdrop of the reply/explanation of the assessee can the order of the A.O be characterized as both erroneous and prejudicial to the interest of the revenue. We are of the considered view that mere placing on record the reply/explanation of the assessee on the issues on which the order of the A.O is sought to be revised as a mere formality, would therein render the very affording of opportunity of being heard to the assessee as nothing better than being a farce and an eye wash, defeating the very legislative intent. We are afraid that in the case of the present assessee, though the CIT had placed on record the reply of the assessee in respect of the issues on which the order passed by the A.O was sought to be revised and had also referred about the same in the body of his order passed under Sec. 263, however, neither any reason had been given by the CIT, nor it can be gathered from the impugned order, as to why the explanation of the assessee that the order passed by the A.O was not erroneous and prejudicial to the interest of the revenue on the issues on which it was sought to be revised, was not found to be acceptable. We may clarify that though there is no doubt that the jurisdiction to revise the order passed by the A.O remains within the exclusive domain of the jurisdiction of the CIT, but however, the internal safeguard provided by the legislature by affording an opportunity of being heard to the assessee would fail if the explanation/objections raised by the assessee during the course of such proceedings, therein demonstrating that the order of the A.O is not erroneous and prejudicial to the interest of the revenue are not judicially considered and brought to a logical end by the CIT. We would not hesitate to observe that despite the fact the assessee had during the course of the revisional proceedings placed on record irrebutable material which inescapably established that the order of the A.O was not erroneous and prejudicial to the interest of the revenue in respect of certain issues on which the same was sought to be revised, however, the same did never see the light of the day and except for forming part of the record and finding a mention in the order passed by the CIT u/s 263, were however as a matter of fact never deliberated upon and brought to a logical end by the CIT. We are of the considered view that in the backdrop of the explanation/objections filed by the assessee during 10 the course of revisional proceedings in respect of certain issues on which the CIT had sought to revise the order passed by the A.O under Sec. 143(3), the CIT had failed to point out as to how the order of the A.O was found to be "erroneous". We are of the considered view that in the absence of clear observations of the CIT as to how the order of the A.O after considering the explanation/objections filed by the assessee was found to be erroneous in respect of the said respective issues, thus, can safely be held to have failed the fundamental requirement for valid assumption of jurisdiction as per the mandate of law. We find our aforesaid view to be supported by the judgment of the Hon'ble High Court of Delhi in the case of Vikas Polymers (supra), wherein it was observed, as under: -
"18. We are thus of the opinion that the provisions of s. 263 of the Act, when read as a composite whole make it incumbent upon the CIT before exercising revisional powers to : (i) call for and examine the record, and (ii) give the assessee an opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is only on fulfilment of these twin conditions that the CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interest of the Revenue will not suffice. The assessee must be called, his explanation sought for and examined by the CIT and thereafter if the CIT still feels that the order is erroneous and prejudicial to the interest of the Revenue, the CIT may pass revisional orders. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to the interest of the Revenue, he may choose not to exercise his power of revision. This is for the reason that if a query is raised during the course of scrutiny by the AO, which was answered to the satisfaction of the AO, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the AO called for interference and revision. In the instant case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were income-tax assessees and the unsecured loan taken from M/s Stutee Chit & Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee."11
We find that a similar view was also arrived at by the Hon'ble High Court of Punjab & Haryanain the case of CIT v. R.K. Metal Works [1978] 112 ITR 445, wherein stressing on the statutory obligation on the part of the CIT to deal with the points raised by the assessee in its explanation/objection filed with him during the course of the revisional proceedings to show that the order passed by the A.O was not erroneous and prejudicial to the interest of the revenue, in context of the issues on which it was sought to be revised, the Hon'ble High Court held as under:-
"There is no indication in the order of the CIT as to the basis on which he came to the prima facie conclusion that the capital borrowed by the firm was utilised for purposes other than that of the firm's business. When the assessee filed a detailed written statement before him, the CIT did not deal with any of the points raised in the statement. He thought that the best course in the circumstances was to remand the matter to the ITO for consideration of the points raised in the assessee's written statement. That certainly was not the proper course to be adopted by him. It was necessary for the CIT to state in what manner he considered that the order of the ITO was erroneous and prejudicial to the interests of the Revenue and what the basis was for such a conclusion. After indicating his reasons for such a conclusion, it would certainly have been open to him to remand the matter to the ITO for such other investigation or enquiry as might be necessary."
Similar proposition has been laid out in other case laws tabulated in para 3.1 at serial numbers 8 to 12 above. Upon due consideration of factual matrix, we find that the above discrepancy as observed by revisional authority stood explained by the assessee during assessment proceedings as well as during revisional proceedings which is further evident from the fact that sundry debtors balances as reflected in the Balance Sheet matches with the details filed by the assessee during assessment proceedings as supported by confirmation of accounts filed by the assessee in respect of concerned sundry debtor. Last but not the least, the alleged discrepancy, viewed from any angle, would have no bearing on assessee' income during impugned AY and therefore, there could be no occasion to term the assessment order as prejudicial to the interest of the revenue on this 12 account. This being the case, the twin conditions as envisaged by Section 263 viz. the orders should be erroneous as well as prejudicial to the interest of the revenue, remained unfulfilled on this issue. We hold so. Consequently, the revisional jurisdiction, as invoked by Ld. CIT, on this issue, could not be sustained in the eyes of law. 4.6 The third ground on which the revision has been sought is the fact that sale of investment, in the opinion of Ld. CIT, was to be treated as assessee's turnover and the resultant income should have been assessed under the head Business Income instead of Capital Gains as accepted by Ld. AO. The Ld. AR has submitted that the assessee had all along been making investments in shares and income derived therefrom has regularly been assessed under the head capital gains as evident from assessment orders of various other assessment years as placed on record and therefore, following rule of consistency, the revenue was debarred from changing his stand on this point particularly when there was no change in material facts. It has further been submitted that the assessee has consistently shown its intentions to hold the shares as investments only and not as stock- in-trade which is evident from the financial statements and borne out of the fact that the assessee carried out only two sales transactions of shares during the impugned AY. Further, the assessee's claim, on merits, was duly examined as well as verified by Ld. AO during assessment proceedings and the resultant gains / losses were accepted under the head capital gains with due application of mind.
13Since, the action of Ld. AO was one of the possible views, the order under question could not be said to be erroneous, in any manner. 4.7 We have duly considered the submissions on this point. Upon careful consideration of financial statements, it is undisputed fact that the shares held by the assessee, has all along, been reflected under the head investments rather than as stock-in-trade which is further fortified by the fact that the investments are valued at cost as against stock-in-trade which is generally valued at lower of cost or market price. It is settled legal position that it is possible for the assessee to maintain two portfolios i.e. an investment portfolio held as capital asset giving rise to income / loss under the head capital gains and trading portfolio held as stock-in-trade giving rise to income / loss under the head business income which has also been accepted by CBDT in circular No. 4 of 2007. Further Hon'ble Apex Court in CIT v. Associated Industrial Development Co. (P.) Ltd. [1971] 82 ITR 586 (SC) has observed that: -
"Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment."
It is also undisputed fact that the investments sold by the assessee during impugned AY were long term investments made between AY 2004-05 to 2006-07 and the same were held as investment valued at cost in the Balance Sheet which lend credence to the arguments of Ld. AR, in this regard.
144.8 Proceeding further, we find that the aforesaid position has also been accepted by the revenue by way of acceptance of returned income for AYs 2006-07 as well as for AY 2009-10 in scrutiny assessment u/s 143(3), the copies of which have been placed on record. This is further fortified by undisputed fact that even during set- aside proceedings consequent to impugned order u/s 263, the resultant income from shares has again been assessed under the head Capital Gains only by Ld. AO despite the observation of Ld. CIT that the income should have been assessed under the head business income.
4.9 Another important aspect of the matter is that the assessee, during assessment proceedings u/s 143(3) of impugned AY, had filed complete details of gains / losses under the head capital gains which was duly examined and verified by Ld. AO. Hence, the assessee' claim was accepted with due application of mind and the action of Ld. AO in accepting the income under the head capital gains was certainly one of the possible views which could not be said to be perverse or contrary to law, in any manner. Simply because the resultant income, in the opinion of Ld. CIT, should have been assessed as business income, would not make the assessment order erroneous unless the same is not in accordance with law. We find substantial force in the arguments raised by Ld. AR, in this regard and concur with the submissions made before us. For the same, we draw strength from the following observations of Hon'ble Apex Court rendered in the case of CIT Vs. Amitabh Bachchan [384 ITR 200]: -
1521. There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from......
4.10 The root of last ground on which the jurisdiction has been invoked lies in the fact that statutory audit u/s 44AB, as per Ld. CIT, was not done and Ld. AO failed to initiate penalty proceedings on this account. We find that when the income was assessed under the head capital gains, which was one of the possible views, the same did not constitute assessee's turnover for the purpose of Section 44AB and there could be no occasion for Ld. AO to initiate penalty proceedings against the assessee for non-compliance of the provisions of Section 44AB. Further, it is undisputed fact that other income reflected by the assessee did not exceed the prescribed threshold limit u/s 44AB and therefore, the provisions of Section 44AB were not applicable to the assessee. This being the case, we do not find any error in the quantum assessment order which necessitate revisions by Ld. CIT. 5.1 Proceeding further, Ld. AR has also agitated the blanket set aside of assessment order and submitted that as per settled legal position, only those issues could be subjected to revisional jurisdiction u/s 263 which made the order erroneous and prejudicial to the interest of the revenue and cancellation of complete order would disturb the already concluded issues and result in serious detriment to the assessee which was not the intention of the legislature. It has been 16 submitted that the cancellation of complete order would give another inning to Ld. AO to review the already concluded issues in the guise of revisional proceedings which was not permitted under the law. For this proposition, our attention has been drawn to the following judicial pronouncements: -
No. Case Laws Authority Citation
1. ACIT Vs. J.K.D'Costa Hon'ble Delhi High 133 ITR 7
Court SLP dismissed (147 ITR 1]
2. Smithkline Beecham Consumer ITAT, Chandigarh 68 ITD 163
Healthcare Ltd. Vs DCIT
3. Century Plyboards (I) Ltd. Vs CIT ITAT, Kolkata ITA No. 643/Kol/2014
20/01/2016
4. Sterling Biotech Ltd. Vs CIT ITAT, Mumbai ITA 2750-56/Mum/2016
29/06/2016
5. Surya Alloy Industries Ltd. Vs CIT ITAT, Kolkata ITA No. 769/Kol/2013
04/03/2015
6. Rashtriya Chemicals & Fertilizers ITAT, Mumbai ITA No. 3265/Mum/2017
Ltd. Vs CIT 14/02/2018
The Ld. DR has controverted the same by submitting that computation of capital gains formed entire gamut of the assessment and therefore, the directions were perfectly valid.
5.2 After weighing the rival submissions including assessment order, we find certain force in the argument raised by Ld. AR in view of the fact that under law, Ld. AO is not permitted to review the orders. The cancellation of entire assessment order and direction for reframing of assessment de novo would empower Ld. AO to review the already concluded issues which is not the intention of the legislatures. For this, we draw strength from the following observations made by Hon'ble Delhi High Court in the case of ACIT Vs. J.K.D'Costa [133 ITR 7] as confirmed by Hon'ble Apex Court: -
177. The second question, in our opinion, is also capable of the same simple answer. Though the language of s. 263 is quite wide, it only empowers the Commissioner to pass an order which the circumstances of the case will justify. As the Tribunal has rightly pointed out, the mere fact that there is some minor omission or mistake in the assessment order cannot justify the action of the Commissioner in setting aside the whole of the assessment order. Such a wholesale cancellation of the assessment with a direction to make a fresh assessment is called for only in cases where there is something totally or basically wrong with the assessment which is not capable of being remedied by amendments to the assessment order itself. In the present case, having come to the conclusion that there was a defect in the assessment order in so far as the question of levy of interest was not considered by the ITO, all that the Commissioner had to do was to direct the ITO to consider the question on merits and in accordance with law after giving the assessed an opportunity of being heard. It was not further necessary for him, nor did the circumstances of the case justify, that the whole assessment should be set aside. We need hardly point out that setting aside of assessment wholesale will have far-
reaching consequences under the Act and that the jurisdiction under s. 263 should not be extended so as to result in such far-reaching consequences except where the circumstances call for such a remedial action. We, therefore, also answer the second question in the affirmative and in favor of the assessee.
Similar analogy has been drawn in other decisions of the Tribunal as cited before us & tabulated above. Drawing strength from catena of judicial pronouncements, we conclude that Ld. CIT was not justified in blanket set aside of the assessment order and direct Ld. AO to reframe the same de-novo.
6. Keeping in view the overall facts and circumstances, judicial pronouncements, our observations and conclusions, we are unable to uphold the exercise of revisional jurisdiction u/s 263 by Ld. CIT. Therefore, by setting aside the same, we allow the assessee's appeal.
7. Resultantly, the appeal stands allowed in terms of our above order.
18Order pronounced in the open court on 26th February, 2019.
Sd/- Sd/-
(Ravish Sood) (Manoj Kumar Aggarwal)
याियक सद य / Judicial Member लेखा सद य / Accountant
Accountant Member
मुबं ई, Mumbai; दनांक,Dated : 26/02/2019
Sr.PS. Thirumalesh/Sr.PS:- Jaisy Varghese
आदेशक ितिलिपअ िे षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु (अपील) / The CIT(A)
4. आयकरआयु / CIT- concerned
5. िवभागीय ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai
6. गाड फाईल / Guard File आदेशानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुबं ई / ITAT, Mumbai