M/s. Rohan Promoters & Builders,, Pune v. Pr. Commissioner of Income-tax : 2,,

ITA 529/PUN/2015 | 2010-2011
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 52924514 RSA 2015
Assessee PAN AAAAR4222N
Bench Pune
Appeal Number ITA 529/PUN/2015
Duration Of Justice 2 year(s) 7 month(s) 6 day(s)
Appellant M/s. Rohan Promoters & Builders,, Pune
Respondent Pr. Commissioner of Income-tax : 2,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Date Of Final Hearing 25-10-2017
Next Hearing Date 25-10-2017
Last Hearing Date 24-08-2017
First Hearing Date 24-08-2017
Assessment Year 2010-2011
Appeal Filed On 24-04-2015
Judgment Text
] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / ITA NO.529/PUN/2015 / ASSESSMENT YEAR : 2010-11 M/S. ROHAN PROMOTERS & BUILDERS O/O.KHANDELWAL JAIN & ASSOCIATES 1 ST FLOOR ALANKAR CINEMA BUILDING NEAR PUNE RAILWAY STATION PUNE 411 001. PAN : AAAAR4222N. . / APPELLANT V/S PRL.COMMISSIONER OF INCOME TAX-2 PMT BUILDING SWARGATE PUNE 411037. . / RESPONDENT ASSESSEE BY : SHRI R.G. NAHAR. REVENUE BY : SMT. NIRUPAMA KOTRU. / ORDER PER ANIL CHATURVEDI AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF PRL.COMMISSIONER OF INCOME TAX (PCIT) - 2 PUNE DT.31.03.2015 FOR THE ASSESSMENT YEAR 2010-11 PASSED U /S 263 OF THE ACT. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN AOP ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 20 10-11 ON / DATE OF HEARING : 25.10.2017 / DATE OF PRONOUNCEMENT: 30.11.2017 2 28.09.2010 DECLARING TOTAL INCOME OF RS.8 61 75 690/-. THE CA SE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 18.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.8 62 36 839/-. SUBSEQUE NTLY ON EXAMINATION OF RECORDS OF ASSESSMENT LD.PCIT NOTICED THAT IN THE PROFIT AND LOSS ACCOUNT SUBMITTED BY THE ASSESSEE IT HAD CLAIMED PROVISION OF EXPENSES AMOUNTING TO RS.62 07 924/- BU T NO DETAILS REGARDING THE SAME WERE FILED BY THE ASSESSEE AND THE CLAIM WAS ALLOWED BY AO. IT WAS ALSO NOTICED BY HIM THAT ONE OF THE MEMBERS OF AOP NAMELY ROHAN BUILDERS AND DEVELOPERS PVT . LTD. HAD MADE ADDITION IN THE CAPITAL ACCOUNT OF AOP TO THE T UNE OF RS.14 27 20 561/- BUT NO DETAILS REGARDING THE SOURCE OF AD DITION TO THE CAPITAL ACCOUNT WERE SUBMITTED BY THE ASSESSEE AND THE SAME WAS ACCEPTED AND ALLOWED BY AO. HE NOTED THAT T HE RECORD SHOWED THAT THE AO HAD COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT WITHOUT APPLICATION OF MIND AND WITHOUT CONDUCTING ENQUIRIES / VERIFICATION ON THE AFORESAID TWO ISSUES. LD.PCIT WAS THEREFORE OF THE VIEW THAT THE ORDER PASSED BY THE AO U/S 143(3) OF THE ACT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HE ACCORDINGLY ISSUED SHOW-CAUSE NOTICE U/S 263 OF TH E ACT ON 24.03.2015 AND CALLED UPON THE ASSESSEE TO SHOW CAUSE A S TO WHY THE ORDER U/S 263 OF THE ACT NOT BE PASSED. IN RESPO NSE TO NOTICE OF LD.PCIT IT WAS INTER-ALIA SUBMITTED BY THE ASSESSEE T HAT ALL THE REQUIRED DETAILS CALLED FOR BY AO FROM TIME-TO-TIME WERE FUR NISHED BY THE ASSESSEE INCLUDING THE ISSUES RAISED IN THE IMPUGNE D NOTICE. THE ASSESSEE ONCE AGAIN FURNISHED THE DETAILS WITH RESPEC T TO THE AFORESAID TWO ISSUES AND IT WAS FURTHER SUBMITTED THAT TH E 3 PROVISIONS OF SEC.263 OF THE ACT WERE NOT ATTRACTED IN TH E PRESENT CASE. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACC EPTABLE TO LD.PCIT. HE THEREFORE VIDE ORDER DT.31.03.2015 HELD THAT THE ORDER DT.18.03.2013 U/S 143(3) PASSED BY THE AO TO BE WITHOUT P ROPER EXAMINATION OR VERIFICATION AND THEREFORE THE ASSESSMENT O RDER TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERE STS OF REVENUE. HE ACCORDINGLY SET-ASIDE THE ASSESSMENT ORDE R AND DIRECTED THE AO TO VERIFY THE SOURCE OF ADDITION TO THE CAPITAL ACCOUNT AND CLAIM OF EXPENSES AND THEREAFTER PASS DEN OVO ORDER. AGGRIEVED BY THE ORDER OF LD.PCIT ASSESSEE IS NOW IN AP PEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND : ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS AND SCHEME OF THE ACT IT BE HELD THAT T HE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX U/S 263 IS WI THOUT SATISFYING THE REQUIREMENTS OF THE SAID SECTION AND WITHOUT PROPERLY RESUMING THE JURISDICTION OF THE SAID SECTION. THE ORDER PASSED U/S 263 BE HELD TO BE UNWARRANTED UNJUSTIFIED AND CON TRARY TO THE PROVISIONS OF THE ACT. THE ORDER SO PASSED BE CAN CELLED 3. BEFORE US THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LD.PCIT AND FURTHER SUBMITTED THAT IN THE PRESENT CASE THE PRE-REQUISITE CONDITIONS SPECIFIED U/S 263 WERE NOT SATISFIED AND THEREFORE THE PROCEEDINGS U/S 263 LACKS JURISDICTION AND ARE BAD IN LAW. HE SUBMITTED THAT U/S 263 THE CIT CAN REVISE AN OR DER PASSED BY THE AO ONLY ON THE SATISFACTION OF TWIN CONDITIO NS NAMELY (I) THE ORDER IS ERRONEOUS AND (II) IT IS PREJUDICIAL T O THE INTEREST OF REVENUE. IF ONE OF THEM IS ABSENT I.E. IF EITHER T HE ORDER OF THE REVENUE IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL T O THE INTEREST OF REVENUE RECOURSE CANNOT BE HAD TO SEC.2 63(1). HE FURTHER SUBMITTED THAT THE ERROR ENVISAGED BY SEC.263 IS NOT ONE 4 WHICH DEPENDS ON POSSIBILITY OR GUESSWORK BUT IT SHOULD BE AN ACTUAL ERROR EITHER OF FACTS OR OF LAW. HE FURTHER SUBMITTED THAT WHEN TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE V IEW WITH WHICH THE CIT DOES NOT AGREE THE ORDER OF THE AO CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF TH E REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW AN D FOR THE AFORESAID PROPOSITION HE RELIED ON THE DECISION IN THE C ASE OF MALABAR INDUSTRIAL CO. LTD. VS CIT (2000) 243 ITR 83 (SC). 4. WITH RESPECT TO THE ISSUE OF PROVISION OF EXPENSES OF RS.62 07 924/- HE SUBMITTED THAT THE ACTUAL EXPENSES OF RS.56 86 664/- WERE INCURRED DURING THE YEAR AND THE EXC ESS PROVISION OF RS.5 21 260/- WERE WRITTEN BACK AND ACCORDING LY CONSIDERED AS INCOME IN A.Y. 2011-12 AND IN SUPPORT OF WH ICH HE POINTED TO THE COPY OF THE PROFIT AND LOSS ACCOUNT FOR T HE PERIOD ENDING 31.03.2011 PLACED AT PAGE 14 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT IN THE ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S. 147 OF THE ACT VIDE ORDER DT.23.03.2016 FOR A.Y. 2010-11 (WHICH IS SUBSEQUENT TO THE ORDER OF LD.PCIT PASSED U/S 263 OF T HE ACT) THE FINDING OF THE AO WAS THAT THE EXCESS PROVISION OF RS.5 21 26 0/- SHOULD HAVE BEEN WRITTEN BACK IN A.Y.2010-11 ITSELF AND N OT IN A.Y. 2011-12 AND THEREFORE ADDITION OF RS.5 21 260/- WAS MAD E IN THE ORDER. LD.A.R. POINTED TO THE RELEVANT ORDER PLACED AT PAGES 8 TO 10 OF THE PAPER BOOK. LD.A.R. FURTHER SUBMITTED THAT IN THE ASSESSMENT FRAMED U/S 143(3) R.W.S. 147 OF THE ACT NO ADD ITION ON ACCOUNT OF CAPITAL INTRODUCTION BY ROHAN BUILDERS AND DEV ELOPERS AT RS.14.27 CRORES (ROUNDED OFF) WAS MADE DESPITE THE ORD ER BEING SUBSEQUENT TO THE ORDER PASSED BY LD.CIT U/S 263 OF THE ACT 5 WHICH ACCORDING TO LD.A.R. MEANS THAT THERE WAS NO LOSS OF REVENUE AND THE ORDER PASSED BY THE AO WAS NOT ERRO NEOUS AND IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . LD.A.R. FURTHER PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. (1993) 203 ITR (BOM) SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT HAS H ELD THAT THE SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF JUDGMENT OF THE COMMISSIONER FOR THAT OF AO WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. HE T HEREFORE SUBMITTED THAT IN THE PRESENT CASE THE ORDER OF LD.CIT PASSED U/S 263 NEEDS TO BE SET ASIDE BOTH ON THE GROUND OF JURIS DICTION AND ON MERITS. LD.D.R. ON THE OTHER HAND SUPPORTED THE ORD ER OF LD.CIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABO UT THE INVOKING OF PROVISIONS OF SECTION 263 BY COMMISSIONER OF INCO ME TAX. SEC.263(1) OF THE ACT THE POWERS UNDER WHICH CIT H AS ASSUMED POWER FOR REVISION READS AS UNDER: THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECO RD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. THE READING OF THE ABOVE PROVISIONS MAKES IT VERY CLEAR T HAT THE POWER OF SUO MOTU REVISION U/S 263(1) IS IN THE NATURE OF 6 SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED O NLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MU ST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REV ISION U/S 263 NAMELY (I) THE ORDER IS ERRONEOUS (II) BY VIRTUE OF BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. HONBLE APEX COURT IN THE CASE OF MALABAR IND USTRIAL CO LTD (SUPRA) HAS HELD THAT CIT HAS TO BE SATISFIED OF TWIN C ONDITIONS NAMELY (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ER RONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. I F ONE OF THEM IS ABSENTIF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO SEC. 263(1). IT WAS FURTHER HELD THAT THE PROVISION CANNOT BE INVOKED TO COR RECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE A O; WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIB LE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGR EE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSU STAINABLE IN LAW. 6. IN THE CASE OF CIT VS. GABRIEL INDIA LTD (SUPRA) THE HO NBLE BOMBAY HIGH COURT HAS HELD AS UNDER: AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT I S NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT THE SAME CANNOT BE BRANDED AS E RRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DO ES NOT VISUALISE A CASE OF SUBSTITUTION OF JUDGMENT OF THE COMMISSION ER FOR THAT OF 7 THE ITO WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS MAKES ENQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKIN G SOME ESTIMATES HIMSELF. THE COMMISSIONER ON PERUSAL OF THE RECORDS MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE CO MMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN THE ONE DETERMINED BY THE ITO. THAT WOULD NOT VEST THE COMM ISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE ITO HAS EXERC ISED THE QUASI- JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION I S PREJUDICIAL TO THE INTEREST OF THE REVENUE. BUT THAT BY ITSELF WIL L NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REV ISION BECAUSE THE FIRST REQUIREMENT NAMELY THE ORDER IS ERRONEO US IS ABSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICI AL TO THE INTEREST OF THE REVENUE THEN ALSO THE POWER OF SUO MOTU REVISI ON CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE SUBJECT-MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUS T BE FULFILLED. 7. IN THE PRESENT CASE IT IS SEEN THAT LD.CIT HELD THAT THE ORDER TO BE ERRONEOUS ON TWO GROUNDS NAMELY NON-EXAMINATION OF THE PROVISION OF EXPENSES AMOUNTING TO RS.62.07 LAKHS (ROUNDED OFF) AND NON-VERIFICATION OF THE CAPITAL INTRODUCTION BY ROHAN BU ILDERS AND DEVELOPERS LIMITED TO THE CAPITAL IN AOP TO THE TUNE OF RS.14.27 CRORES. WE FIND THAT PRIOR TO THE PASSING OF ORDE R U/S 263 DT.31.03.2015 PROCEEDINGS U/S 147 WERE INITIATED BY ISSUING NOTICE U/S 148 DT.30.03.2015. SUBSEQUENTLY ORDER WAS PASSED U /S 143(3) R.W.S. 147 OF THE ACT WHEREIN NO ADDITION WITH RESP ECT TO CAPITAL INTRODUCTION BY ROHAN BUILDERS AND DEVELOPERS WA S MADE BY THE AO MEANING THEREBY THAT THERE WAS NO ERROR IN THE ORIGINAL ORDER PASSED BY AO U/S 143(3) OF THE ACT. WITH RESPEC T TO THE PROVISION OF EXPENSES WE FIND THAT AO HAD NOTED THAT TH E AMOUNT OF RS.5.21 LACS SHOULD HAVE BEEN WRITTEN BACK IN THE YEAR UNDER CONSIDERATION AND NOT IN A.Y. 2011-12 AS DONE BY THE ASS ESSEE 8 MEANING THEREBY THAT HE HAD ADOPTED A VIEW ON THE ISSU E. THE VIEW ADOPTED BY THE AO IS NOT AN ERRONEOUS VIEW OR CON TRARY TO LAW. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS WE AR E OF THE VIEW THAT IN THE PRESENT CASE THE PROVISIONS OF SEC.263 OF THE ACT COULD NOT HAVE BEEN RESORTED AND FOR WHICH WE DRAW SUP PORT BY THE DECISION OF MUMBAI HIGH COURT IN THE CASE OF GABRIAL IND IA LIMITED (SUPRA). BEFORE US REVENUE HAS NOT PLACED ANY MAT ERIAL ON RECORD TO DEMONSTRATE THAT THE VIEW TAKEN BY THE AO WAS AN IMPERMISSIBLE VIEW AND WAS CONTRARY TO LAW OR WAS UPON E RRONEOUS APPLICATION OF LEGAL PRINCIPLES NECESSITATING THE EXERCISING OF REVISIONARY POWERS U/S 263. IN VIEW OF THE AFORESAID FACTS WE FIND THAT IN THE PRESENT CASE LD.PCIT WAS NOT JUSTIFIED IN RE SORTING TO REVISIONARY POWERS U/S 263 OF THE ACT. WE FURTHER FIND THAT THE AO HAS NOT PASSED ANY CONSEQUENTIAL ORDER TO ORDER O F CIT AND ON THIS TECHNICAL GROUND ALSO THE ORDER OF REVISION U/S 263 D O NOT SURVIVE. WE THEREFORE SET ASIDE THE ORDER AND THUS THE GROUND OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 30 TH DAY OF NOVEMBER 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 30 TH NOVEMBER 2017. YAMINI 9 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. PR.CIT-2 PUNE. ADDL.CIT RANGE-3 PUNE. '#$ %%&' ) &' / DR ITAT B PUNE; $+ -/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &' / ITAT PUNE.