Case Law Details

Case Name : Goldgerg Finance P. Ltd. Vs. Asstt. Commissioner of Income Tax (ITAT Mumbai)
Appeal Number : ITA No. 5284/Mum/2009
Date of Judgement/Order : 24/02/2012
Related Assessment Year : 2002- 03
Courts : All ITAT (5321) ITAT Mumbai (1660)

The facts in, brief, are that the assessee is a company carrying business of investment and trading in shares and securities. A search and seizure action took place in the premises of the assessee on two occasions, firstly, on 25/06/03 and secondly on 28/10/04. As a result, assessment orders u/s 143(3) r.w.s 153A were also passed on two occasions, firstly on 27/02/06 and secondly on 28/12/2006, accepting the returned income as assessed income at Rs. 3,42,430/- on both the occasions. Subsequently, a proposal for reopening the impugned assessments u/s 263 was submitted by the AO to the CIT. Accordingly, the CIT vide his order dated 26/03/08 u/s 263 directing the AO to pass an assessment order in the light of directions given by him. Against the order of the AO, the assessee carried the matter in appeal before the CIT(A) and the CIT(A) confirmed the order of the AO observing that in this case the assessment record of the assessee company was called for and it was found by the CIT that the orders u/s 143(3) rws 153A passed on 27/02/06 and 28/12/06 were erroneous and prejudicial to the interests of the revenue as there was prima-facie evidence to show that the sale and purchase transactions of shares were not genuine. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal.

The facts in the case before Hon’ble High Court (supra) are identical to the facts in hand because the assessment order was passed by the AO as per the discussion with CIT and as per the office note dt. 28/12/2006 then the subsequent CIT cannot revise the assessment order. In view of the above discussion, we hold that when the AO has conducted an enquiry and taken a possible view then while exercising the jurisdiction u/s 263, the CIT cannot take a different view. Accordingly, the assessment order cannot be treated as erroneous and prejudicial to the interests of the revenue which can be revised by exercising the power u/s 263. Accordingly, the impugned revision order passed u/s 263 is not sustainable and liable to be set aside.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI

ITA No. 5284/Mum/2009 -Assessment Year: 2002- 03

Goldgerg Finance P. Ltd.

Vs.

Asstt. Commissioner of Income Tax 

Date of Pronouncement: 24/02/2012

ORDER

PER V. DURGA RAO, J.M.:

This appeal filed by the assessee is directed against the order of CIT(A)-Central II, Mumbai, passed on 23/06/2009 for the assessment year 2002- 03.

2. The solitary ground raised in this appeal is against the action of the CIT(A) in confirming the addition of Rs. 6,10,29,000/- made by the AO on account of alleged unexplained cash credit u/s 68 of the Act.

3. The facts in, brief, are that the assessee is a company carrying business of investment and trading in shares and securities. A search and seizure action took place in the premises of the assessee on two occasions, firstly, on 25/06/03 and secondly on 28/10/04. As a result, assessment orders u/s 143(3) r.w.s 153A were also passed on two occasions, firstly on 27/02/06 and secondly on 28/12/2006, accepting the returned income as assessed income at Rs. 3,42,430/- on both the occasions. Subsequently, a proposal for reopening the impugned assessments u/s 263 was submitted by the AO to the CIT. Accordingly, the CIT vide his order dated 26/03/08 u/s 263 directing the AO to pass an assessment order in the light of directions given by him. Against the order of the AO, the assessee carried the matter in appeal before the CIT(A) and the CIT(A) confirmed the order of the AO observing that in this case the assessment record of the assessee company was called for and it was found by the CIT that the orders u/s 143(3) rws 153A passed on 27/02/06 and 28/12/06 were erroneous and prejudicial to the interests of the revenue as there was prima-facie evidence to show that the sale and purchase transactions of shares were not genuine. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal.

4. At the time of hearing, the learned counsel for the assessee submitted that the basis on which this order was emanated u/s 263 knocked out by the Tribunal in ITA No. 2432 & 2433/Mum/2008 vide order dated 20th January, 2012 and, therefore, the order passed by the CIT(A) cannot survive or withstand in the eye of law. The learned DR, on the other hand, conceded the said submissions of the learned counsel for the asesssee.

5. We have heard the parties, perused the record and gone through the orders of the authorities below. The present appeal filed by the asesssee against the order of the CIT(A) is a consequential order passed by the CIT while exercising his powers u/s 263 of the Act, which was quashed by the Tribunal when the assessee filed appeal against the said order of CIT. The findings of the Tribunal in its order (supra) are extracted below:-

“16. After taking the note of the fact that the assessment order was based as per directives of the then CIT, the subsequent CIT  cannot revise the assessment order u/s 263, the Hon’ble Jurisdictional High Court in the case of Virendra Kumar Jhamb Vs. CIT & Ors 222 CTR 88 (Bom.) has held as under:- “Having heard both the learned counsel for the parties, we must record our appreciation that Mr. Sahadevan very fairly obtained the letter dt. 30th Nov. 1987, which is very crucial in this matter. We have perused the same and in fact the Xerox copy of the same also has been taken on record, which clearly indicates that the petitioner had approached under the Amnesty Scheme and after discussion with the CIT, it was agreed that rate of taxable income should be 8 per cent instead of 4 per cent and accordingly he was directed to file revised return at 8 per cent. Even thereafter, the second CIT, on scrutiny and verification found that the earlier decision of the CIT at 8 per cent to be fair and justifiable and accordingly had issued directors to the JAC, BSD(S) Range, Bombay. It is very pertinent to note that the revised assessment orders passed by the concerned ITO on 5th Jan., 1988 were solely based on the directives of the CIT, in fact, the assessment orders do not indicate any other reason other than the directions mentioned by the CIT. Mr. Sahadevan also could not dispute that the Department was bound by the circulars. We find in the instant case that the ITO had passed revised assessment order based on the revised return at 8 per cent. The said order is solely based on the directives given by the earlier CIT and the same could not be revised by the subsequent CIT exercising the power u/s 263 of the Act.”

17. The facts in the case before Hon’ble High Court (supra) are identical to the facts in hand because the assessment order was passed by the AO as per the discussion with CIT and as per the office note dt. 28/12/2006 then the subsequent CIT cannot revise the assessment order. In view of the above discussion, we hold that when the AO has conducted an enquiry and taken a possible view then while exercising the jurisdiction u/s 263, the CIT cannot take a different view. Accordingly, the assessment order cannot be treated as erroneous and prejudicial to the interests of the revenue which can be revised by exercising the power u/s 263. Accordingly, the impugned revision order passed u/s 263 is not sustainable and liable to be set aside.”       

6. In view of the said order of the Tribunal (supra), the order of the CIT(A) cannot survive and, therefore, we set aside the order of the CIT(A) and delete the addition of Rs. 6,10,29,000/- made by the AO on  account of alleged unexplained cash credit u/s 68 of the Act. Thus, the ground of appeal of the assessee is allowed.

8. In the result, appeal of the asesssee is allowed.

Pronounced in the open court on this 24th day of February, 2012.

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Category : Income Tax (27907)
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Tags : ITAT Judgments (5503) section 263 (114)

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