ASSISTANT COMMISSIONER OF INCOME TAX - 4(2)(1), MUMBAI V. DEUTSCHE INVESTMENTS INDIA PRIVATE LIMITED, MUMBAI

ITA 3502/MUM/2024

AI Insights

The case involves Deutsche Investments India Pvt. Ltd., which faced appeals from the Revenue concerning assessment years 2008-09, 2010-11, and 2011-12. The core issue was the validity of the assessment orders that were passed following revision orders under section 263 of the Income Tax Act, 1961, by the PCIT. The ITAT had previously quashed these revision orders, leading to the current appeals being dismissed as the assessment orders based on these revisions were found to be unsustainable. The ITAT's decision was influenced by precedents and judicial interpretations that emphasized the need for an order to be both erroneous and prejudicial to the interest of the Revenue for section 263 to be applicable.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474459 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-10-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 09-07-2024
• Other Referred Cases: State Bank of India vs. CIT, Malabar Industrial Co. Ltd. vs. CIT, Gee Vee Enterprises vs. ITO, D.G. Housing Projects Ltd. vs. ITO, Raj Mandir Estate vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANYOGITA NAGPAL
• Assessee Lawyers: NIRAJ SHETH; RE
• Keywords: Bogus Share capital; Revision of order; Bogus
• Section: 143(3); 263

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA Nos. 3502 to 3504/MUM/2024 Assessment Years: 2008-2009, 2010-11 & 2011-12 Asst. CIT-4(2)(1), R. No. 640, 6th floor, Aayakar Bhavan, MK Road, New Marine Line, Mumbai-400020. Vs. Deutsche Investments India Pvt. Ltd., Block B1, Nirlon Knowledge Park, Western Express Highway, Goregaon East, Mumbai-400063. PAN NO. AACCD 1765 E Appellant Respondent Assessee by : Mr. Niraj Sheth Revenue by : Mrs. Sanyogita Nagpal, CIT-DR Date of Hearing : 14/10/2024 Date of pronouncement : 14/10/2024 ORDER PER OM PRAKASH KANT, AM The captioned appeals by the Revenue are directed against three separate orders, each dated 09.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment years 2008- 09, 2010-11 and 2011-12 respectively. In these appeals common issue in dispute is involved and therefore same were heard together and disposed off by way of this consolidated order for convenience. 2. In all these appeal, th been passed pursuant tax Act, 1961 (in short ‘the Act’) Commissioner of Income Appellate Tribunal ( in short ‘the ITAT’) quashed the revision order passed by the Ld. P before us, the Ld. counsel for the assessee submitted that when all the three years, the revision order passed by the Ld. PCIT u/s 263 has been quashed, the consequent assessment order the Assessing Officer to give effect to the direction of the Ld. PCIT cannot survive. The relevant finding of the ITAT passed in ITA No. 3665/Mum/2014 for assessment year 2008 under: “21. Thus once it is held that the Assessing Office the two possible view with which learned CIT does not agree, the same does not give learned CIT(A) jurisdiction to exercise revisionary power u/s. 263 of the Act. Moreover, as we have already held above that by asking the Assessing Off finding about the order being erroneous and prejudicial to the interest of revenue the learned CIT(A) has clearly erred and hence his order is not sustainable. Explanation (2) added to section 263 of the Act can come to the rescue of revenue as the same is not applicable for the current assessment year. 22. More so, because we have held that the Assessing Officer’s view is a possible view. On the touchstone of Hon'ble Bombay High Court decision in the case of been detailed in the computation of income and case law referred therein and the Assessing Officer having accepted that, it cannot be said that the Assessing Officer has not applied his mind in that issue. Thus in the background of the aforesaid discussion and precedent, we Deutsche Investments India Pvt. Ltd. ITA Nos. 3502 to 3504/MUM/2024 issue in dispute is involved and therefore same were heard together and disposed off by way of this consolidated order for convenience. In all these appeal, the assessment order in question pursuant to the revision order u/s 263 of the Income tax Act, 1961 (in short ‘the Act’) passed by the Principal Commissioner of Income-tax ( in short the PCIT). The Income ( in short ‘the ITAT’) in separate orders has ion order passed by the Ld. PCIT. Accordingly before us, the Ld. counsel for the assessee submitted that when all the revision order passed by the Ld. PCIT u/s 263 the consequent assessment order the Assessing Officer to give effect to the direction of the Ld. PCIT cannot survive. The relevant finding of the ITAT passed in ITA No. 3665/Mum/2014 for assessment year 2008-09 is reproduced as 21. Thus once it is held that the Assessing Officer has adopted one of the two possible view with which learned CIT does not agree, the same does not give learned CIT(A) jurisdiction to exercise revisionary power u/s. 263 of the Act. Moreover, as we have already held above that by asking the Assessing Officer to make further examination without any finding about the order being erroneous and prejudicial to the interest of revenue the learned CIT(A) has clearly erred and hence his order is not sustainable. Explanation (2) added to section 263 of the Act can come to the rescue of revenue as the same is not applicable for the current assessment year. 22. More so, because we have held that the Assessing Officer’s view is a possible view. On the touchstone of Hon'ble Bombay High Court decision in the case of State Bank of India (supra), the issue having been detailed in the computation of income and case law referred therein and the Assessing Officer having accepted that, it cannot be said that the Assessing Officer has not applied his mind in that issue. s in the background of the aforesaid discussion and precedent, we Deutsche Investments India Pvt. Ltd. 2 ITA Nos. 3502 to 3504/MUM/2024 issue in dispute is involved and therefore same were heard together and disposed off by way of this consolidated order for convenience. e assessment order in question have order u/s 263 of the Income- passed by the Principal . The Income-tax in separate orders has CIT. Accordingly before us, the Ld. counsel for the assessee submitted that when all the revision order passed by the Ld. PCIT u/s 263 the consequent assessment orders passed by the Assessing Officer to give effect to the direction of the Ld. PCIT cannot survive. The relevant finding of the ITAT passed in ITA No. 09 is reproduced as r has adopted one of the two possible view with which learned CIT does not agree, the same does not give learned CIT(A) jurisdiction to exercise revisionary power u/s. 263 of the Act. Moreover, as we have already held above that by icer to make further examination without any finding about the order being erroneous and prejudicial to the interest of revenue the learned CIT(A) has clearly erred and hence his order is not sustainable. Explanation (2) added to section 263 of the Act cannot come to the rescue of revenue as the same is not applicable for the 22. More so, because we have held that the Assessing Officer’s view is a possible view. On the touchstone of Hon'ble Bombay High Court State Bank of India (supra), the issue having been detailed in the computation of income and case law referred therein and the Assessing Officer having accepted that, it cannot be said that the Assessing Officer has not applied his mind in that issue. s in the background of the aforesaid discussion and precedent, we are of the considered opinion that learned CIT could not have legally assumed jurisdiction u/s. 263 of the Act to ask the Assessing Officer to make a denovo examination by making further exa finding order being erroneous as well as prejudicial to the interest of revenue. We further note that learned Counsel of the assessee has given case laws for the proposition that the method adopted by assessee for claiming deduction for br to market loss is having judicial acceptance. These were also before learned CIT(A), who has not cogently dislodged the reliance placed on the case law. 23. The case law of Raj Mandir Estate (supra) referred by learned Departmental Representative was with respect to bogus share capital and share premium allowed by the Assessing Officer without proper enquiry and in that context on the facts of that case Hon'ble Apex Court has observed that no prejudice will be caused to the ass examination by the Assessing Officer. This case law is not applicable on the facts here. The case law from Hon'ble Delhi High Court in the case of Gee Vee Enterprises (99 ITR 375) is not applicable on the facts of this case. This case law was d decision in the case of ITO Vs. D.G. Housing Projects Ltd. (343 ITR 329) and Hon'ble High Court has observed as under : “It is in this context that the Supreme Court in Malabar Industrial Co. Ltd. vs. Commission observed that the phrase “prejudicial to the interest of Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the A taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, th the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue.” The above case law duly supports the case of 24. Since the issue has been decided by following Hon'ble Supreme Court & Hon'ble Bombay High Court decisions directly applicable, dealing with other Representative is only of academic 25. We have already quashed the order of learned CIT(A) on the ground that assumption of jurisdiction on matters for denovo examination by the Assessing that adjudicating upon and we are not engaging into Deutsche Investments India Pvt. Ltd. ITA Nos. 3502 to 3504/MUM/2024 are of the considered opinion that learned CIT could not have legally assumed jurisdiction u/s. 263 of the Act to ask the Assessing Officer to make a denovo examination by making further examination without finding order being erroneous as well as prejudicial to the interest of revenue. We further note that learned Counsel of the assessee has given case laws for the proposition that the method adopted by assessee for claiming deduction for broken period expenses and mark to market loss is having judicial acceptance. These were also before learned CIT(A), who has not cogently dislodged the reliance placed on 23. The case law of Raj Mandir Estate (supra) referred by learned ental Representative was with respect to bogus share capital and share premium allowed by the Assessing Officer without proper enquiry and in that context on the facts of that case Hon'ble Apex Court has observed that no prejudice will be caused to the ass examination by the Assessing Officer. This case law is not applicable on the facts here. The case law from Hon'ble Delhi High Court in the case of Gee Vee Enterprises (99 ITR 375) is not applicable on the facts of this case. This case law was duly referred to in Hon'ble Delhi High Court decision in the case of ITO Vs. D.G. Housing Projects Ltd. (343 ITR 329) and Hon'ble High Court has observed as under :- “It is in this context that the Supreme Court in Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax, (2000) 243 ITR 83 (SC), had observed that the phrase “prejudicial to the interest of Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue.” The above case law duly supports the case of the assessee. 24. Since the issue has been decided by following Hon'ble Supreme Hon'ble Bombay High Court decisions directly applicable, dealing with other case laws referred by learned Departmental Representative is only of academic interest. We have already quashed the order of learned CIT(A) on the ground assumption of jurisdiction on matters for denovo examination by Officer is not legally sustainable, we are of the opinion that adjudicating upon merits of the issues is only of academic interest and we are not engaging into the same.” Deutsche Investments India Pvt. Ltd. 3 ITA Nos. 3502 to 3504/MUM/2024 are of the considered opinion that learned CIT could not have legally assumed jurisdiction u/s. 263 of the Act to ask the Assessing Officer to mination without finding order being erroneous as well as prejudicial to the interest of revenue. We further note that learned Counsel of the assessee has given case laws for the proposition that the method adopted by oken period expenses and mark to market loss is having judicial acceptance. These were also before learned CIT(A), who has not cogently dislodged the reliance placed on 23. The case law of Raj Mandir Estate (supra) referred by learned ental Representative was with respect to bogus share capital and share premium allowed by the Assessing Officer without proper enquiry and in that context on the facts of that case Hon'ble Apex Court has observed that no prejudice will be caused to the assessee by re examination by the Assessing Officer. This case law is not applicable on the facts here. The case law from Hon'ble Delhi High Court in the case of Gee Vee Enterprises (99 ITR 375) is not applicable on the facts of this uly referred to in Hon'ble Delhi High Court decision in the case of ITO Vs. D.G. Housing Projects Ltd. (343 ITR 329) “It is in this context that the Supreme Court in Malabar Industrial Co. er of Income Tax, (2000) 243 ITR 83 (SC), had observed that the phrase “prejudicial to the interest of Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss ssessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is e CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is the assessee. 24. Since the issue has been decided by following Hon'ble Supreme Hon'ble Bombay High Court decisions directly applicable, case laws referred by learned Departmental We have already quashed the order of learned CIT(A) on the ground assumption of jurisdiction on matters for denovo examination by Officer is not legally sustainable, we are of the opinion nly of academic interest 2.1 Following the above finding of the ITAT, the Ld. CIT(A) held the assessment order unsustainable in law observing as under: “4.2. Perusal of the above order reveals that the Hon’ble ITAT quashed the order u/s 263 of the Act passed by CIT 26.03.2014 with a detailed reason and therefore, the assessment order passed u/s 143(3) in pursuance of the order u/s 263 of the Act itself doesn’t survive. Hence, the present appeal again r.w.s. 263 of the Act becomes infructuous and doesn’t require any specific adjudication. 3. In all the three years, the Revenue also in its grounds has challenged the order of the Ld. CIT(A) merely for the reason that Income-tax Department has already preferred appeal against order of the ITAT quashing the of the Act. We don’t find any in following the order of the ITAT and holing the appeal as infructuous. The finding of the Ld. CIT(A) on the issue in dispute is accordingly upheld for assessment year 2008 2011-12. The grounds of the assessee in three appeals are accordingly allowed. 4. In the result, all the three appeals of the Reven dismissed. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 14/10/2024 Rahul Sharma, Sr. P.S. Deutsche Investments India Pvt. Ltd. ITA Nos. 3502 to 3504/MUM/2024 Following the above finding of the ITAT, the Ld. CIT(A) held the assessment order unsustainable in law observing as under: 4.2. Perusal of the above order reveals that the Hon’ble ITAT quashed the order u/s 263 of the Act passed by CIT-6, Mumbai on 26.03.2014 with a detailed reason and therefore, the assessment order passed u/s 143(3) in pursuance of the order u/s 263 of the Act itself doesn’t survive. Hence, the present appeal against the order u/s 143(3) r.w.s. 263 of the Act becomes infructuous and doesn’t require any specific adjudication.” In all the three years, the Revenue also in its grounds has challenged the order of the Ld. CIT(A) merely for the reason that partment has already preferred appeal against order of the ITAT quashing the revision order of the PCIT passed u/s 263 We don’t find any infirmity in the order of the Ld. CIT(A) in following the order of the ITAT and holing the appeal as tuous. The finding of the Ld. CIT(A) on the issue in dispute is accordingly upheld for assessment year 2008-09 The grounds of the assessee in three appeals are In the result, all the three appeals of the Reven nced in the open Court on 14/10 - Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Deutsche Investments India Pvt. Ltd. 4 ITA Nos. 3502 to 3504/MUM/2024 Following the above finding of the ITAT, the Ld. CIT(A) held the assessment order unsustainable in law observing as under: 4.2. Perusal of the above order reveals that the Hon’ble ITAT has 6, Mumbai on 26.03.2014 with a detailed reason and therefore, the assessment order passed u/s 143(3) in pursuance of the order u/s 263 of the Act itself st the order u/s 143(3) r.w.s. 263 of the Act becomes infructuous and doesn’t require any In all the three years, the Revenue also in its grounds has challenged the order of the Ld. CIT(A) merely for the reason that partment has already preferred appeal against order order of the PCIT passed u/s 263 infirmity in the order of the Ld. CIT(A) in following the order of the ITAT and holing the appeal as tuous. The finding of the Ld. CIT(A) on the issue in dispute is 09, 2010-11 and The grounds of the assessee in three appeals are In the result, all the three appeals of the Revenue are /10/2024. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Deutsche Investments India Pvt. Ltd. ITA Nos. 3502 to 3504/MUM/2024 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Deutsche Investments India Pvt. Ltd. 5 ITA Nos. 3502 to 3504/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai "