Dnyaneshwar Pandit Mahajan, Jalgaon V. Pr. Commissioner of Income-tax-2, Nashik

ITA 1155/PUN/2018

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 2168 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: SANKET MILIND JOSHI
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 13

Judgement Text

आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORESHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1155/PUN/2018 धििाारण वर्ा / Assessment Year : 2013-14 Shri Dnyaneshwar Pandit Mahajan, H. No. 3231, Gujrathi Lane, Tal.-Parola, Distt.-Jalgaon PAN : AMWPM8083H .......अपीलार्थी / Appellant बिाम / V/s. Pr. CIT – 2, Nashik ......प्रत्यर्थी / Respondent Assessee by : Shri Sanket Milind Joshi Revenue by : Shri Naveen Gupta सुनवाई की तारीख / Date of Hearing :16-02-2022 घोषणा की तारीख / Date of Pronouncement : 02-05-2022 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 19-01-2018 passed by the Pr. Commissioner of Income Tax-2, Nashik [‘Pr. CIT’] for assessment year 2013-14 u/s. 263 of the Act. 2. We find that this appeal was filed with a delay of 86 days and the assessee filed an affidavit stating the reasons for delay. On perusal of record and hearing both the parties, we find that the reasons stated by the 2 ITA No.1155/PUN/2018, A.Y. 2013-14 assessee are bonafide which really prevented the assessee to file the present appeal in time. Therefore, the delay of 86 days are condoned. 3. The ld. AR submits that the assessee raised two sets of additional ground as 1 and 2 and prayed to take up additional ground No. 2 filed vide letter dated 03-09-2020 and pleaded to ignore the main grounds of appeal forming part of Form No. 36 and additional ground No. 1. On perusal of record and upon hearing, with the consent of both the parties, we proceed to take up additional ground No. 2 as preliminary issue and since it is a legal ground which does not require examination of new facts in the facts and circumstances of the case. 4. The additional ground No. 2 which is as under : “2] The assessee submits that in the instant case, the reason stated by the ld. Pr. CIT in the Revision Order u/s. 263 for holding the asst. order u/s. 143(3) as erroneous was neither confronted to the assessee in the Show Cause Notice nor in the course of the revision proceedings u/s. 263 and therefore, the revision order u/s. 263 passed without granting an opportunity of being heard to the assessee on the core issue, may be declared as null and void in law.” 5. The ld. AR submits that the order passed by the Pr. CIT u/s. 263 of the Act is unsustainable under law and argued that Pr. CIT issued show cause notice by holding the order passed by the AO u/s. 143(3) of the Act is erroneous and prejudicial to the interest of revenue as the said assessment was made without applying the proper provision of law and referred to Para No. 2 of the said show cause notice which is at Page No. 2 of the paper book. The ld. AR further submits that the Pr. CIT travelled beyond the show cause notice and held the AO passed assessment order without application of mind and without making proper enquiry which is totally contrary to the point of show cause notice issued u/s. 263 of the Act. 3 ITA No.1155/PUN/2018, A.Y. 2013-14 6. The ld. A.R referred to an order in the case of Synergy Entrepreneur Solutions (P) Ltd. reported in 13 ITR-Trib. 377 at Page No. 24 of the paper book and submits that the issue arose before the Mumbai ITAT Benches as to whether exercise of revision power on the ground other than the ground of revision as set out in the show cause notice, could be held to be sustainable in law. He argued that the Tribunal by placing reliance on the decision of the co-ordinate Bench in the case of Maxpak Investments Ltd., which in turn, by placing reliance in the case of G.K. Kabra reported in 211 ITR 336 (A.P.) held that if the ground of revision is not mentioned in the show cause notice issued u/s 263, that ground cannot be made the basis of the order passed under such section for the simple reason that the assessee would have had no opportunity to meet the point. The ld. AR also submits that the Revenue did not prefer any appeal against the order of Mumbai Tribunal in the cases of Synergy Entrepreneur Solutions (P) Ltd. and Star India Ltd. 7. Further, he referred to an order in the case of Star India Ltd. Reported in 14 ITR-Trib 106 at Page No. 30 of the paper book and submits that there in that case, the notice was issued on the ground of inadmissibility of deduction and the revision is done on the ground that the matter needs to be examined even as there are no findings about short coming in the proceedings before the A.O. He argued in the present case, the PCIT did not give any finding on the point raised in the show cause notice, but, he directed the A.O. to examine afresh. He argued unless the PCIT points out any defect in the stand of the A.O. it cannot be open to him to exercise the revisionary powers and vehemently canvassed such defect cannot be assumed or inferred. 4 ITA No.1155/PUN/2018, A.Y. 2013-14 8. He further placed reliance in the case of B.S. Sangwan of Delhi Benches at Page No. 40 of the paper book and submits that the CIT started by point in respect of irregularities in the assessment order and concluded the said assessment order was passed without making proper requisite and desired inquiry. The Tribunal held the said view is not permissible in the scheme of law as a revision order can only be passed on the ground on which the assessee has been given a reasonable opportunity of being heard. The ld. AR submits that the Revenue preferred an appeal against the order of Delhi Tribunal before the Hon’ble High Court of Punjab and Haryana, wherein, that the said appeal was dismissed vide order dated 23- 09-2019 by the Hon’ble High Court and referred to Page No. 46 of the paper book. 9. The ld. DR, Shri Naveen Gupta submits that a show cause notice was issued on the issue involved and opportunity of hearing was given to the assessee. The issue involved in the show cause notice was to treat the profit on sale of land as income from business in place of Capital Gains considered in the assessment order and opportunity to explain the same was given to the assessee. The ld. Pr. CIT in the impugned order u/s. 263 of the Act, after examining the assessment records as well as the submission of the appellant, the assessment order was found erroneous on this issue as the same was decided without application of mind and without making proper enquiries and the order was also found prejudicial to the interest of Revenue. The issue involved was the same on which show cause was given to the assessee and opportunity of being heard was given. The only difference was that, in place of giving directions to the AO to make assessment in a particular manner on this issue, as mentioned in the show cause notice, it was held that proper enquiries were not made and the issue was decided without application of mind by the AO. He 5 ITA No.1155/PUN/2018, A.Y. 2013-14 referred to Hon'ble Apex Court in the case of CIT Vs. Amitabh Bachan reported in 384 ITR 200 and argued that a show cause notice was not required to be issued and even if it was issued, the PCIT need not confine himself to the issues mentioned in the show cause notice, the PCIT has confined himself to the issue raised in the show cause notice, though the findings given and final directions on that issue were after appreciation of facts mentioned in the assessment order and the submission made by the assessee. He vehemently argued that the action taken by the PCIT is well within the framework of section 263 of the Act as well as the contours defined by the Hon’ble Apex Court in the case of CIT Vs. Amitabh Bachan (Supra). 10. Heard both parties and perused the material on record. We find that in the first page of impugned order, the PCIT prima facie held that the A.O has not examined the issue related to LTCG of Rs. 1,40,24,360/- on sale of plot and the entire activity of transaction of land falls in the ambit of business activity. Further, in para 4, he held that the assessee sold all 47 plots in bulk to M/s. Maitriya Ploters &Structures Pvt. Ltd. that all the activities performed by the assessee along with the joint holder who had the intention to earn profit. Therefore, it transpires from the impugned order that the PCIT opined that the AO should have taxed the assessee under business income but not under LTCG, that is being so, we note that, the PCIT having no definite finding on how the order of the A.O is illegal attracting the revision u/Sec 263, simply, directed the AO to frame assessment de novo. Fact remains admitted, that the PCIT travelled beyond the show cause notice i.e. without giving any definite finding by recording cogent reasons why the order of A.O. is erroneous and prejudicial to the interest of revenue and came to a conclusion that the A.O. would have taxed under business income instead of LTCG as offered by the assessee. 6 ITA No.1155/PUN/2018, A.Y. 2013-14 In our opinion, this is not a scheme of revision power u/s. 263 available to the PCIT that holding the assessment is erroneous on specific issue of LTCG and concluding on another aspect directing the A.O. to do de novo assessment. 11. In view of the above, let us examine the case law as relied on by the Sri Sanket Joshi, Ld.AR, in the case of Synergy Enterprenuer Solutions Pvt Ltd (supra), We note that Commissioner therein in the show cause notice observed as to whether the profit or loss from the future trading amounts to speculation gain or loss and in the final conclusion he held that the A.O. shall obtain complete details and conduct necessary inquiries and examine the same. We find the Mumbai Tribunal held that there has been a shift in the stand of Commissioner whether it was a fit case for revision on the ground that the assessee was not entitled for set off of losses or whether it was a case for revision on the ground that the A.O. did not make necessary verification about the transaction. Therefore, it is clear that the Commissioner therein issued a show cause notice on set off of speculation loss against the business profit but without deciding the same directed the A.O. to conduct necessary inquiries. The Mumbai Tribunal in order to come to such a conclusion placed reliance in the case of G.K. Kabra (supra) of the Hon’ble High Court of Andhra Pradesh. Coming to the present case as already discussed above that the PCIT had come to the conclusion on perusal of the assessment record that the A.O. has not examined the issue related to long term capital gain vide para 2 of the impugned order and directed the A.O. to frame the assessment de novo vide para 8 of the impugned order. Therefore, it is clear that the PCIT shifted the stand on whether it was a case for revision on the ground of non-examination in respect of long term capital gain or the A.O. did not make necessary verification about the long term capital gain. Further it was brought to our 7 ITA No.1155/PUN/2018, A.Y. 2013-14 notice that the respondent revenue did not prefer an appeal against such order before the Hon’ble High Court of Bombay. Therefore, the finding of the Mumbai Tribunal in the case of Synergy Enterprenuer Solutions Pvt. Ltd (supra) is applicable to the facts on hand to hold that the revisionary power exercised u/s. 263 of the Act by the PCIT is not sustainable. 12. Further, the order of Delhi Tribunal in the case of D.S. Sangwam (supra) as relied on by the ld. A.R, we note that the CIT initiated revision proceedings that the A.O. did not make five additions/disallowances, had the said additions/disallowance been made there would have been substantial tax effect the revenue had suffered. We note that the CIT therein started a point in the show cause by observing illegalities and by holding the order of A.O. is erroneous and prejudicial to the interest of revenue for not making five additions/disallowances and revised the order for want of proper requisite and desired enquiries. We find the Delhi Tribunal quashed the order of CIT against which the Revenue preferred an appeal before the Hon’ble High Court of Punjab and Haryana which was dismissed vide order dated 23-9-2019, which is evident from para 46 of the paper book. We note that in the present case also as discussed in the aforementioned paragraphs that the PCIT shifted stand from not giving clear finding on how the A.O. violated the legal provisions in respect of long term capital gain and without there being so, he directed the A.O. to frame the assessment de novo. 13. Coming to the submissions of Sri Naveen Gupta, Ld CIT-DR with reference to the decision of Hon’ble Supreme Court in the case of Amitabh Bachan supra, wherein, we note that the Hon’ble Supreme Court was pleased to hold that the PCIT is well within the jurisdiction u/s. 263 of the Act to raise an issue which is not raised in the show cause notice, but, 8 ITA No.1155/PUN/2018, A.Y. 2013-14 subject to providing an opportunity to the assessee on the issue which is not part of show cause notice. The Ld. CIT-DR argued that in the present case, the PCIT raised a point in the show cause notice to treat the profit on sale of land as income from business in the place of Capital Gains and the only difference in place of giving directions to the AO to make assessment in a particular manner held that proper enquiries were not made and the issue was decided without application of mind by the AO. We are not agreeable to the arguments advanced by the Ld. CIT-DR, for the reason, that the A.O in the present case did not deviate from law and admittedly made certain assessment in accordance with law. The PCIT under revision held the same as erroneous, as in his opinion, the A.O. did not apply his mind elaborately. We note that the A.O examined the claim of assessee with supporting evidences along with necessary submissions and determined the assessment and chargeable to tax under LTCG. If at all, if the PCIT not satisfied with the said determination of assessment is lower side, would have applied higher rate by the A.O. of another head of income in our opinion, is untenable, again, for another reasons as it constitutes substitution of opinion which cannot be held as erroneous. Thus, when the assessment made by the A.O. is in accordance with law, it cannot be termed as erroneous and when it is not erroneous it cannot be prejudicial to the interest of revenue. Therefore, the decision of Hon’ble Supreme Court in the case of Amitabh Bachan supra, is not applicable to the facts on hand. 14. We find in the present case, the PCIT issued a show cause notice for non examination of LTCG, without determining the same, directing the A.O. to conduct de novo assessment i.e. re-examination, is not sustainable under law, therefore, in light of the discussion made by us herein above with the support of decisions relied on and in the facts and circumstances 9 ITA No.1155/PUN/2018, A.Y. 2013-14 of the case, we hold, the PCIT in treating the assessment erroneous and prejudicial to the interest of revenue is not justified under revision proceedings u/s. 263 of the Act and it is set aside. Thus, the additional ground No. 2 treated as a preliminary issue is allowed and in view of the same, all remaining grounds become academic requiring no adjudication. 15. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 02 nd May, 2022. Sd/- Sd/- (Dr. Dipak P. Ripote) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 02 nd May, 2022. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT-2, Nashik 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदचव/ Sr. Private Secretary आयकर अपीलीय अदिकरण, पुणे/ ITAT, Pune