TOmin J.Thachankary, Ernakulam V. ITO, Kottayam

ITA 125/COCH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0995 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: R KRISHNAN
• Keywords: Revision of order; Cost of acquisition; Fair market value; Assessment record
• Section: 263

Judgement Text

1 ITA NO.125/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 125/COCH/2012 (ASSESSMENT YEAR 2007-08) SHRI TOMIN J THACHANKARY VS THE ITO, WD.4 THACHANKARY HOUSE KOTTAYAM THAMMANAM PO ERNAKULAM PAN : ABHPT5844P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R KRISHNAN RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 13-02-2013 DATE OF PRONOUNCEMENT : 28-02-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE TAXPAYER IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER PASSED U/S 263 OF THE A CT DATED 20-03-2012 FOR THE ASSESSMENT YEAR 2007-08. 2 ITA NO.125/COCH/2012 2. SHRI R KRISHNAN, THE LD.REPRESENTATIVE FOR THE T AXPAYER SUBMITTED THAT THE PROCEEDINGS UNDER SECTION 263 OF THE INCOME-TAX ACT WERE INITIATED BY THE ITO (H.QRS). ACCORDING TO THE LD.REPRESENTATIV E REVISIONAL JURISDICTION U/S 263 OF THE ACT WAS SPECIFICALLY CONFERRED ON TH E COMMISSIONER OF INCOME-TAX. THEREFORE, THE COMMISSIONER HAS TO EXA MINE THE RECORD BEFORE INITIATING PROCEEDINGS U/S 263 OF THE ACT. IN THIS CASE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER HAS NOT APP LIED HIS MIND AT THE TIME OF INITIATION OF THE PROCEEDINGS. REFERRING T O THE SHOW CAUSE NOTICE ISSUED FOR INITIATION OF PROCEEDINGS U/S 263, THE C OPY OF WHICH IS AVAILABLE AT PAGE 5 OF THE PAPER BOOK, THE LD.REPRESENTATIVE SUB MITTED THT ADMITTEDLY THIS NOTICE WAS ISSUED BY THE ITO (H.QRS); IT DOES NOT REFERS TO ANYTHING ABOUT THE SATISFACTION OF THE ADMINISTRATIVE COMMIS SIONER WITH REGARD TO THE PREJUDICIAL NATURE OF THE ASSESSMENT ORDER. AN INCOME-TAX OFFICER WHO HAS CO-TERMINUS POWER WITH THAT OF THE ASSESSING OF FICER CANNOT REVISE THE ORDER OF ANOTHER ASSESSING OFFICER. THEREFORE, ACC ORDING TO THE LD.REPRESENTATIVE, THE INITIATION OF PROCEEDINGS U/ S 263 IS INVALID. CONSEQUENTLY, THE ORDER PASSED BY THE ADMINISTRATIV E COMMISSIONER U/S 263 OF THE ACT IS INVALID. 3 ITA NO.125/COCH/2012 3. ON THE CONTRARY, SMT. S. VIJAYAPRABHA, THE LD.DR SUBMITTED THAT THE SHOW CAUSE NOTICE WAS ISSUED BY THE ITO (H.QRS). H OWEVER, THE ORDER OF REVISION WAS PASSED BY THE ADMINISTRATIVE COMMISSIO NER. THEREFORE, ACCORDING TO THE LD.DR, FOR ALL PRACTICAL PURPOSE, IT HAS TO BE CONSTRUED THAT THE ADMINISTRATIVE COMMISSIONER INITIATED THE PROCE EDINGS U/S 263 OF THE ACT. THEREFORE, THE PROCEEDINGS HAVE BEEN VALIDLY INITIATED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 263 OF THE ACT. SECTION 263 OF THE ACT ENABLES THE ADMINISTRATIVE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS OF THE ASSESSING OFFICER AND IF HE CONIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE HE MAY P ASS AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSES SMENT. BEFORE PASSING THE ORDER, THE ADMINISTRATIVE COMMISSIONER SHALL GI VE NECESSARY OPPORTUNITY TO THE TAXPAYER AFTER MAKING NECESSARY ENQUIRIES. THE ENQUIRY MAY BE MADE BY THE COMMISSIONER DIRECTLY OR IT MAY BE MADE THROUGH SUBORDINATE OFFICER. WHAT IS CONTEMPLATED IN SECTI ON 263 IS THE 4 ITA NO.125/COCH/2012 COMMISSIONER SHALL CALL FOR THE RECORDS AND IF HE F INDS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE AFTER PROPER ENQUIRY HE MAY CANCEL / MODIFY THE ASS ESSMENT. THE APPLICATION OF MIND IS THAT OF THE ADMINISTRATIVE C OMMISSIONER AND NOT THAT OF ANY OTHER OFFICER FOR INITIAITING THE PROCEEDING S U/S 263. A BARE READING OF SHOW CAUSE NOTICE ISSUED BY THE ITO (H.QRS) CLEA RLY SHOWS THAT THE ADMINISTRATIVE COMMISSIONER HAS NOT EXAMINED THE RE CORDS AT ALL. THE INCOME-TAX OFFICER (H.QRS) FOUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS FOR THE FOLLOWING REASONS: EXCESSIVE COST OF ACQUISITION HAS BEEN ALLOWED IN T HE ASSESSMENT OF CAPITAL GAINS. SHORT-TERM CAPITAL GAINS HAVE BEEN ASSESSED AS LONG TERM CAPITAL GAINS. NECESSARY ENQUIRIES HAVE NOT BEEN CONDUCTED TO EXAM INE WHETHER THE FAIR MARKET VALUE CLAIMED AS ON 1.4.198 1 WAS NOT EXCESSIVE; WHETHER THE ORIGINAL COST CLAIMED IN RESPECT OF THE THREE HOUSES SOLD WERE NOT EXCESSIVE; 5 ITA NO.125/COCH/2012 WHETHER THE ASSESSEES WIFE EARNED ANY INCOME INCLU DIBLE IN THE ASSESSEES TOTAL INCOME FROM THE AMOUNT OF RS.45,00 ,000/- THE ASSESSEE GAVE HER ON 08-11-2006; WHETHER THE AMOUNT OF DRAWINGS FOR PERSONAL EXPENSE S DISCLOSED BY THE ASSESSEE WERE NOT TOO LOW, AND WHETHER THE AMOUNTS OF LIABILITIES AS ON THE 31 ST MARCH OF 2005, 2006 AND 2007 WERE NOT GENUINE. THE ADMINISTRATIVE COMMISSIONER VERBATIM REPRODUCED THE ABOVE GROUNDS IN THE ORDER U/S 263 AND FOUND THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREF ORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ADMINISTRATIVE COMMISSI ONER HAS NOT APPLIED HER MIND AT THE TIME OF INITIATION OF THE PROCEEDIN GS. SECTION 263 VERY CLEALRY SAYS THAT THE PROCEEDINGS HAVE TO BE INITIA TED ONLY BY THE ADMINISTRATIVE COMMISSIONER. AN INCOME-TAX OFFICER , AT THE OFFICE OF THE ADMINISTRATIVE COMMISSIONER IS NOT COMPETENT OFFICE R TO INITIATE THE PROCEEDINGS. AT THE BEST, THE ITO (H.QRS) MAY PROV IDE SECRETARIAL ASSISTANCE AT THE TIME OF CONDUCTING ENQUIRY (OR) T HE ITO (H.QRS) MAY CONDUCT THE ENUIQRY ON THE ORDERS OF THE COMMISSION ER OR FILE A REPORT BEFORE THE COMMISSIONER FOR CONSIDERATION. THE PRO CEEDINGS BEFORE THE ADMINISTRATIVE COMMISSIONER IS A QUASI JUDICIAL PRO CEEDINGS, THEREFORE, THE 6 ITA NO.125/COCH/2012 POWER CONFERRED ON THE ADMINISTRATIVE COMMISSIONER CANNOT BE DELEGATED TO ANY OTHER PERSON. THE ADMINISTRATIVE COMMISSION ER HAS TO INDEPENDENTLY EXAMINE THE ASSESSMENT RECORDS AND SA TISFY HERSELF WHETHER THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ADMINISTRATIVE C OMMISSIONER SO FINDS THAT THE ORDER OF THE ASSESSING OFFICER IS PREJUDIC IAL AND ERRONEOUS TO THE INTEREST OF THE REVENUE HE HAS TO RECORD HIS SATISF ACTION AND CONDUCT FURTHER ENQUIRIES. THE ENQUIRY MAY BE CONDUCTED THROUGH TH E INCOME-TAX OFFICER, IF NECESSARY. HOWEVER, THE SATISFACTION OF THE COM MISSIONER WITH REGARD TO ERRONEOUS NATURE OF THE ASSESSMENT ORDER HAS TO BE OF THE COMMISSIONER AND NOT OF ANYBODY ELSE. IN THIS CASE, THE SHOW CA USE NOTICE ISSUED BY THE ITO (H.QRS) CLEALRY SHOWS THAT THE PROCEEDINGS WERE INITIATED BY THE ITO (H.QRS) AND NOT BY THE ADMINISTRATIVE COMMISSIONER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PROC EEDINGS INITIATED BY THE ITO (H.QRS) ARE BAD IN LAW. ACCORDINGLY, THE CONSE QUENT ORDER SIGNED BY THE ADMINISTRATIVE COMMISSIONER, AFTER EXTRACTING T HE GROUNDS STATED IN THE SHOW CAUSE NOTICE ISSUED BY THE ITO (H.QRS) IN VERB ATIM CANNOT STAND IN THE EYES OF LAW. FOR THESE REASONS, THE ORDER OF THE A DMINISTRATIVE COMMISSIONER IS QUASHED. 7 ITA NO.125/COCH/2012 5. IN THE RESULT, APPEAL OF THE TAXPAYER STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH FEBRUARY, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH FEBRUARY, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH