M/s The Mayurbhan Central Co-Operative Bank Ltd, Cuttack V. CIT, Cuttack

ITA 137/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61586 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 26-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-02-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: AMBIKA PRASAD MOHANTY
• Keywords: Principle of natural justice
• Section: 263; 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 137/CTK/2012 ( / ASSESSMENT YEAR 2007 - 08) M/S.THE MAYURBHANJ CENTRAL CO - OP.BANK LTD., AT/P.O.BARIPADA, MAYURBHANJ. - - - VERSUS - COMMISSIONER OF INCOME - TAX, CUTT ACK CHARGE, CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI AMBIKA PRASAD MOHANTY, AR / FOR THE RESPONDENT: / S MT. . PARAMITA TRIPATHY, CIT - DR / DATE OF H EARING: 25 .06.2012 / DATE OF PRONOUNCEMENT: 13.07.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THE ASSESSEE HAS FILED THE PRESENT APPEAL ASSAILING THE LEARNED CIT ASSUMING JURISDICTION U/S.263 OF THE L.T.AC T,1961 AND MODIFYING THE INCOME AS ASSESSED BY THE ASSESSING OFFICER IN PROCEEDINGS U/S.144/147 FOR THE ASSESSMENT YEAR 2007 - 08 , WHICH RESULTED IN ENHANCEMENT OF THE ASSESSED INCOME . 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. 2. THE FACTS UNDISPUTED ARE THAT ASSESSMENT U/S.144/147 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS COMPLETED ON 31.12.2009, WHEREIN THE ASSESSING OFFICER ALLOWED EXEMPTION OF DIVIDEND INCOME OF 5,03,181 THOUGH NOT CLAIMED BY THE ASSESSEE AS EXEMPTION IN THE RETURN OF INCOME. HE ALSO DISALLOWED 48,380 BEING RELATABLE EXPENDITURE TO THE EARNINGS ON THE I.T.A.NO. 137/CTK/2012 2 SAID DIVIDEND INCOME. THE LEARNED CIT WAS OF THE VIEW THAT THE DIVIDEND INCOME EARNED BY THE ASSESSEE COULD NOT BE ALLOWED AS EXEMPT. HE OBSERVED THAT THE ASSESSEE HAS EARNED SUCH DIVIDEND INCOME FROM ITS INVESTMENT IN THE SHARES OF OTHER CO - OP. INSTITUTIONS WHICH ACCORDING TO HIM ARE NOT VENTURE CAPITAL FUNDS OR A VENTURE CAPITAL COMPANY AND ALS O NOT COMPANIES AS PER THE PROVIS IONS OF THE COMPANIES ACT, 1956, AND THEREFORE NOT EXEMPTED WITHIN THE AMBIT OF SECTIONS 10(23F),10(23FA) AND 10(34) READ WITH SECTION 115 - O. THEREFORE, HE WAS OF THE VIEW THAT THE FINDINGS OF THE ASSESSING OFFICER CONSIDER ING THE SUM OF 5,03,181 TO BE NOT CHARGEABLE TO THE INCOME - TAX IN THE HANDS OF THE ASSESSEE IS AN ERROR PREJUDICIAL TO THE INTEREST OF REVENUE. FURTHER HE WAS OF THE VIEW THAT THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ESTIMATED DISALLOWANCES OF 4 8,380 BEING RELATABLE TO THE EARNINGS OF CERTAIN NON - TAXABLE DIVIDEND INCOME WAS ALSO NOT WARRANTED AS THE ENTIRE DIVIDEND INCOME WAS CHARGEABLE TO TAX. ACCORDINGLY, HE REVISED THE ASSESSED INCOME AND DIRECTED THE ASSESSING OFFICER TO ISSUE REVISED DEMAND NOTICE. 3. ACCORDING TO WELL SETTLED LAW THE PRE - REQUISITION OF EXERCISE OF JURISDICTION BY THE CIT SUO MOTO IS THAT THE ORDER OF ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. THUS THE CIT HAS TO BE SATISFIED OF TWIN CONDITIO NS NAMELY - (I) THE ORDER OF ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; (II) IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE . IF ONE OF THEM IS ABSENT IF THE ORDER OF ITO IS ERRONEOUS BUT IT IS NOT PREJUDICIAL TO THE INTERESTS OF REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE INTERESTS OF REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1). IT IS ALSO WELL SETTLED THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE/ERROR COMMITTED BY THE ASSESS ING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SAID SECTION WILL BE ATTRACTED. FURTHER WHAT IS ERRONEOUS IS DEFINED AS AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT I.T.A.NO. 137/CTK/2012 3 APPLICATION OF LAW; AND ALSO THE ORDER WHICH HAS BEEN PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND AND THE PHRASE PREJUDICIAL TO THE INTERESTS OF REVENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT AND IT IS WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT 243 ITR 83 (S C) . IN THE LIGHT OF THESE PRINCIPLES, WE HAVE TO EXAMINE THAT WHETHER OR NOT LEARNED CIT HAS EXERCISED HIS POWERS UNDER SECTION 263 CORRECTLY IN THE PRESENT CASE. 4. IN THE PRESENT CASE AT HAND, ADMITTEDLY, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE DI VIDEND IN QUESTION RECEIVED BY THE ASSESSEE AS EXEMPT AND THUS ALLOWED EXEMPTION AND APPLYING PROVISIONS OF SECTION 14A HE DISALLOWED 48,380 BEING THE EXPENDITURE ON AVERAGE VALUE OF THE INVESTMENT. THE LEARNED CIT DID NOT AGREE TO THE ACTION OF THE ASSESSING OFFICER RELYING ON THE PROVISIONS OF 10(23F),10(23FA) AND 10(34) READ WITH SECT ION 115 - O , WHEN SECTION 115 - O REFERS TO DIVIDENDS CHARGEABLE TO ADDITIONAL INCOME TAX OF DOMESTIC COMPANIES , WHICH VIEW IN OUR CONSIDERED VIEW IS NOT CORRECT IN LAW BECAUSE THE ASSESSEE IN THE INSTANT CASE IS A CO - OP.BANK AND NOT A DOMESTIC COMPANY . BE THA T AS IT MAY, THE FACT REMAINS THAT IT IS MERELY A VIEW EXPRESSED BY THE LEARNED CIT OTHER THAN THE VIEW TAKEN BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT. LAW IS WELL SETTLED THAT ASSUMING JURISDICTION U/S.263 IS NOT PERMISSIBLE MERELY ON CHANGE OF OP INION WITHOUT ESTABLISHING THE FACT THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF R EVENUE, WHICH IS LACKING IN THE INSTANT CASE IN SO FAR AS THE LEARNED CIT HAS APPLIED WRONG PROVISIONS OF LAW . IN VIEW OF THE ABOVE, WE ARE OF TH E CONSIDERED VIEW THAT THE LEARNED CIT ASSUMING I.T.A.NO. 137/CTK/2012 4 JURISDICTION U/S.263 IN THE INSTANT CASE IS NOT AS PER LAW AND AS SUCH, THE ORDER PASSED U/S.263 CANNOT BE SUSTAINED AND THEREFORE, WE QUASH THE SAME BY ALLOWING THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 13.07.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 09.07.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.07.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.07.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.