Arcoy Biorefinery Private Limited, Ahmedabad V. The PCIT -1, Ahmedabad

ITA 282/AHD/2023

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0497 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-10-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 24-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INVOKING THIS
• Keywords: Capital asset; Gift; Revision of order; Depreciation; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Corroborative evidences; Assessment record; Prejudicial to interest; Unabsorbed depreciation; Set aside
• Section: 263; 132; 2; 143(3); 142(1); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Arcoy Biorefinery P Ltd., 606, 6 th Floor, Abhijit No. 1, Nr. Mithakhali Six Roads, Ellisbridge, Ahmedabad-380006 PAN: AAGCA2341H (Appellant) Vs The DCIT, Circle-4(1)(2), Ahmedabad (Respondent) Assessee Represented: Shri Dhrunal Bhatt, A.R. Revenue Represented: Shri Akilendra Pratap Yadav, CIT-DR Date of hearing : 05-10-2023 Date of pronouncement : 27-10-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the Revision order dated 28.03.2023 passed by the Principal Commissioner of Income Tax, Ahmedabad-1, arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2018-19. ITA No. 282/Ahd/2023 Assessment Year 2018-19 I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 2 2. The brief facts of the case, the assessee filed its Return of Income for the Assessment Year 2018-19 on 31.10.2018 declaring total income as NIL. The case was selected for scrutiny assessment to verify capital gain/loss and income on sale of property. The Assessing Officer issued notice u/s. 143(2) and the assessee filed his replies on 10.01.2020, 17.08.2020, 03.10.2020 and 24.11.2020. After considering the above replies, the Ld. A.O. accepted the returned income and passed the assessment order dated 16.12.2020, under section 143(3) of the Act. 3. On verification of the above assessment order, the Ld. PCIT noticed that in response to the notice u/s.142(1) dated 18.09.2020 and reply letter dated 03.10.2020 the assessee failed to file any evidence in support of the expenses claimed in the computation of capital gain namely (i) Land levelling, fencing work of Rs. 3,20,341/- (ii) Consultation charges of Rs. 6,32,247/- and (iii) Land development charges of Rs. 39,55,675/- in all totaling Rs. 49,08,263/-. 3.1. In view of the above Ld PCIT issued a show cause notice dated 10-03-2023 requesting the assessee as to why the assessment order dated 16-12-2020 relating to the Assessment Year 2018-19 should not be revised as per provisions of Section 263 of the Act since no proper enquiry was made by the AO. In response, the assessee filed its submission on 16-03-2023 explaining that during the assessment proceedings, the Ld. A.O. had made enquiry regarding Long Term Capital Gain by issuing notice u/s. 143(2) of the Act dated 28-09-2019 and vide show cause notice dated 11-11- 2020. In response, the assessee filed detailed reply vide letters I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 3 dated 10-01-2020, 06-08-2020, 03-10-2020 and 24-11-2020. Thus based on the above replies filed by the assessee, the Ld. AO satisfied and completed the assessments after due enquires. Thus there is no error in the assessment order passed by the AO and the same is no way prejudicial to the interest of Revenue and relied upon various case laws. 3.2. The above reply was considered by the Ld. PCIT and not satisfied with the same, since the A.O. has not adequately verified the facts, not examined the issue properly, thereby held that the assessment order passed by the A.O. is erroneous and prejudicial to the interest of Revenue as per explanation 2 of section 263 of the Act and thereby set aside the assessment order with a direction to the AO to pass fresh assessment order in accordance with law by giving the assessee reasonable opportunity of being heard. 4. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. In law and in the facts and circumstances of the Appellant's case, the impugned order under Section 263 passed by the Ld. PCIT is bad in law and deserves to be quashed. 2. In law and in the facts and circumstances of the case, the Ld. PCIT has erred in holding that Assessment Order passed by the Assessing Officer was without proper verification and was, therefore, erroneous and prejudicial to the interest of Revenue. Such conclusions are contrary to the facts of the case. As such. Provisions of Section 263 are unjustifiably invoked 3. In law and in the facts and circumstances of the Appellant's case, the order passed by the Ld. PCIT may please be held to be unjustified, unwarranted and may please be quashed I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 4 4. The Appellant craves leave to add to, amend or to raise any further ground(s) of appeal, as the case may arise. 5. The Ld Counsel Mr. Dhrunal Bhatt appearing for the assessee submitted before us a compilation of Paper Book wherein the replies filed by the assessee before the Assessing Officer in response to the notices issued u/s.143[2] and relevant replies as follows: “...3. The Assessee has filed various replies along with required evidences and documents in compliance to notices received under section 143(2) of the Act. The following are list of replies filed by the Assessee: (1) Reply dated 10/01/2020. Vide said reply the Assessee has furnished detailed working of Capital Gain and relevant documentary evidences. The Assessee has also submit detailed explanation on Long Term Capital Gain earned against sale of Land as under: 7. Details of Long Term Capital Gain. In respect of Long term capital gain of Rs. 1,18,27,589/- your Good Self have asked for complete details. In this connection the Assessee submits herewith detailed working of its Long Term capital gain of Rs. 1,18,27,589/- as under: INCOME FROM LONG TERM CAPITAL GAIN Sr. Particu lars Date of Sales Date of purcha se Sale Value Purcha se Value Index ed Improve ment Value Indexed Transf er Cost Gain/Loss 1 Land 28-03- 18 08-06- 07 95775 710 39813 631 8394 8121 11827589 Index of 2017-18 272 Total 11827589 As explained at preceding para there was compulsory auction by the lenders. The value realized against the sale of land situated at Plot no. 29 GIDC, Panoli, Village Kharod Taluka Ankleshwar Bharuch was of Rs. 9,57,75,710/-. The intimation letter received from the lender is attached vide Annexure - 2. As regards to the details of purchase of Land in question the assessee submits I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 5 herewith copy of purchase agreement vide Annexure - 5. As the sale was through auction the details relating registered document value, sale deed copy etc. are not applicable. Further on the basis of aforesaid working of Long Term capital your good self will find that the assessee has not claimed any cost of improvement and hence the details relating improvement cost and supporting evidence are not applicable. (ii) Reply dated 06/08/2020. Vide said reply the Assessee has explained detailed bifurcation of Land cost, year of acquisition etc. The relevant extract from the said submission is reproduced as under for your kind perusal purpose: After your Good Self consider aforesaid factual submission regarding final land area allotted to the Assessee and purchase consideration, the Assessee detailed reconciliation of Land allotment cost of Rs. 3,98,13,631/- is as under: S.No. Particulars Amount (Rs.) 1 Land Allotment price as per order dated 14/07/2008 3,23,86,708 2 Stamp Charges 21,92,480 3 Registration charges 3,26,180 4 Land levelling, fancing work etc. 3,20,341 5 Consultation charges and Others 6,32,247 6 Land development Charges 39,55,675 3,98,13,631 3.2 The total land purchase cost was of Rs. 3,98,13,631/-. The Land cost was separately capitalized in Books of accounts under the heads Tangible Assets as the Assessee has duly obtained possession of land on 08/06/2007. 3.3 As per the terms agreed upon with GIDC, the Assessee had built up Factory building on Land situated at GIDC Panoli. The construction of Factory building was immediately started after obtaining possession of Land and was completed in the month of March 2010 at a total cost of Rs. 11,26,82,678/-. The cost of Factory Building was added to Block of Building in F.Y. 2009-10 relevant to A.Y. 2010-11 and the Assessee was consistently claiming depreciation thereon. Hence Cost of land and Cost of factory building were separately recognized to the Annual accounts of the I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 6 Assessee. Against the cost of factory building the Assessee has claimed depreciation and was part of its Block of assets. 3.4 It is not out of place to submit that the Assessee was regularly filling return of income and was also assessed to tax. As explained earlier the capitalization of Land cost and Building cost were made in earlier years and the then A.O. has duly accepted the capitalization of cost of capital assets, and the Assessee's claim of Depreciation during the course of Assessment Proceedings of earlier years, which leaves no scope for any further explanation in this regards. (III) Reply dated 03/10/2020. Vide said reply again the Assessee has given detailed justification as regards to claim of Land cost. The said reply is reproduced as under of your kind reference purpose: .... ...... .... (iv) The Land cost totaling to Rs. 3,98,13,631/- was capitalized in books of accounts of previous preceding year. Further as the Land in question was acquired in F.Y. 2007 - 08, and in view of peculiar fact of the case i.e. possession by the banker and subsequent e-auction, the Assessee is not in possession of supporting vouchers, invoices copies etc. in respect of expenditure in question i.e. stamp charges, registration charges etc. (v) As regards to the Assessee's claim of Stamp duty and Registration charges, the Assessee submits that Stamp duty and Registration charges being Government tax mandatorily required to be paid to register any Property document. If your Good Self compare the amount of stamp duty vis a vis land allotment price, your Good Self will find that the Assessee has paid Stamp duty @6.7% Similarly registration charges was paid @1% approx. The stamp duty and registration charges was as per the Stamp Duty Act, prevailing during F.Y. 2007- 08 which leaves no scope for any adverse inference in this regards. As regard to other charges, the Assessee submits that possession of Assessee's factory premises were taken over by its banker. The Assessee could not retain files pertaining to F.Y. 2007-08. Hence it could not submit the documentary evidences as asked by your Good Self. (vi) However, it is not out of place to submit that the Assessee being Private Limited company is subject to statutory audit as per Companies Act as well as tax audit as per provision of I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 7 Income Tax Act. The auditor has after verifying the relevant supporting evidences/ voucher as per his audit procedure issued audit report without any adverse remark as regard to the cost of capital assets. Independent audit report leaves no scope to doubt the genuineness of land cost claimed by the Assessee. (vii) In addition to above, the Assessee submits that it was also subject to scrutiny assessment under section 143(2) of the Act in preceding previous years. The land costs of Rs. 3,98,13,631/- was accepted as such by the then A.O. during the course of scrutiny assessment. Hence land cost claimed by the Assessee of Rs. 3,98,13,631/- being opening cost brought forward from annual accounts of preceding previous years should be allowed in toto. To substantiate the said contention the Assessee submits herewith following: i. Copy of assessment order passed under section 143(3) of the Act for A.Y. 2013-14, 2014-15 vide Annexure-1 ii. Copy of audited annual account for F.Y. 2013-14 relevant to A.Y. 2014-15 highlighting the amount capitalized as Land Cost vide Annexure-2 In view of what is stated herein above, the Assessee requests your Good Self to kindly allow, Assessee's claim of Land cost in toto and oblige. [IV Reply letter dated 24/11/2020 in response to SCN issued by National E assessment Centre Delhi on 11/11/2020 is reproduced as under: 1. The Assessee being Private Limited company is subject to statutory audit as per Companies Act as well as tax audit as per provision of Income Tax Act. The auditor has after verifying the relevant supporting evidences/ voucher as per his audit procedure issued audit report without any adverse remark as regard to the cost of capital assets. Independent audit report leaves no scope to doubt the genuineness of land cost claimed by the Assessee. The capital cost of Land of Rs. 3,98,13,631/- was opening balance and carried forward as such from the year of its acquisition. No additional expenditure was incurred during the year under consideration. I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 8 2. In addition to above, the Assessee submits that it was also subject to scrutiny assessment under section 143(2) of the Act in preceding previous years. The land costs of Rs. 3,98,13,631/- was accepted as such by the then A.O. during the course of scrutiny assessment of earlier year. Hence land cost claimed by the Assessee of Rs. 3,98,13,631/- being opening cost brought forward from annual accounts of preceding previous years should be allowed in toto. The assessment orders of previous years were duly filed by the Assessee in earlier submission. 3. As explained earlier, on account of severe financial crisis and default in payment of dues to Bankers, the possession of properties including Factory building in question were taken over by the Banker. There was auction of the Assessee's properties i.e. Factory building and Plant Machinery during the year under consideration. The auditor of the Assessee has also given detailed note on financial assistance taken by the Assessee, the Assessee's default in payment of their dues, possession of properties by the lender, e-auction etc. in its statutory audit report of the year under consideration. 3.2. Even in such peculiar condition, the Assessee has filed all possible evidences to prove the Land acquired from GIDC. The property in question was acquired in the year 2007. As against that the proceedings in question is carried out during the year 2020. After lapse of 13 years as well as considering the Assessee's peculiar condition i.e. possession of property being taken by banker, it is highly unjustifiable to ask for each and every voucher and assume the part acquisition cost as unexplained income of the Assessee. 3.3 The audited annual accounts of preceding years as well as assessment orders are great piece of evidences to prove the Assessee's claim. Both audited annual accounts and assessment orders of preceding years are departmental records and cannot be ignored to verify the genuineness of Land cost claimed by the Assessee. The Assessee with best possible evidences substantiated its claim of Land cost, however if your Good Self is in possession of any contrary evidence to prove that alleged cost totaling to Rs. 49,08,2637- is unexplained income of the Assessee, then the Assessee requests your Good Self to kindly forward the same for cross verification. Any addition in the absence of evidence to prove that part acquisition cost totaling to Rs. 49,08,263/- being unexplained income of the Assessee is highly prejudicial and against principal of natural justice. I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 9 3.4. It is further to submit that cost questioned by your Good Self i.e. Rs. 49,08,263/- comes to just 12% of total Land cost. Hence considering the materiality concept, together with audited annual account, assessment order of preceding years, no. of years lapse etc., there is no scope for any adverse inference in this regards. The Assessee requests your Good Self to kindly accept the Land acquisition cost in total and Capital gain offered to tax as such. 3.5 Further, your Good Self have proposed to add disallowance of Rs. 49,08,263/- as "Unexplained income" of the Assessee. Against the said proposal, the Assessee submits that disallowance proposed by your Good Self was out of Opening Land cost brought forward from audited annual accounts of preceding years. As stated earlier, audited accounts of preceding years were duly accepted during the course of Assessment Proceedings of preceding previous years. Hence any disallowance out of Land cost, cannot be termed as "unexplained income" of the Assessee under any of the provision of Income Tax Act. 4. At the outset the Assessee further submits that in view of exorbitant Brought forward losses and unabsorbed depreciation, the gain earned against the sale of Land in question was set off against the brought forwards losses of earlier year. The availability of sufficient brought forward losses beyond doubt proves the absence of malafide intention of the Assessee. Hence it is highly unjustifiable to hold that alleged land cost which comes to just 12% of total land acquisition cost cannot considered to be genuine cost and its claim resulted into escapement of income tax. Further as verifiable from the computation of total income, even after set of off current year Long Term Capital gain, the amount of carried forward losses of the year far exceeds the amount alleged by your Good Self. The carried forward losses of the Assessee as tabulated below are far sufficient to cover the alleged cost of Rs.49,08,263/- and resultant index cost of Rs.1,03,49,205/-: 5. As explained at preceding para, the details called for by your Good Self relates to Financial year 2007. The assessment proceedings is for A. Y. 2018-19 relevant to F.Y. 2017-18. After your Good Self consider this factual submission, the Assessee invites the attention of your Good Self to provision of section 142(1) of the Act which reads as under: I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 10 As per the clause (b) of section 142(1) of the Act, the A.O. cannot call for the details pertaining to period more than three year prior to the previous year. Hence for A. Y. 2018-19, the A.O. can ask the details for A.Y. 2017-18, 2016-17 and 2015 16. Any notice asking details and evidences for the period beyond A.Y. 2015-16 is bad in law. Hence present notice asking the evidences for the expense incurred during F.Y. 2007-08 relevant to A.Y. 2008-09 is bad in law. The Assessee vehemently object the present notice and any addition on the basis of notice which is bad in law and invalid and not justifiable. 5.1. The Ld. Counsel for the assessee further reiterated the submissions made before the Ld. PCIT and submitted that the assessee company since date of its incorporation is subject to statutory audit as well as tax audit. The Return of Income filed by the assessee were subjected to scrutiny assessment and cost of the Land of Rs. 3,98,13,631/- purchased in the year 2007 was accepted by the Revenue. Because of the exorbitant brought forward losses and unabsorbed depreciation, the gain earned against the sale of Land will also result in set off of losses. Thus the Ld. PCIT is not correct in holding, the Assessing Officer failed to verify the expenses of Rs. 49,08,263/- towards Land levelling, Fencing, Consultation charges and Land development charges. 5.2. As per the clause (b) of section 142(1) of the Act, the A.O. cannot call for the details pertaining to period more than three years prior to the previous year. That is for the Assessment Year 2018-19, the A.O can ask for details up to 2015-16, he cannot expect to ask for details, while framing the assessment beyond three years period. Even as per Rule 6F of the Income Tax Rules, retention of books of accounts for a period up to six years are sufficient compliance of the provisions of the Income Tax Act. Thus I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 11 the Assessing Officer after detailed consideration of the replies filed by the assessee dated 10.01.2020, 06.08.2020, 03.10.2020 and 24.11.2020 accepted the explanation offered by the assessee and has not made any additions. Thus considering overall circumstances the conclusion arrived by the A.O. is one of the plausible view taken by him, while completing the assessment and relied upon various case laws. 6. Per contra, Ld. CIT-DR Shri Akilendra Pratap Yadav appearing for the Revenue supported the order passed by the PCIT and requested to uphold the same. 7. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and Case laws filed by the assessee. Ld. PCIT revised the assessment primarily looking on the reply letter dated 03.10.2020 filed by the assessee and held that the Assessing Officer has not made proper enquiry without passing assessment order. In our considered view, the Ld. PCIT failed to consider the other replies filed by the assessee namely 10.01.2020, 06.08.2020 and 24.11.2020 which clearly spelt about the Long Term Capital Gain and Non-production of the alleged expenses of Rs. 49,08,263/- which incurred in the year 2007. However such expenditure was not disallowed by the Assessing Officer while framing the assessment for that particular assessment year. As rightly pointed out by the Ld. Counsel for the assessee, as per clause (b) of section 142(1) of the Act, the A.O. cannot call for the details pertaining to period more than three years to the previous year and as per Rule 6F of the Income Tax I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 12 Rules, the assessee was expected to keep the records, books of accounts for the last six assessment years. Now by this Revision proceedings, the Ld. PCIT holds that the assessee failed to produce evidences for the Land levelling, Fencing, Consultation charges, and Land development expenses of Rs. 49,08,263/- claimed in the computation of Long Term Capital Gain. It is well settled principle of law that where two views are possible and one view has been adopted by the Assessing Officer then existence of other possible view alone would not be sufficient to exercise powers under section 263. Further the assessee claimed carry forward loss of Rs. 13,07,07,655/- for the present Assessment Year 2018-19 which is not yet been fully set off as against the Assessment Year 2022-23. Thus there is no Revenue loss to the department by invoking this Revision proceedings. 7.1. Further in our considered view, the Ld. PCIT partially looking into the assessment records and initiated the Revision proceedings on the ground that the assessee failed to submit evidences in support of the expenses, which is factually incorrect. The Ld. PCIT failed to consider the other reply letters dated 10.01.2020, 06.08.2020 and 24.11.2020 filed by the assessee. Unless both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding under section 263 of the Act, the same has been upheld by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd.-Vs-CIT 243 ITR 83. However, an assessment cannot be revised if there is no jurisdictional error in I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 13 the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. 8. Our above view is supported by the following judicial precedents: (a) Supreme Court of India in case of CIT Vs. Nirav Modi [2017] 77 taxmann.com 78 (SC) wherein it was held as under. Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credit (Gift) - Assessment years 2007-08 and 2008-09- Assessee received certain amount as gifts from his father and sister who were non- residents in India Assessing Officer after making detailed enquiries, took a view that assessee had duly proved identity, source and creditworthiness of donors Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh It was noted that Commissioner in his order of - revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous High Court by impugned order held that it was a case where a view had been taken by Assessing Officer after making proper enquiry and, thus, Tribunal was justified in setting aside impugned revisional order Whether Special Leave Petition filed against impugned order was to be dismissed. Held, yes [Para 2] [In favour of assessee] (b) Commissioner of Income-tax Vis Arvind Jewellers [2002] 124 Taxman 615 (Gujarat) Section 263 of the Income-tax Act, 1961 Revision Of orders prejudicial to interests of revenue Assessment year 1981-82 - Whether provisions of section 263 cannot be invoked to correct each and every type of mistake or error committed by Assessing Officer and it is only when an order is erroneous that section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy requirement of order being erroneous Held, yes In pursuance of notices issued under sections 142(1) and 143(2), assessee produced relevant material and offered explanation ITO had raised all possible enquiries in view of a search conducted under section 132 After considering those materials and explanation, ITO came to a definite conclusion and made certain additions - However, Commissioner did not agree with conclusion reached by ITO on ground that on material already brought on record, better assessment could I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 14 have been framed than that framed by ITO and invoked section 263 Whether since material was there on record and said material was considered by ITO and a particular view was taken, mere fact that different view could be taken, should not have been basis for an action under section 263 Held, yes - Whether Commissioner was unjustified in arriving at a conclusion that order passed by ITO was erroneous and prejudicial to interest of revenue - Held, yes (c) Spectra Shares & Scrips (P.) Ltd. V/s Commissioner of Income- tax III, Hyderabad [2013] 36 taxmann.com 348 (Andhra Pradesh) Section 263 of the Income-tax Act, 1961 Revision Of order prejudicial to interest of revenue [Scope of] Assessment year 2006-07 Whether Assessing Officer in assessment order is not required to give detailed reasons and once it is clear that there was application of mind by an enquiry, Commissioner, merely because he entertains a different opinion in matter, cannot invoke his powers under section 263 Held, yes [Para 59] [In favour of assessee] (d) Decision of Gujarat High Court in case of Aryan arcade Ltd. Vs. CIT [2017] 84 taxmann.com 293 wherein it was held as under: Section 24, read with section 263, of the Income-tax Act, 1961 Income from house property - Deductions (Interest) - Assessment year 2011-12 Assessee-company was engaged in renting of property During relevant period assessee raised funds by issuing debentures - Funds raised through such debentures were utilised for repayment of past loans taken for purpose of construction of building Assessee pointed out this aspect to Assessing Officer during original assessment Through accounts assessee could establish precise correlation between debentures and repayment of past loans Assessing Officer after examining issue accepted assessee's claim for deduction under section 24(b) even with respect to interest paid on debentures which were utilised for repayment of past loans used for purpose of construction of building Further, CBDT in its circular dated 20-8-1969 had clarified position that if second borrowing had really been used merely to repay original loan and this fact was proved to satisfaction of Income-tax Officer, interest paid on second loan would also be allowed as a deduction Whether view of Assessing Officer being plausible, it was not open for Commissioner to take such order in revision Held, yes [Para 16] [In favour of assessee] (e) Decision of Gujarat High court in case of CIT Vs. Mehsana District Co-Operative Milk Producers Union Ltd. 263 ITR 645 whereby court has held as under: The provisions of section 263(1) of the Income-tax Act, 1961, cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, and it is only when the order is erroneous that the I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 15 section will be attracted. The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. When two views are possible and the Income- tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. The powers of the Commissioner under sub-section (1) of section 263 extend to such matters as have not been considered and decided in appeal. The revisional powers under section 263 do not extend to matters on which the appellate authority has bestowed consideration and given a decision....” (f) Commissioner of Income-tax-III V/s R.K. Construction Co [2008] 175 Taxman 165 (Gujarat) Section 263 of the Income-tax Act, 1961 - Revision Of orders prejudicial to interest of revenue - Whether where Assessing Officer has taken a particular view on basis of evidence produced before him, it is open for Commissioner, in revisional proceedings under section 263, to take a different view on same material Held, no Whether on facts stated under heading 'Business disallowance - Excessive or unreasonable payments' when Assessing Officer had duly verified all details from books and records, and had made no addition in regular assessment, Commissioner was justified in invoking revisional jurisdiction under section 263 - Held, no] 9. In the result, the appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 27-10-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 27/10/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad I.T.A No. 282/Ahd/2023 A.Y. 2018-19 Page No Arcoy Bio Refinery Pvt. Ltd, vs. PCIT 16 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद