Smt. Nishaben Harenbhai Doshi, Rajkot V. The Pr. CIT-1, Rajkot, Rajkot

ITA 32/RJT/2022

AI Insights

The case involves Smt. Nisha Haren Doshi, the appellant, contesting the order of the Principal Commissioner of Income Tax-1, Rajkot, which set aside the original assessment order for the Assessment Year 2012-13. The PCIT had initiated proceedings under Section 263, claiming the original assessment was erroneous and prejudicial to the interest of the revenue, specifically concerning the set-off of brought forward speculation losses. The Tribunal examined whether the PCIT's order was justified in setting aside the assessment without specific infirmities being pointed out in the original order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138314 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2022
• Other Referred Cases: Meerut Roller Flour Mills (P.) Ltd. vs. PCIT, Shergil Harjit vs. PCIT, Dhanraj Chhipa vs. PCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Speculation loss; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o .3 2 / R j t/2 0 2 2 ( A s se ss m e nt Y e a r : 20 12- 1 3 ) S mt. Ni s h a Ha r e n Do sh i, “ I lla V ill a ” , A s ha p ur a R o a d, R aj ko t, G u j ar a t- 3 6 00 01 V s . The P r i nc ip la C o mm i ss i on er of I n c o m e T a x- 1, R aj k o t [ P AN N o. A D XP D 6 1 4 8 C ] (Appellant) .. (Respondent) Appellant by : Shri R. D. Lalchandani, Advocate Respondent by: Shri Shramdeep Sinha, CIT DR D a t e of H ea r i ng 25.07.2023 D a t e of P r o no u n ce me nt 04.08.2023 O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the assessee against the order passed by the Ld. Principal Commissioner of Income Tax-1 (in short “Ld. PCIT”), Rajkot in Order No. ITBA/REV/F/REV5/2021-22/1039224710(1) vide order dated 31.01.2022 passed for Assessment Year 2012-13. 2. The assessee has taken the following grounds of appeals:- “1. The Learned Principal Commissioner of Income Tax erred in holding that the order of the Assessing Officer was erroneous and prejudicial to the interest of revenue. The order of the assessment was neither erroneous nor prejudicial to the interest of revenue. ITA No.32/Rjt/2022 Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 2 - 2. The Learned Principal Commissioner of Income tax erred in directing the Assessing Officer claim of the Appellant as per law. The Principal Commissioner of Income tax has not pointed out or determined any error in the order of the Assessing Officer. 3. Without prejudice ground no. 1 and 2, the claim of the Appellant is as per the Law prevalent in the year of the determination of the loss.” 3. The brief facts of the case are that the Ld. Principal Commissioner of Income Tax on examination of the records of the case, initiated 263 proceedings to verify the claim of set off of brought forward speculation losses of Rs. 9,36,848/- of Assessment Year 2004-05 against income of the impugned assessment year i.e. A.Y. 2012-13. The Ld. PCIT set-aside the assessment order as being erroneous and prejudicial to the interest of the Revenue with the following observations:- “5. In the present proceedings also the assessee has reiterated the same version as earlier before the AO in the assessment proceedings. The assessee has also submitted that the provisions related to carry forward of stipulation losses has been amended w.e.f. 01.04.2006. Since the claim of set off of speculation loss was pertaining to earlier period therefore the AO is directed to factually verify the said claim of losses from the assessment records of A.Y. 2004-05 and then set off of loss against the speculation profit of the subsequent years in view of the amendment took place w.e.f. 01.04.2006. In this regard prima facie the case of the assessee appears to be in order but the AO has not factually verified the claim as per the provisions of law which needs to be done now. ITA No.32/Rjt/2022 Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 3 - Therefore, due to lack of enquiry and investigation in the matter besides in application of law, the assessment completed by the AO needs to be set-aside for fresh assessment.” 4. Before us, the Counsel for the assessee submitted that while setting- aside the assessment order, Ld. PCIT has not pointed out to any specific infirmity in the order of the Assessing Officer and has even observed that “prima facie case of the assessee appears to be in order” and yet, without pointing out to any infirmity in the assessment order, Ld. PCIT has set-aside the assessment order as being erroneous and prejudicial to the interest of the Revenue. 5. In response, Ld. D.R. placed reliance on the observations made by the PCIT in the 263 proceedings. 6. We have heard the rival contentions and perused the facts on record. We observed that in the 263 order, Ld. PCIT has set-aside the assessment order with the following provisions:- “Since the claim of set off of speculation loss was pertaining to earlier period, therefore, the Assessing Officer is directed to factually verify the said claim of losses from the assessment records of A.Y. 2004-05......” 7. In the case of Meerut Roller Flour Mills (P.) Ltd. 110 taxmann.com 170 (Allahabad), the High Court held that where Commissioner passed a revisional order under Section 263 directing Assessing Officer to examine matter relating to unsecured loans obtained by assessee, in view of fact that in course of scrutiny assessment, Assessing Officer had already made detailed enquiries in respect of loan received by assessee, ITA No.32/Rjt/2022 Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 4 - impugned revisional order deserved to be set aside. In the case of Shergil Harjit Vs. PCIT (ITAT Pune) ITA No. 170/PUN/2021, ITAT Pune held that initiation of revisionary proceeding under section 263 of the Income Tax Act on a fishing and roving enquiry in the matter without bringing on record any material or evidence is liable to be quashed. In the case of Dhanraj Chhipa Vs PCIT (ITAT Jodhpur) in ITA Number 83/Jodh/2022, ITAT held that PCIT cannot initiate 263 proceedings with a view to start fishing & roving enquiries. Therefore, we observe that on a perusal of the 263 order, Ld. PCIT has set- aside the assessment order with a direction to the Assessing Officer to verify the claim of the assessee. Further, PCIT has also observed that “prima facie the case of the assessee appears to be in order”. Therefore, looking into the contents of the 263 order, in our considered view, PCIT is not permitted to initiate 263 proceedings only to carry out further verification, without pointing out to any infirmity in the order passed by the Ld. Assessing Officer. This is more so when the PCIT has also observed that prima facie the case of the assessee appears to be in order. In our view, 263 proceedings cannot be initiated only with a direction / view to carry out further verification of assessment records, without pointing out to any specific infirmity in the assessment order. Accordingly, looking into the facts of the case, the order passed by PCIT is hereby directed to be set-aside. 8. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 04/08/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 04/08/2023 TANMAY, Sr. PS TRUE COPY ITA No.32/Rjt/2022 Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 5 - आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, राजोकट / DR, ITAT, Rajkot 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot 1. Date of dictation 27.07.2023 2. Date on which the typed draft is placed before the Dictating Member 27.07.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 28.07.2023 / 01.08.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .08.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 04.08.2023 7. Date on which the file goes to the Bench Clerk 04.08.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................