Prakhar Developers P Ltd , Indore V. The Pr. CIT ,Central, Bhopal

ITSSA 109/Ind/2021

AI Insights

The case involves Prakhar Developers Private Limited, which appealed against the orders of the Principal Commissioner of Income Tax (Central), Bhopal, revising the assessment orders for the assessment years 2011-12 and 2012-13. The original assessments were completed under Section 143(3) r.w.s. 153A of the Income Tax Act, 1961, accepting the returns filed by the assessee. The PCIT later found these orders to be erroneous and prejudicial to the interest of the Revenue, as they did not disallow certain cash payments and exemptions for agricultural income, despite the assessee being engaged in real estate. The Tribunal, referencing several precedents, concluded that the PCIT lacked jurisdiction to revise the orders as they were passed with the prior approval of the Addl.CIT under Section 153D of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122566 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 14-06-2021
• Other Referred Cases: Shri Ramamoorthy Vasudevan vs. PCIT, M/s. Trinity Infra Ventures Ltd. vs. DCIT, Satchidananda Rao vs. DCIT, Dhariwal Industries Limited Vs. CIT, Mehtab Alam Vs. ACIT, CH. Krishna Murthy Vs. ACIT, CIT vs. Dr. Ashok Kumar
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Set aside
• Section: 263; 132; 10; 11; 143(3); 153A; 192; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER& SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I. T . (S S )A . N o s. 10 9 & 11 0 / I nd / 2 0 2 1 ( A s s e ss me nt Y ea rs : 2011 -1 2 & 20 1 2 -1 3 ) P ra kh a r D e v e l op e r s P r iv at e L i m it e d, In d or e V s. P ri nc ip al C o m mi s s i o ne r o f Inc o m e T a x ( C e n t ra l ) , Bh op al P A N N o. A A EC P 7 8 88 E (Appellant) . . (Respondent) Appellant by : Shri Rajesh Mehta & Apurva Mehta, C.As. Respondentby: Shri P. K. Mitra, CIT.D.R. D ate of H ea ri n g 15.12.2022 D ate of P ro n ou n ce me n t 05.01.2023 O R D E R PER Ms. MADHUMITA ROY - JM: Both the appeals filed by the assessee aredirected against the ordersboth dated 27.03.2021 passed by thePCIT (Central), Bhopal for A.Ys. 2011-12 & 2012-13under Section 263 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) whereby and whereunderthe orders passed under section 143(3) r.w.s. 153A of the Act both dated 19.12.2018by the ACIT(Central)-1, Indore has been sought to be revised for the respective assessment years. 2. Since these appeals are filed by the same assessee and the issue involved in these appeals are identical, these are heard analogously and are being disposed of by a common order for the sake of conveyance. ITA Nos. 109 & 110/Ind/2021 [PrakharDevelopers P. Ltd. vs.Pr.CIT]Asst.Years.–2011-12 & 2012-13- 2 - 3. These appeals are time barred by 10 days due to Covid Pandemic. Keeping in view the direction passed by the Hon’ble Apex Court in this regard, we condone such delay. 4. The brief facts leading to this case is this that in the scrutiny assessment under Section 143(3) r.w.s. 153A of the Act, the Ld. AO completed the assessment accepting return of income filed by the assessee. The Ld. PCIT is of the opinion that since the Ld. AO did not disallow cash payments made by the assessee, neither disallowed the exemption of agricultural income considering the fact that the assessee was engaged in Real Estate business was not involved in the agricultural activities. The assessment order is erroneous so far it is prejudicial to the interest of the Revenue and invoked jurisdiction under Section 263 of the Act. The grounds taken by the assessee before us is this that the Ld. PCIT (Central) has erred in initiating revisional proceedings under Section 263 of the Act, the same is not sustainable on the ground of maintainability itself. This preliminary issue has been raised against the exercise of revisionary jurisdictional power of the Ld. PCIT as the assessment order was passed under Section 143(3) r.w.s. 153A of the Act was upon taking prior approval of the ACIT (Central)-1, Indore under Section 153D of the Act. The order impugned is, therefore, liable to be quashed. The assessment order under Section 143(3) r.w.s. 153A of the Act may kindly be restored as the ultimate prayer of the assessee. In this regard, on identical set of facts, the Ld. AR relied upon the judgment passed by the Hon’ble Pune Bench in the case of Shri RamamoorthyVasudevan vs. PCIT in ITA Nos. 967 & 968/Pun/2016 for A.Ys. 2008-09 & 2009-10. He has further relied upon other judgments passed by the Hyderabad Bench in case of M/s. Trinity Infra Ventures Ltd. vs. DCIT in ITA No. 584/H/2015 for A.Y. 2005-06 &Ors. He has further relied upon the judgment passed by the Hyderabad Bench in the case of Satchidananda Rao vs. DCIT in ITA No. 395 & 396/Hyd/2021 for A.Ys. 2014-15 & 2017- ITA Nos. 109 & 110/Ind/2021 [PrakharDevelopers P. Ltd. vs.Pr.CIT]Asst.Years.–2011-12 & 2012-13- 3 - 18.A copy of each of the judgments passed by different Benches have been filed before us by way of paper book by the Learned Advocate appearing for the assessee. Under the facts and circumstances of the matter, he vehemently argued for quashing of the impugned order passed under Section 263 of the Act passed by the Ld. PCIT. On the other hand, the Ld. DR relied upon the orders passed by the Ld. PCIT, Bhopal. 5. We have heard the rival submissions made by respective parties and we have also perused the relevant materials available on record and the written submissions filed by the appellant and considered the case laws relied upon by both the sides. We find that the Hon’ble Pune Bench in the case of Shri RamamoorthyVasudevan vs. PCIT on the identical facts and circumstances of the case has been pleased to observe as follows: “4. The assessee is in appeal against order of Commissioner in exercising the jurisdiction under section 263 of the Act. The preliminary issue raised against the said exercise of revisionary jurisdiction is that assessment order was passed under section 143(3) r.w.s. 153A of the Act after taking prior approval of the Addl.CIT, Central Range-2, Pune and hence the Commissioneris not empowered to exercise his jurisdiction. In this regard, the learnedAuthorized Representative for the assessee has placed reliance on the ratio laid down by the Pune Bench of Tribunal in Dhariwal Industries Limited Vs. CIT in ITA Nos.1108 to 1113/PUN/2014, relating to assessment years 2004-05 to 2006-07 & 2008-09 to 2010-11, order dated 23.12.2016. 5. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below. 6. We have heard the rival contentions and perused the record. Briefly, in the facts of the case, search and seizure operations were carried out under section 132 of the Act on the Vascon group of cases on 05.06.2012 and the assessee was part of said group. Thereafter, notice under section 153A of the Act was issued. The Assessing Officer made certain enquiries and accepted returned income filed by the assessee. The said order was passed with the prior approval of the Addl.CIT, Central Range-2, Pune vide letter dated 23.03.2015. The Commissioner was of the view that the said assessment order passed under section 143(3) r.w.s. 153A of the Act is erroneous and prejudicial to the interest of Revenue. 7. We find that similar issue of exercise of jurisdiction by the Commissioner under section 263 of the Act against order passed under section 143(3) r.w.s. ITA Nos. 109 & 110/Ind/2021 [PrakharDevelopers P. Ltd. vs.Pr.CIT]Asst.Years.–2011-12 & 2012-13- 4 - 153A of the Act has been set aside by the Tribunal with lead order in Dhariwal Industries Limited Vs. CIT (supra). The Tribunal vide order dated 23.12.2016 had held as under:- "12. We have considered the rival arguments made by both the sides, perused the orders of the AO and the Ld.CIT and the paper book filed on behalf of the assessee. We have a/so considered the various decisions cited before us. We find the Assessing Officer in the instant case for all the six assessment years has passed the order u/s.153A r.w.s. 143(3) after obtaining approval of the Addl.CIT u/s.153D of the I.T. Act. We find the Ld.CIT invoked his revisional powers u/s.263 of the I.T. Act on the ground that the order passed by the Assessing Officer for all the years are erroneous and prejudicial to the interest of the revenue since he has railed to disallow the expenditure u/s.14A forA.Yrs. 2004-05 to 2006-07 and failed to disallow the claim of depreciation on assets of Hyderabad unit which is defunct for A. Y. 2008-09 to 2010-11. 13. It is the submission of the Ld. Counsel for the assessee that since the order has been passed by the Assessing Officer after obtaining approval of the Addl.CIT u/s.153D of the I.T. Act, therefore, the Ld.CIT has no power to exercise his jurisdiction u/s.263 of the I.T. Act, 1961. It is a/so his submission that even on merit the Tribunal has decided both the issues in favour of the assessee. 14. We find merit in the above submission of the Ld. Counsel for the assessee. We find the Lucknow Bench of the Tribunal in the case of Mehtab A/am Vs. ACITvide ITA Nos.288 to 294/Lkw/2014 order dated 18-11-2014 while deciding an identical issue has observed as under: "31. Besides other judgments were also referred by the assessee in this regard and we have also carefully examined the same and we find that similar views were expressed by various judicial authorities. 32. We have also examined the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Dr. Ashok Kumar (supra) on an issue whether the assessment order was passed with the approval of the Addl. CIT and their Lordships have held that the Assessing Officer was fully alive about the facts of the case and that is why he got necessary approval of the Addl. CIT before completing the assessment orders for all the assessment years and once that is not disputed by the Revenue, then the Id. Commissioner of Income-tax would not be justified in interfering in the approval according by the Addl. CIT for framing the assessment order and thus there was no case for setting aside the assessment order for the assessment years in question." 14.1 We find the Hyderabad Bench of the Tribunal In the case of CH. Krishna Murthy Vs. ACIT vide ITA No.766/Hyd/2012 order dated 13- 02-2015 following the decision of the Lucknow Bench of the Tribunal in the case of MehtabAlam (Supra) held that CIT(A) is not justified in ITA Nos. 109 & 110/Ind/2021 [PrakharDevelopers P. Ltd. vs.Pr.CIT]Asst.Years.–2011-12 & 2012-13- 5 - assuming jurisdiction u/s.263 when the order has been passed in terms of section 153D of the Act. 14.2 We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl. CIT u/s.153D cannot be subject to revision u/s.263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under: "5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153Dof the I. T. Act and therefore such an assessment cannot be revised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld. Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C.3, Hyderabad in ITA.No.766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of MehtabAlam 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon'ble Allahabad High Court in the case of CIT vs. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263of the I. T. Act. In view of the above decision also, we hold that the revision order under section 263 of the I.T. Act is not sustainable. Accordingly, we allow the grounds of the assessee." 15. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl.CIT u/s.153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl. CIT u/s. 153D of the I.T. Act." 8. The said ratio has been followed in series of cases. The facts and issues raised in the present appeal are similar to the facts and issues in Dhariwal Industries Limited Vs. CIT (supra) and following the same parity ofsection 263 of the Act against order passed under section 143(3) r.w.s. 153A ofthe Act, which was passed after taking prior approval of the Addl.CIT, Central Range-2, Pune, cannot stand. Hence, the said exercise of jurisdiction is held to be invalid and bad in law and consequent order passed under section 263 of the Act is thus, cancelled. The grounds of appeal raised by the assessee are thus, allowed. 9. The facts and issues in ITA No.968/PUN/2016 are identical to the facts and issues in ITA No.967/PUN/2016 and our decision in ITA No.967/PUN/2016 shall apply mutatis mutandis to ITA No.968/PUN/2016. ITA Nos. 109 & 110/Ind/2021 [PrakharDevelopers P. Ltd. vs.Pr.CIT]Asst.Years.–2011-12 & 2012-13- 6 - 10. In the result, both the appeals of assessee are allowed.” 6. Having regard to the facts and circumstances of the case and having regard to the judgment passed by the Hon’ble Pune Bench, we find that the order impugned passed by the PCIT under Section of the Act whereby and whereunder the order passed by the Ld. AO under Section 143(3) r.w.s. 153A of the Act has been sought to be revised is not sustainable due to lack of jurisdiction in invoking Section 263 of the Act by the Ld. PCIT for this particular reason that the order sought to be revised has already been passed by the Ld. ACIT upon prior approval from the ACIT, Indore under Section 153D of the Act and therefore, the same cannot be revised without having any revised decision and/or directions of the ACIT under Section 153D of the Act. We, therefore, respectfully relying upon the ratio laid down by the Hon’ble Pune Bench as cited above, quash the impugned order under Section 263 of the Act passed by the Ld. PCIT (Central), Bhopal. 7. In the result, assessee’s appeals are allowed. This Order pronounced on 05/01/2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 05/01/2023 S. K. Sinha, Sr. PS 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 ितिनिध, / DR, ITAT, Indore 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr. Private Secretary) ITAT, Indore ITA Nos. 109 & 110/Ind/2021 [PrakharDevelopers P. Ltd. vs.Pr.CIT]Asst.Years.–2011-12 & 2012-13- 7 - 1 . D a t e o f d i c t a t i o n o n 0 2 . 0 1 . 2 0 2 3 2 . D a t e o n w h i c h t h e t y p e d d r a f t i s p l a c e d b e f o r e t he D i c t a t i n g M e m b e r 0 2 . 0 1 . 2 0 2 3 3 . D a t e o n w h i c h t h e a p p r o v e d d r a f t c o m e s t o t h e S r .P . S . / P . S . 4 . D a t e o n w h i c h t h e f a i r o r d e r i s p l a c e d b e f o r e t h e D i c t a t i n g M e m b e r f o r p r o n o u n c e m e n t 5 . D a t e o n w h i c h t h e f a i r o r d e r c o m e s b a c k t o t h e S r. P . S . / P . S 6 . D a t e o n w h i c h t h e f i l e g o e s t o t h e B e n c h C l e r k 7 . D a t e o n w h i c h t h e f i l e g o e s t o t h e H e a d C l e r k ... ... ... .... 8 . T h e d a t e o n w h i c h t h e f i l e g o e s t o t h e A s s t t . R e gi s t r a r f o r s i g n a t u r e o n t h e o r d e r ... ... ... ... ... ... ... ... 9 . D a t e o f D e s p a t c h o f t h e O r d e r ... ... ... Date on which the typed draft is placed before the Dictating Member 19.12.2019 1. Other Member..................Date on which the approved draft comes to