C I T KOTA vs. GOVIND RAM MODI

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ITA/836/2008HC RajasthanRJHC02039844200806 February 20182 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, in its judgment, referred to its prior decision in Tax Appeal No. 95/2008 and connected matters. The Court noted the Tribunal's observation that there was nothing on record for the CIT to conclude that more rental income than claimed was received from shops at Surat. Consequently, the Tribunal found the CIT was not justified in treating the assessment order as erroneous and prejudicial to the revenue. The Tribunal had set aside the revisional order and restored the assessment order. The High Court also referenced the decision in S.A. Builders' case [288 ITR 1 (SC)] concerning interest income and household expenses. Based on these considerations, the High Court answered the issue in favour of the assessee against the department. The appeal was dismissed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Kota (appellant) against the judgment and order of the Income Tax Appellate Tribunal (Tribunal). The Tribunal had allowed the assessee's appeal, reversing the view taken by the Commissioner of Income Tax (Appeals) [CIT(A)]. The core of the dispute involved the CIT's action under Section 263 of the Income Tax Act, 1961, which the assessee challenged before the Tribunal. The High Court admitted the matter and framed a specific question of law. The respondent-assessee argued that a similar appeal concerning the same judgment had been decided by this Court in Tax Appeal No. 95/2008.

What were the issues?

1. Whether, under the facts and circumstances of the case and in law, the Tribunal was justified in setting aside the order of the CIT passed under Section 263, specifically when the Assessing Officer failed to make proper investigation and passed an order prejudicial to the interest of the revenue? (Question of law turning on Section 263 of the Income Tax Act, 1961). Assessee's Contentions: The respondent-assessee relied on a previous decision of the High Court in Tax Appeal No. 95/2008 (The Commissioner of Income Tax Kota vs. Smt. Manju Devi Modi) and connected matters, decided on August 17, 2017. They also referred to observations made by the Tribunal in paragraph 14 of its order, which stated that the CIT was not justified in treating the assessment order as erroneous and prejudicial to the revenue regarding rental income from shops at Surat and household expenses. The assessee argued that the assessment order was not erroneous, and therefore, not prejudicial to the revenue. Revenue's Contentions: The appellant-revenue contended that the CIT(A) had provided cogent reasons for proceeding under Section 263, and the Tribunal had wrongly allowed the assessee's appeal. They argued that the revisional authority's view was prejudicial to the interest of the revenue and should have been accepted, reversing the Tribunal's view.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 836 / 2008 The Commissioner of Income Tax, Kota ----Appellant Versus Shri Govind Ram Modi, C/o M/s. Agarwal Flooring Stone Co., Morak Station, Kota. ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo Jain For Respondent(s) : Mr. P.K. Kasliwal _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 06/02/2018

By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the assessee reversing the view taken by the CIT(A). This Court while admitting the matter framed the following question of law:- “Whether under the facts and circumstances of the case and in law, the Tribunal was justified in setting aside the order of CIT passed u/s 263 specifically when the Assessing Officer failed to make proper investigation and passed an order prejudicial to the interest of revenue?” Counsel for the respondent contended that against the same judgment, the appeal was preferred which has been

(2 of 2) [ITA-836/2008] decided by this Court in Tax Appeal No. 95/2008 (The Commissioner of Income Tax Kota vs. Smt. Manju Devi Modi) and other connected matter decided on 17th August, 2017 wherein it has been observed as under:- “4. Counsel for the appellant contended that CIT (A) while considering the issue under Section 263 has given cogent reasons and the Tribunal has wrongly allowed the appeal and contended that the view taken by the revisional authority to proceed under Section 263 was prejudicial to the interest of the revenue, and therefore, the view taken by the revisional authority was required to be accepted and view taken by the Tribunal is required to be reversed. 5. Counsel for the respondent has taken us to observation of the tribunal in para 14, which reads as under:- “So far as acceptance of claimed rental income from different shops at Surat is concerned, there was nothing on record before the Ld. CIT to come to this conclusion that more rental income than claimed by the assessee was received. The Ld. Cit was thus not justified in treating the assessment order in this regard as erroneous and when it was not erroneous thee was no question of it being prejudicial to the interest of revenue. We thus while setting aside revisional order in question in this regard direct restoration of assessment order accepting the claimed household expenses and rental income from different shops at Surat.” 6. In that view of the matter, the interest income which was received from the debtor and household and other expenses in view of decision in S.A. Builder's case [288-ITR-1(SC)] which was sought by the Tribunal to be relied upon is required to be accepted. In that view of the matter, the issue is answered in favour of the assessee against the department. The appeal stands dismissed. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J. A.Sharma/98

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