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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER PER R.S.SYAL, VP :
This appeal filed by the assessee is directed against the order dated 19-03-2018 passed by the Principal Commissioner of Income-tax-1, Nashik u/s. 263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2013-14.
Briefly stated, the facts of the case are that the assessee filed his original return declaring total income at Rs.1,95,670/-. During the year under consideration, the assessee sold agricultural land at
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Gut No.901, Anjaneri Shivar, Nashik. Sale consideration, as per
sale deed, was declared at Rs.80.00 lakh. As against that, the
assessee claimed that he actually received a sum of Rs.3.00 crore
against the sale of agricultural land, viz., Rs.80.00 lakh through
cheque; Rs.1.20 crore was retained by the Builder against booking
of two flats by the assessee; and the remaining Rs.1.00 crore was
given to his friend Shri Dalvi. The Assessing Officer (AO)
finalized the assessment by computing long term capital gain
chargeable to tax at Rs.16,78,378/- with reference to the full value
of consideration on transfer of land taken at Rs.80.00 lakh.
Remaining amount of Rs.2,20,00,000/- was taxed as unexplained
cash credit u/s.68 of the Act. This resulted into computation of
total income at Rs.2.38 crore. The ld. Pr. CIT invoked his
jurisdiction u/s.263 of the Act by holding the assessment order to
be erroneous and prejudicial to the interest of the Revenue. It was
concluded in the revisionary order that the entire sale consideration
was liable to be considered for the purpose of computation of
capital gain and further exemption u/s.54F was to be given in
respect of investment in one flat. The assessee is aggrieved by the
revisionary order passed by the ld Pr. CIT.
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We have heard both the sides and gone through the relevant
material on record. It is seen that the assessment order u/s.143(3)
was passed on 23-03-2016 determining total income at Rs.238.74
crore. This was followed by the notice of demand u/s.156
determining total tax payable by the assessee at Rs.95,57,390/-.
Pursuant to the revisionary order, the AO completed the
assessment on 22-11-2018 determining total income at
Rs.2,96,55,130/- followed by notice of demand u/s.156
determining the total amount of tax payable by the assessee at
Rs.84,26,510/-. In such a concluded assessment, the AO did not
grant any benefit of exemption u/s.54F as against the direction of
the CIT for granting such benefit in respect of one flat purchased
by the assessee. Notwithstanding that, it is seen that the amount of
tax determined pursuant to the revisionary order has been
computed at Rs.84.26 lakh, which is lower than the amount of tax
computed pursuant to the original assessment u/s.143(3) at
Rs.95.57 lakh.
Section 263 empowers the Commissioner of Income-tax to
revise an assessment order which is erroneous as well as
prejudicial to the interest of the Revenue. It is trite law that the
revisionary power can be exercised only when the assessment
order passed by the AO is both erroneous as well as prejudicial to
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the interest of the Revenue. If one of the two conditions is not
satisfied, the power to revise is ousted. Here is a case in which the
assessment order passed pursuant to the revisionary order has
resulted in total tax liability of the assessee at Rs.84.26 lakh, which
is less than the amount of tax originally determined as payable at
Rs.95.57 lakh, which order became subject matter of revision by
the ld. Pr. CIT. In such circumstances, a question arises as to
whether the original assessment order can be considered as not
prejudicial to the interest of the Revenue?
In this regard, the ld. DR has relied on the judgment of Hon’ble
Supreme Court in Malabar Industrial Company Ltd. Vs. CIT
(2000) 243 ITR 83. She emphasized on the meaning of the term
“prejudicial to the interest of the Revenue”. She accentuated on
the observations of the Hon’ble Supreme Court to the effect that
“every loss of Revenue as a consequence of an order of AO cannot
be treated as prejudicial to the interest of the Revenue”. In our
considered opinion, reliance on one line of the judgment, taken out
of context, cannot bring the case of the Revenue any further. An
order can be said to be “prejudicial to the interest of the revenue”
when it suffers loss in terms of tax amount. The Hon’ble
jurisdictional High Court in CIT Vs. Hindustan Lever Ltd. (2012)
343 ITR 161 (Bom.) considered this issue, after taking note of the
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judgment in the case of Malabar Industrial Company Ltd. (supra).
Their Lordships in Hindustan Lever Ltd. ( supra) held as under :-
“As regards the order being prejudicial to the interests of the Revenue, the judgment in Malabar Industrial Company adverts to the decisions of the Karnataka and Gujarat High Courts and of the view of the Division Bench in Gabriel India, according to which, a loss of tax has been regarded as prejudicial to the interests of the Revenue. The Supreme Court has held that if due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it would certainly be prejudicial to the interests of the Revenue. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue. For instance, where the Assessing Officer adopted one of several courses permissible in law or where two views are possible and the Assessing Officer has adopted one view with which the Commissioner does not agree, it has been held that it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken is unsustainable in law.”
In this case, the Hon’ble Bombay High Court has held that if
due to erroneous order of the Income-tax Officer, the Revenue is
losing tax lawfully payable by a person, it would be certainly
prejudicial to the interest of the Revenue. A part of the judgment
in Malabar Industrial Company Ltd. (supra) relied on by the ld.
DR has also been considered by the Hon’ble jurisdictional High
Court in which it was seen that “every loss of Revenue as a
consequence of the order of the AO cannot be treated as prejudicial
to the interest of the Revenue”. This was further explained with
the help of an example that where the AO adopted one of several
courses permissible in law or where two views are possible and the
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AO has adopted one with which the CIT does not agree, the order
cannot be treated as erroneous as well as prejudicial to the interest
of the Revenue unless a view taken is unsustainable in law.
Adverting to the facts of the instant case, we find that the
Department, by virtue of the revisionary order, is losing tax
lawfully payable by the assessee. That being the position, the
assessment order cannot be considered as prejudicial to the
interests of the Revenue. Since the assessment order does not
suffer from the second infirmity namely “prejudicial to the interest
of the Revenue”, we hold that the revisionary power u/s.263 cannot
be exercised as both the limbs of an order, being, erroneous and
prejudicial to the interest of the Revenue are not cumulatively
satisfied. We, therefore, set-aside the impugned order.
In the result, the appeal is allowed.
Order pronounced in the Open Court on 06th March, 2019.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT
पुणे Pune; �दनांक Dated : 06th March, 2019 सतीश
ITA No.903/PUN/2018 Rameshwar Ramgopal Goud
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The ACIT, Range-1 Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 4. “बी” / DR ‘B’, ITAT, Pune; 5. गाड� फाईल / Guard file.
/ True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
Date 1. Draft dictated on 05-03-2019 Sr.PS 2. Draft placed before author 05-03-2019 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *