ACIT, CIRCLE, GANDHIDHAM, GANDHIDHAM vs. KUTCH DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LIMITED, ANJAR

Learned D.R. for the Revenue, at the outset, informs the Bench that the Revenue does not wish to press ground no.1 raised by it, along with the Form No. 36, therefore, we dismiss ground no. 1 raised by the Revenue, as not pressed.

In respect of other grounds raised by the Revenue, the Ld. D.R. for the Revenue, argued that the Departmental appeal, which was against the order of the Hon'ble ITAT, Rajkot in dated 29.01.2024, which was pending with Hon'ble High Court of Gujarat, has been now decided by the Hon'ble High Court of Gujarat, in favour of assessee and against the Department. Therefore, learned DR for the revenue did not have any objection, if the appeal of the revenue is dismissed, nevertheless, the learned DR also relied on the findings of the assessing officer.

On the other hand, ld. Counsel for the assessee also submitted that the issue is squarely covered by the judgment of the Hon’ble Gujarat High Court in Kutch District Co-op. Milk Producers Union Ltd. (AY : 2017-18) 3 assessee’s own case vide 174 taxmann.com 868 (Guj.), wherein the appeal of the department was dismissed by the Hon’ble Gujarat High Court. Therefore Ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee, hence the appeal filed by the Revenue should be dismissed.

We have heard the rival submissions and perused the materials available on record. We note that in the assessee’s own case original assessment order was passed by the assessing officer u/s 143(3) of the Act, on 06-11-2019. Thereafter Ld. PCIT exercised his jurisdiction u/s 263 of the Act dated 07-03-2022. Then after the Hon’ble Income Tax Appellate Tribunal, Rajkot quashed the order of the PCIT, vide order of ITAT in ITA No. 176/RJT/2022. Thereafter, the assessing officer has framed the appeal effect order u/s 143(3) r.w.s. 263 of the Act dated 27-03-2023 wherein the assessing officer has disallowed the deduction claimed by the assessee u/s 80P(2)(d) of the Act. Against this order, the assessee filed appeal before Ld. CIT(A) who has allowed the appeal of the assessee by following judgment of the Jurisdictional High Court of Gujarat and deleted the addition pertaining to Section 80P(2)(d) of the Act. Against this order of the Ld. CIT(A), the Revenue is in appeal before this Tribunal and the solitary grounds of the Revenue is that the deduction u/s 80P(2)(d) of the Act allowed by the Ld. CIT(A) is not in accordance with law.

However, meanwhile, we find that the order passed by the Tribunal, in wherein the Tribunal has quashed the 263 proceedings, were carried by the Department in appeal before the Hon`ble High Court of Gujarat, who has dismissed the appeal of the department for the same assessment year 2017–18, in assessee’s own case vide 174 taxmann.com 868 (Guj.), wherein it was held as follows:

The Supreme Court in another recent case of Principal Commissioner of Income- tax 2 v. Shree Gayatri Associates [2019] 106 taxmann.com 31/263 Taxman 672 (SC), held that where Pr. CIT passed a revisional order making addition to assessee's income under Section 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of on- money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was liable to be dismissed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revisional order under Section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal thus set aside revisional order passed by Commissioner. The High Court upheld Tribunal's order. The Supreme Court while dismissing the SLP filed by the Department held as under: We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgement referred to the detailed correspondence between Assessing Officer and the assessee Kutch District Co-op. Milk Producers Union Ltd. (AY : 2017-18) 7 during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed"

In our considered view, this is not a fit case for invocation of ns of Section 263 of the Act. This is for the reason that firstly, we that the assessing officer had examined the issue in detail during course of assessment proceedings, and it is not a case where there was any apparent lack of enquiry on this aspect by the assessing officer. Secondly, the assessing officer had taken a view which is a legally plausible view and it is a well settled law that 263 proceedings cannot be resorted to by the PCIT only with the view to supplant his own view with the view taken by the assessing officer. Further, the decision of KatlaryKariana Supra was on the aspect of reopening of assessment under Section 147 of the Act and not directly on the issue of claim of reduction under Section 80P of the Act. Therefore, once it is seen from the records that the assessing officer had made due enquiries during the course of assessment proceedings on this aspect and had taken a view, which is a legally possible view, then, in our considered view PCIT cannot reason to 263 proceedings only to supplant his own view with the view taken by the Assessing Officer. Further, we observe that the PCIT has also factually erred in observing that there was no enquiry by the assessing officer on this aspect. Accordingly, in light of the facts of the instant case, and the judicial president of the subject, we hold that the order passed by PCIT under Section 263 of the Act is liable to be set aside."

In Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State [2000] 109 Taxman 66/243 ITR 83 (SC), wherein, the Hon'ble Apex Court has held as under :- "6. A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to Section 263(1) of the Act.

The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. 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 example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where 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 Kutch District Co-op. Milk Producers Union Ltd. (AY : 2017-18) 8 law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. (See Rampyari Devi Saraogi v. CIT and in Tara Devi Aggarwal v. CIT.)"

In the result, appeal find by the revenue is dismissed.