APURVA NATVAR PARIKH & CO. PVT. LTD.,MUMBAI vs. ACIT CENT. CIR. - 7(1), MUMBAI

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ITA 4689/MUM/2016Status: DisposedITAT Mumbai27 April 2018AY 2009-103 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT's revisionary order was illegal and without jurisdiction. Consequently, the subsequent assessment order passed based on the illegal revisionary order was also invalid.

What were the facts?

The assessee received a one-time membership entrance fee, which was initially treated as a capital receipt. The CIT invoked revisionary powers under Section 263, deeming the assessment erroneous and prejudicial to revenue. The Tribunal later quashed the CIT's revisionary order.

What were the issues?

Whether the CIT's revisionary order under Section 263 was justified and legal, and the validity of the subsequent assessment order.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य, राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार- PER RAJENDRA, AM- अनुसार Challenging the order dated 10/05/2016 of the CIT (A) -49,Mumbai, the assessee has filed the present appeal.Assessee-company engaged in the business of warehousing,construction activities and running a club,filed its return of income on 30/09/2009, declaring total income at Rs. 7.06 crores.The Assessing Officer (AO) completed the assessment u/s.143(3)of the Act,on 30/12 / 2011,assessing its income at Rs. 9.87 crores. Brief Facts 2.A revisionary order,as per the provisions of section 263 of the Act, was passed by this CIT, Central-IV,on 19/11/2013,wherein the assessment completed by the AO was held to be erroneous and prejudicial to the interest of revenue with regard to the issue relating to treatment of receipt of one-time membership entrance fee of Rs. 2.51 crores. The assessee had claimed that the entrance fee was a capital receipt and the then AO had accepted the claim made by the assessee while passing the original order.In his revisionary order, the CIT set aside the assessment order with a direction to the AO to tax the entrance fee after affording a reasonable opportunity of hearing.In pursuance of revisionary order, the AO completed the assessment, u/s. 143 (3) r.w.s.263 of the Act, on 24/02/2015, determining the income of the assessee at Rs .12.39 crores.

1.

4689/M/16 Apurva Natvar Parikh & Co.Pvt.Ltd. 3.Aggrieved by the above order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).After considering the available material,he referred to the order of the tribunal for the AY.s 2006-07 to 2008-09 (ITA/2146 and 2147/Mum/2009 and ITA 2283/ Mum/2011,dated 20/11/2015)and directed the AO to tax 1/25th part of one-time member -ship fees in each year, over the period of 25 years, rather than taxing the entire amount in the AY. 2009-10.

4.In the meanwhile the assessee filed an appeal before the tribunal challenging the revisionary order of the CIT,dated 19/11/2013.It was brought to our notice that the order passed by the him,u/s. 263 of the Act,was quashed by the Tribunal vide its order dated 24/10/2017 (ITA/ 444/ Mum/2014,AY.2009-10).We are reproducing the operative part of the order of the Tribunal and that reads as under: “8. A perusal of the order passed by the CIT indicated that the assessment order passed by the Assessing Officer was cancelled on the ground that the Assessing Officer has not made proper enquiry and verification in respect of the issue as discussed above. This, in our considered opinion, cannot be sufficient ground for cancelling the assessment. While making the assessment order, it is the satisfaction of the Assessing Officer who made the enquiry and it should be touchstone of assessment order passed by him. No cogent material or evidence was brought to our knowledge by the Ld. DR which may prove that view taken by the Assessing Officer in the case of the assessee was unsustainable in law. Therefore, we are of the view that the order passed by the CIT is illegal and without jurisdiction. If the order passed by the CIT is sustained then this will permit the illegality to continue and the subsequent action is carried out on the illegal order is also illegal per se.

9.

In the result, the appeal filed by the assessee is allowed.” As the revisionary order of the CIT has been declared illegal,so,the consequential order of the AO passed u/s. 143(3) r.w.s 263,dtd.,would not survive.Therefore,reversing the order of the FAA,we decide the effective ground of appeal in favour of the assessee.

As a result,appeal filed by the assessee stands allowed. फलतः िनधा�रती �ारा दािखल क� गई अपील मंजूर क� जाती है. Order pronounced in the open court on 27th April, 2018. आदेश क� घोषणा खुले �यायालय म� �दनांक 27 अ �ैल, 2018 को क� गई । Sd/- Sd/- (राम लाल नेगी राम लाल नेगी राम लाल नेगी / Ram Lal Negi) (राजे�� / Rajendra) राम लाल नेगी �याियक सद�य / JUDICIAL MEMBER लेखा लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य मुंबई Mumbai; �दनांक/Dated : 27.04.2018. Jv.Sr.PS. आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1.Appellant /अपीलाथ� 2. Respondent /��यथ� 2

4689/M/16 Apurva Natvar Parikh & Co.Pvt.Ltd.

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