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PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeal by assessee under section 253 of the Income-Tax Act (“The Act”) are directed against the order ld. CIT-19, Mumbai under section 263 dated 23.07.2012 and CIT(A)-30, Mumbai dated 11.02.2013 for Assessment Year (AY) 2009-10. Both the appeal relates to assessment year & 1435/M/14- Bibhuti B. Dasgupta (HUF)
2009-10. In the assessee has raised the following grounds of appeal:
1. BREACH OF THE PRINCIPLES OF NATURE JUSTICE 1.1. The learned Commissioner of Income-tax -19, Mumbai [“ld.CIT”] erred in framing the revision order u/s. 263 of the Income - tax Act, 1961 ["the Act"] by not giving proper, sufficient and effective opportunity of being heard to the Appellant. 1.2. It is submitted that in the facts and the circumstances of the case, and in law, the order is required to be held as bad and illegal in breach of the principles of natural justice.
2. REVISION ILLEGAL 2.1 The Ld. CIT erred in revising the assessment order passed by the A.O., by invoking the provisions of section 263 of the Act. 2.2 While doing so, the Id. CIT failed to appreciate that: (i) The A.O. had made the necessary inquiries while framing the assessment order; (ii) The order was not' erroneous' within the meaning of section 263 of the Act; and (iii) It was not 'prejudicial to the interest of the revenue' within the meaning of section 263 of the Act. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such revision was called for. WITHOUT PREJUDICE TO THE ABOVE 3.1 The Id. CIT erred in holding that the fair market value of the flats, to be received by the Appellant on transfer of his immovable property, should be taken as 'consideration' while computing capital gain tax liability, and not the cost of construction on such flats. 3.2 It is submitted that in the facts and the circumstances of the case, and in law, no such substitution was called for.
Brief facts of the case are that for AY 2009-10, the assessee filed return of income on 28.08.2009 declaring total income of Rs. 17,46,41,580/-. The 2 & 1435/M/14- Bibhuti B. Dasgupta (HUF) assessment was completed on 26.12.2011 under section 143(3) of the Act.
The Assessing Officer (AO) while passing the assessment order computed the Long Term Capital Gain (LTCG) of Rs. 18,10,65,929/- against the LTCG of Rs. 17,16,82344/- as computed by assessee in its calculation for working the capital gain. Aggrieved by the order of assessment, the assessee filed appeal before the ld. CIT(A), challenging the additions on account of working the LTCG. Subsequently, the assessment order was revised by ld. CIT-19. The ld. CIT-19 vide its order dated 23.07.2012 and set-aside the order passed under section 143(3) dated 26.12.2011. While setting aside the assessment order , the AO was directed to make further enquiry and pass the afresh, after making enquiry with regard to Fair Market Value of the asset received or to be received in exchange of consideration and recalculate the LTCG. Thus, aggrieved by the order of ld. CIT-19, the assessee has filed the present appeal before us.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that the AO passed the assessment order after making full-fledged enquiry and recomputed the LTCG. The assessee has disclosed all information and furnished replies to the relevant query raised by AO during the assessment proceedings. After satisfaction of the reply of the assessee, the assessing officer passed the assessment order. The order passed by AO is neither 3 & 1435/M/14- Bibhuti B. Dasgupta (HUF) erroneous nor prejudicial to the interest of Revenue. It was submitted that the assessee was served with show-cause notice under section 263 dated 15.05.2012 for revising the assessment order passed under section 143(3).
The assessee filed its reply on 06.06.2012. In the reply, the assessee contended that during the assessment proceeding, after discussing and fully examining the LTCG earned and declared by the assessee on the sale and development right, the AO passed the assessment order under section 143(3) determining the capital gain at Rs. 18.10 Crore against Rs. 17.17 Crore declared by assessee, thereby the AO made the addition of more than Rs. 90 Lakhs. The assessee further contended that the AO issued details of show-cause notice vide letter dated 15.11.2011 raising specific query regarding the capital gain. The assessee made exhaustive written submission on 04.10.2011 and placed on record the entire factual and legal submission on the issue. The assessee also furnished copy of valuation report for considering at the end of AO after gathering all information during the assessment proceeding. The AO rework the capital gain on sale of development right. The assessee specifically contended that the AO has taken one of the possible views during the course of assessment. Mere fact that adopting some other alternative method could fetch more revenue would not render the assessment order erroneous. Every order which is passed on a possible view cannot be termed as prejudicial to the interest of revenue. 4 & 1435/M/14- Bibhuti B. Dasgupta (HUF)
It was further submitted that even if the order is prejudicial to the interest of revenue, no revision is possible, if the order is not erroneous, revision cannot be invoked to correct each and every type of mistake. In support of his submission reliance is made on the decision of Hon’ble Apex Court in Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] and CIT vs. Kwality Steel Suppliers Complex [(2017) 395 ITR 1 (SC)] and decision of jurisdictional High Court in CIT vs. Gabriel India Ltd. [(1993) 203 ITR 108 (Bom)].
In other alternative submission, the ld. AR of the assessee submits that the order is invalid as the AO adopted and followed one of the possible views while passing the assessment order. Merely facts that some other alternative method could fetch more revenue or the commission is not in agreement with the view taken by AO would not render the assessment order erroneous and prejudicial to the interest of revenue. The reliance is made in case of CIT vs. Max India Ltd. [(2007) 295 ITR 282 (SC)], Grasim Industry Ltd. vs. CIT [(2010) 321 ITR 92 (Bom)], CIT vs. LIC Housing Finance Ltd. [(2014) 367 ITR 458 (Bom)], CIT vs. Gera Developments (P) Ltd. [(2016) 387 ITR 691(Bom)] and CIT vs. Kiran Hirji Shah [(2015) 56 taxmann.com 360(Bom)]. 6. In further alternative submission, the ld. AR of the assessee submits that no revisional power should be exercised for directing full enquiry, where the AO has already conducted sufficient enquiry and has taken a possible view 5 & 1435/M/14- Bibhuti B. Dasgupta (HUF) after the enquiry. The power of revision can only exercise, where no enquiry as required under law is done. Reliance is made in case of CIT vs. Nirav Modi [(2017) 390 ITR 292 (Bom)], CIT vs. Nirav Modi [(2017) 77 taxmann.com 15(SC)], CIT vs. Nirav Modi [(2017) taxmann.com 78 (SC)], CIT vs. Sunbeam Auto Ltd. [(2011) 332 ITR 167 (Del)], CIT vs. Anil Kumar Sharma [(2011) 335 ITR 83 (Del)], CIT vs. New Delhi Television Ltd. [(2014) 360 ITR 44 (Del)]. 7. In other alternative submission, it was argued that against the addition made in the assessment order, the assessee filed appeal before the ld. CIT(A) and the ld. CIT was precluded from revising the assessment order on the issues which were subject matter of appeal pending before the ld. CIT(A). On the contrary, the ld. DR for the Revenue supported the order of ld. CIT. 8. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that the assessment order passed by AO on 26.12.2011 under section 143(3). While passing the assessment order, the AO recalculated the capital, against the capital gain computed by assessee in its working furnished before the AO, arisen from the development right sold by assessee. The assessee filed appeal before the ld. CIT(A). Thus, certainly the recalculation of LTCG was made by AO after raising sufficient queries during the assessment proceeding. The AO made the addition of more than Rs. 90 Lakhs in the assessment order. The assessee filed appeal before the ld. CIT(A). When the order was revised the 6 & 1435/M/14- Bibhuti B. Dasgupta (HUF) appeal on the same issue was pending before ld CIT(A). The appeal before the ld. CIT(A) was instituted on 11.01.2012. Show-cause notice under section 263 was issued on 15.05.2012. The ld. CIT issued show-cause notice for revision of assessment order passed under section 143(3) during the pendency of the appeal. The show cause notice was issued in respect of the same issue pending before the ld. CIT(A). Clause-(c) of Explanation 1 attached with section 263 prescribe that where any order passed by Assessing Officer is subject matter of appeal, the ld. Principle Commissioner of Income-tax or CIT is precluded to consider those issues , though he may consider the other issues which may not been considered or appealed in such appeal. In our view, when the subject matter of disallowance was pending adjudication before the ld. CIT(A). The ld. CIT ought not to have revised the order for passing assessment order afresh. Our view is also supported by the provision contained under section 251 of the Act, wherein the appellate Commissioner has a power to confirm, reduce, enhance or annul the assessment order.
Even on other alternative argument, we may note that the Hon’ble Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (supra) held that where two view was possible and the AO has taken one view. The order of ld. CIT revising order in such circumstances cannot be treated as order erroneous or prejudicial to the interest of Revenue. In view of the above, we accept the ITA No. 5129/M/2012 & 1435/M/14- Bibhuti B. Dasgupta (HUF) appeal of the assessee and set-aside the impugned order passed by ld. CIT under section 263 dated 23.12.2012.
In the result the appeal of the assessee is allowed.
The perusal of record reveals that the present appeal is filed after 292 days of prescribed period of limitation. Perusal of the record reveals that the assessee has filed an affidavit of Sh. Bibhuti B. Dasgupta Karta of aassessee firm in support of condonation of delay in filing the appeal. In the affidavit, the assessee has contended that the order passed by ld. CIT(A) dated 11.02.2013 on 13.03.2013 and the appeal is filed on 28.02.2014. It is further stated that against the assessment order, the assessee filed appeal before the ld. CIT(A) on 11.02.2002. During the pendency of appeal, the assessee received notice under section 263 from ld. CIT-19 for revising the assessment order framed under section 143(3). The assessment order was revised by ld. CIT-19 against which appeal was filed before the Tribunal.
The assessee was advised that the assessment order has been revised by ld. CIT-19, against which the appeal has been filed. The assessee was advised to wait for outcome of appeal filed before the Tribunal. It was advised that if the order passed under section 263 is quashed by Tribunal, the assessment order automatically would stands revived. However, The ld. CIT (A) dismissed the appeal of the assessee without giving any opportunity holding that appeal of the assessee has become infructuous. It was argued that 8 & 1435/M/14- Bibhuti B. Dasgupta (HUF) assessee has bonafide belief that assessee needs not to file appeal before the Tribunal.
On the other hand, the ld. DR for the Revenue submits that he has no objection, if the delay is condoned and the appeal is decided on merit. Considering the contents of affidavit, the submission of ld. AR of the assessee, we find that assessee explained his bonafidies in not filing the appeal within prescribed period of limitation. Our view is also supported by the decision of Hon’ble Supreme Court in Concord of India Insurance Co.
Ltd. v. Smt. Nirmala Devi AIR 1979 SC 1666, has held that a legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned. Eventually, an overall view in the larger interest of justice has to be taken. None should be deprived of adjudication on merits unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed filing of the appeal that he is careless, negligent and his conduct is lacking in bona fides. We are conscious of the facts that when technicalities and substantial justice are pitted against each other, the technicalities must be avoided. Considering the facts of the present case we have seen that substantial right of the assessee is an involved in the appeals, hence, we deem it appropriate to condone the delay in filing appeal. 9 & 1435/M/14- Bibhuti B. Dasgupta (HUF)
We have heard the parties on merit of the case. The ld. AR of the assessee submits that the ld. CIT(A) dismissed the appeal of the assessee holding that the assessment order has been set-aside under section 263 by Administrative Commissioner. Hence, the appeal has become infructuous. The ld. AR of the assessee submits that the appeal may be restored to the file of ld. CIT(A) to decide it afresh in accordance with law. On the other hand, the ld. DR for the Revenue conditionally agreed that this appeal may be restored to the file of ld. CIT(A) to decide on merit, only in case if the order passed under section 263 dated 26.07.2012 is held invalid by the Tribunal.
We have considered the rival submission of the parties and have gone through the orders of authorities below. As we have already declared the order passed by ld. CIT-19 under section 263 dated 23.07.2012 as invalid.
Hence, we deem it appropriate to restore the present appeal to the file of ld. CIT(A) to decide it afresh on merit. Needless to say that ld. CIT(A) shall grant reasonable opportunity before passing the order on merit.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on this 5th day of February, 2018. Sd/- Sd/- (B. R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 05 /02/2018 S.K.PS Copy of the Order forwarded to :
1. 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 10 & 1435/M/14- Bibhuti B. Dasgupta (HUF)