Commissioner Of Income Tax, Kota v. Shri Parmanand

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 137 / 2014 Commissioner of Income Tax, Kota ----Appellant Versus Shri Parmanand, Prop., Parmanand Contractor, Rangbari, Kota ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo JainFor Respondent(s) : Mr. Muzaffar Iqbal for Mr. Siddharth Ranka _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 07/11/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the assessee and set aside the order ofCIT(A). 2.This Court while admitting the matter framed the following substantial questions of law:- “i) Whether the Tribunal was legally justified inholding that the notice u/s 263 issued by theCIT(A) exercising the revisional power conferredu/s 263 was a case of reopening and not one byholding the order of the Assessing Officer to beerroneous and prejudicial to the interest of therevenue since the Assessing Officer did notconduct proper inquiries. ii) Whether the Tribunal was legally justified inholding that the twin conditions as per provisionof section 263 did not co-exist and the Assessing Officer could not propose his own order to beerroneous and prejudicial to the interest of therevenue?” 3.The Tribunal while deciding the matter has observed asunder:- “2.7. Adverting to the facts of the case, we areafraid that the AO himself can find his order aserroneous and prejudicial to the interest of theRevenue and can make such proposal to the ld.CIT u/s 263 of the Act. The power of revision asdiscussed above widely vests in Commissionerwho may call and examine the record of anyproceeding under the Act and if he considers thatany order passed therein by the AO is erroneousand prejudicial to the interest of the Revenue. Hemay after giving the assessee a particularopportunity of being heard or after making anysuch enquiry revise that order. Therefore, it isvery clear from the provision of Section 263 ofthe Act that the AO has to examine the recordhimself to come to a conclusion that the order iserroneous and prejudicial to the interest of theRevenue. There is no such procedure laid underthis Section wherein the AO himself can proposethe order to file u/s 263 of the Act. This action ofthe AO is unwarranted and not legal. On thebasis of such proposal, the ld. CIT cannot takeaction as he has taken in this regard. Thedecision of ITAT Lucknow Bench in the case ofJheendu Ram vs. CIT, 130 TTJ (Luck) and ITATJaipur Bench in the case of Rajeev Arora vs. CIT135 TTJ 01 (JP.) are relevant. The ratiodecidendie of the above two orders is that the AOcannot propose his own order by treating it aserroneous and prejudicial to the interest ofRevenue for getting it revised by the ld.Commissioner u/s 263 of the Act. This procedureis unknown to the Income Tax. Accordingly, onthis very basis, the appellate order is struckdown and quashed. 2.8.On merits also, this is a case of reopeningand during reopening both the issues raised bythe AO himself have been duly verified by him.The assessee has clearly explained the debit andcredit entries as discussed in the writtensubmission and also explained the cost ofimprovement shown by the assessee and thestatus of the land etc. Therefore, this is not acase of no verification or no proper verification.The verification done by the AO is also to be 2.8.On merits also, this is a case of reopeningand during reopening both the issues raised bythe AO himself have been duly verified by him.The assessee has clearly explained the debit andcredit entries as discussed in the writtensubmission and also explained the cost ofimprovement shown by the assessee and thestatus of the land etc. Therefore, this is not acase of no verification or no proper verification.The verification done by the AO is also to be treated as proper unless some specificinstruction or prescription of a particular sectionof the Act has not been carried by the AO or elsethe AO has not conducted enquiry as demandedby law. In our considered opinion, this is notsuch a case. The twin conditions of Section 263as discussed above in detail are not found to co-exist. Therefore, we set aside the impugnedorder dt. 07.03.2013 passed by the ld. CIT andallow the appeal of the assessee.” 4.We are in complete agreement with the view taken by the Tribunal. 5.Hence, both the issues are required to be answered in favour of the assessee and against the department. 6.The appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S. JHAVERI)J. A.Sharma/37