Decision Of This Court In Cit v. Gabrial (I) Ltd.[1

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1399 OF 2016 Pr.Commissioner of Income Tax, Central-2.… Appellant V/s. M/s Ambit Multitrade P. Ltd.… Respondent --- Mr.Ashok Kotangle with Ms. Padma Divakar for the Appellant.Mr.R.Murlidhar with Mr.P.C.Tripathi i/by Mr.Atul Jasani for theRespondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : JANUARY 18, 2019. P.C.:- 1.This Appeal under Section 260-A of the Income Tax Act,1961 (the Act), challenges the order dated 28[th] October, 2015passed by the Income Tax Appellate Tribunal (the Tribunal). ThisAppeal relates to Assessment Year 2010-11. 2.The Revenue urges the following question of law for ourconsideration: “Whether on the facts and in circumstances of thecase and in Law, the Tribunal was justified in setting aside the order of the CIT passed underSection 263 of th Act?” 3.The respondent-assessee is engaged in the business of share- trading. Its return of income for the subject assessment year wastaken up for scrutiny and on 3[rd] January, 2013 an assessmentorder was passed under Section 143(3) of the Act determining itsincome at 'Nil'. 4.The Commissioner of Income Tax (CIT) in exercise ofpowers under Section 263 of the Act by order dated 27[th]February, 2015 revised the assessment order dated 3[rd] January,2013. This on the ground that the Assessing Officer while passingthe Assessment Order dated 3[rd] July, 2013 had not conducted anyinquiry with respect to genuineness of the persons who hadinvested in the share capital bearing in mind the high premiumof Rs.490/- per share having face value of Rs.10/- per share.Accordingly, the CIT by her order dated 27[th] February, 2015 setaside the assessment order dated 3[rd] January, 2013 and restoredthe assessment to the Assessing Officer for passing a fresh orderafter due application of mind. 5.Being aggrieved, the respondent filed an appeal before theTribunal. The impugned order dated 28[th] October, 2015 on factsfound that originally the return was processed under Section143(1) of the Act. However, thereafter with approval of ChiefCommissioner of Income Tax, the Assessing Officer had issuednotices to the respondent under Section 143(2) of the Act seekingan explanation from the respondent for the high share premiumcharged as well as in respect of the huge closing stock. TheTribunal further records that the respondent gave completeexplanation in its two letters to the Assessing Officer and thesame was subjected to verification by the Assessing Officer. Thus,the Tribunal held that the CIT in her order in Revision hadcompletely ignored the two letters written by the Assessing Officerexplaining in detail about the high share premium and hugeclosing stock issue. This being evidence of due application ofmind by the Assessing Officer rendering the order dated 27[th]February, 2015 of the CIT bad as the Assessment Order dated3[rd] July, 2013 was not erroneous. This on application of the decision of this Court in CIT Vs. Gabrial (I) Ltd.[1]. 6.Mr.Kotangle, learned counsel in support of the appeal placesreliance upon the order dated 27[th] February, 2015 of the CITwhile exercising her powers of revision. It is further submittedthat mere stating by the Assessing Officer in her Assessment Orderdated 3[rd] January, 2013 that she has verified the detailsformulated during the assessment proceedings, does not meanthat the same has been verified. decision of this Court in CIT Vs. Gabrial (I) Ltd.[1]. 6.Mr.Kotangle, learned counsel in support of the appeal placesreliance upon the order dated 27[th] February, 2015 of the CITwhile exercising her powers of revision. It is further submittedthat mere stating by the Assessing Officer in her Assessment Orderdated 3[rd] January, 2013 that she has verified the detailsformulated during the assessment proceedings, does not meanthat the same has been verified. 7.We find that the impugned order of the Tribunal hasexamined the records while come to the finding that theAssessing Officer had made necessary inquiry/ verification withregard to both the issues namely high share premium as well asthe high closing stock. Moreover, as noted this inquiry was doneby the Assessing Officer after having obtained the necessaryapproval from the Chief Commissioner of Income Tax. Infact thisitself is an evidence of application of mind of the AssessingOfficer, followed by notice to the respondent and verification of Priya Soparkar the response of the respondent. The aforesaid facts whileexercising the powers of revision has been completely ignoredthe CIT. The impugned order of the Tribunal correctly heldfollowing the decision of this Court in Gabrial (I) Ltd.(supra)that the Assessment Order dated 3[rd] July, 2013 cannot be termederroneous simply because he may have written the order moveelaborately or taken a different view on facts (which is notperverse). Thus, as the impugned order dated 28[th] October, 2015of the Tribunal applied the decision of this Court no substantialquestion of law as proposed arises. Thus, not entertained. 8.Accordingly, Tax Appeal is dismissed. No order as to costs. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….