Delhi High Court
Commissioner Of Income Tax vs Anil Kumar Sharma on 24 February, 2010
Author: Siddharth Mridul
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 24th February, 2010
+ ITA No.820/2009
COMMISSIONER OF INCOME TAX ..... Appellant
- versus -
ANIL KUMAR SHARMA ..... Respondent
Advocates who appeared in this case:
For the Appellant : Ms Prem Lata Bansal
For the Respondent : Mr V.P. Gupta with Mr Basant Kumar
CORAM:
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SIDDHARTH MRIDUL
1. Whether reporters of local papers may be allowed
to see the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the
Digest?
SIDDHARTH MRIDUL, J
1. The present is an appeal by the Revenue against the order of the
Income Tax Appellate Tribunal in ITA No.2771/Del./2007 pertaining to
the assessment year 2003-04.
2. The respondent/assessee, an individual had filed its return of
income for the relevant assessment year on 25th November, 2003
declaring total income at Rs 1,64,06,770/-. The Assessing Officer issued
notice under Section 143(2) of the Income Tax Act, 1961, (for short „the
said Act) to the assessee, calling for information. Thereafter vide
assessment order dated 30th September, 2005, the Assessing Officer
accepted the return of income submitted by the assessee.
3. It is seen from the record that on the proposal of the Assessing
Officer, the learned CIT issued a notice under Section 263 of the said
Act. The CIT noticed that one Sh. Ashok Kumar Sharma, resident of 12-
DM Block, Saket, New Delhi had received compensation for the land at
village Tughlakabad and that the said Ashok Kumar Sharma had
transferred 50% of such compensation to the assessee at a sum of Rs
27,00,000/- only, whereas the compensation granted by the Supreme
Court in relation to the said land was Rs 1.82 crore. It was further
noticed by the CIT that the TDS deducted on the compensation had also
been transferred by the said Ashok Kumar Sharma in the name of the
assessee. The CIT came to a conclusion that credit of TDS can be
transferred mainly to a person who is acting as agent or representative of
the entitled person, and that such issues had not been examined by the
Assessing Officer. The CIT, therefore, came to a conclusion that the
order of the Assessing Officer was erroneous and prejudicial to the
interest of the Revenue and deserved to be set aside. The assessment
framed was, therefore, reopened under Section 263 of the said Act.
4. Before the Tribunal it was the case of the assessee that the
compensation received by him on purchase of the award was offered for
tax under the head "capital gains". The assessee further submitted that
the Assessing Officer had issued a detailed questionnaire and invited the
explanation of the assessee on various issues as was discernable from the
notice issued under Section 142(1) of the said Act. The assessee‟s case
was that the Assessing Officer had examined every aspect and had
applied his mind on all the facts before accepting the computation of
income submitted by the assessee and passing the assessment order. It
was the assessee‟s contention that a specific reply had been submitted by
the assessee with regard to the purchase of land at village Tughlakabad
and a copy of the award passed by the Hon‟ble High Court in respect of
this land was also submitted to the Assessing Officer.
5. The Tribunal after examining the facts of the case observed that
although it is not discernible from the assessment order whether the
Assessing Officer had applied his mind or not, but it was the prerogative
of the Assessing Officer to draft his order, and if he failed to record
certain findings, the assessee could not be penalized therefor. The
Tribunal further observed that what has to be ascertained is whether the
Assessing Officer had investigated the issue and applied his mind to the
whole record. In this behalf it noted that the Assessing Officer had asked
the assessee to submit the Purchase Deed in respect of the purchase of
land at village Tughlakabad and that the assessee in response thereto had
supplied requisite details and submitted a copy of the High Court‟s
decision in relation to the award of compensation etc. The Tribunal,
therefore, came to the conclusion that the complete details were filed
before the Assessing Officer and that he applied his mind to the relevant
material and facts, although such application of mind is not discernable
from the assessment order. The Tribunal held that, the Commissioner in
proceedings under Section 263 also had all these details and material
available before it, but had not been able to point out defects conclusively
in the said material, for arriving at a conclusion that particular income
had escaped assessment on account of non-application of mind by the
Assessing Officer. The Tribunal, therefore, allowed the appeal of the
assessee and quashed the order of the Commissioner passed under
Section 263 of the said Act.
6. In Commissioner of Income Tax vs. M/s Sunbeam Auto Ltd: ITA
No.1399/2006 decided on 11th September, 2009, it was observed that:
"As noted above, the submission of learned counsel for
the Revenue was that while passing the assessment order,
the AO did not consider this aspect specifically whether
the expenditure in question was revenue or capital
expenditure. This argument predicates on the assessment
order, which apparently does not give any reasons while
allowing the entire expenditure as Revenue expenditure.
However, that by itself would not be indicative of the fact
that the AO had not applied his mind on the issue. There
are judgments galore laying down the principle that the
AO in the assessing order is not required to give detailed
reason in respect of each and every item of deduction, etc.
Therefore, one has to see from the record as to whether
there was application of mind before allowing the
expenditure in question as revenue expenditure. Learned
counsel for the assessee is right in his submission that one
has to keep in mind the distinction between "lack of
inquiry" and "inadequate inquiry". If there was any
inquiry, even inadequate that would not by itself give
occasion to the Commissioner to pass orders under
Section 263 of the Act, merely because he has different
opinion in the matter"
The High Court in the said decision further went on to observe that:
"There must be some prima facie material on record to
show that tax which was lawfully exigible has not been
imposed or that by the application of the relevant statute
on an incorrect or incomplete interpretation a lesser tax
than what was just has been imposed."
7. In view of the above discussion, it is apparent that the Tribunal
arrived at a conclusive finding that, though the assessment order does not
patently indicate that the issue in question had been considered by the
Assessing Officer, the record showed that the Assessing Officer had
applied his mind. Once such application of mind is discernable from the
record, the proceedings under Section 263 would fell into the area of the
Commissioner having a different opinion. We are of the view that the
findings of facts arrived at by the Tribunal do not warrant interference of
this Court. That being the position, the present case would not be one of
„lack of inquiry‟ and, even if the inquiry was termed as inadequate,
following the decision in M/s Sunbeam Auto Ltd (supra), "that would
not by itself give occasion to the Commissioner to pass orders under
Section 263 of the said Act, merely because he has a different opinion in
the matter." No substantial question of law arises for our consideration.
Consequently, the appeal is dismissed.
SIDDHARTH MRIDUL, J
BADAR DURREZ AHMED, J
FEBRUARY 24, 2010
dn
