Smt. Vijaya Srinivasan Flat No.33 & 34, Rishikesh Apartments, No.38, G..N. Chetty Road, T. Nagar, Chennai 600 017 vs The Assistant Commissioner of Income Tax, Circle II,Chennai
October, 24th 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
`C ' BENCH : CHENNAI
[BEFORE DR. O.K.NARAYANAN, VICE PRESIDENT AND
SHRI S.S. GODARA, JUDICIAL MEMBER]
Assessment year : 2008-2009
Smt. Vijaya Srinivasan vs The Assistant Commissioner of
Flat No.33 & 34, Income Tax,
Rishikesh Apartments, Circle II,
No.38, G..N. Chetty Chennai
Chennai 600 017
Appellant by : Shri. K. Balasubramanian
Respondent by : Shri.Alka Rajvanshi Jain (CIT)
Date of Hearing : 08-10-2013
Date of Pronouncement : 09-10-2013
PER S.S. GODARA, JUDICIAL MEMBER
This appeal of the assessee for assessment year
2008-09 ,emanates from the order dated 25.03.2013 passed by the
CIT-IV, Chennai in C.No.46(16)/CIT-IV/2012-13, in proceedings under
section 263 of the Income Tax Act 1961 [in short the "Act"].
:- 2 -: I.T.A.No.644/Mds/2013
2. The facts of the case are in a very narrow compass. The
assessee is an `individual'. She is engaged in the business of share
trading. On 28.07.2008, the assessee had filed her `return' declaring
income of Rs.58,50,180/- which was `summarily' processed.
Thereafter, the Assessing Officer framed `regular' assessment in her
case vide order dated 31.12.2010 treating long term capital gain
`exempt' income under section 10(38) amounting to Rs.1,78,11,947/-.
The assessee had also earned dividends under section 10(34) of the
Act an Rs.29,34,251/-. In assessment order, the Assessing Officer
specifically observed that no disallowance under section 14A was
required since entire long term capital gain claim was treated as
business income. In this manner, the assessment was finalized.
3. Coming to the present case, on 12.03.2013, the CIT issued a
notice after observing that since the Assessing Officer had not
considered making any disallowance under section 14A of the Act qua
the assessee's exempt income of Rs.29,34,251/-, the assessment was
erroneous causing prejudice to the interest of the Revenue.
Thereafter, in the order under challenge, he has held that the
Assessing officer had wrongly not considered the issue of disallowance
:- 3 -: I.T.A.No.644/Mds/2013
under section 14A of the Act and directed him to pass fresh
Therefore, the assessee is in appeal.
4. In the course of hearing, the only argument advanced by the
assessee is that in the assessment order, the Assessing Officer had
duly considered the issue of disallowance under section 14A of the
Act which was not made by observing that entire long term capital
gains had been treated as business income. To buttress her
submissions, the assessee had drawn our attention to the assessment
order and prayed for acceptance of the appeal.
5. The Revenue draws support from the order under challenge and
prays for confirmation thereof.
6. We have heard both parties and perused the case file. It is
evident to us that the CIT had issued notice under section 263 only on
the ground that the Assessing Officer; while finalizing the assessment,
had not considered the issue of disallowance under section 14A of the
Act qua the assessee's exempt income of Rs.29,34,252/-. However, a
perusal of the assessment order shows that in para 3, the
:- 4 -: I.T.A.No.644/Mds/2013
Assessing Officer had duly considered the very issue but did not make
disallowance because entire long term capital gains were treated as
business income. In these circumstances, the only reason quoted by
the CIT in invoking jurisdiction under section 263 of the Act appears to
be contrary to the facts on record. We make it clear that in section
263 proceedings, the validity thereof is to be judged qua the reasons
stated in the show cause notice which in the instant case turns out to
be against the record. So, we hold that the CIT has wrongly assumed
jurisdiction under section 263 of the Act in directing the Assessing
Officer to pass a fresh assessment order keeping in mind the
provisions of section 14A of the Act. Therefore, the relevant contention
of the assessee challenging the CIT's order stands accepted.
7. In the result, the appeal of the assessee is allowed.
Order pronounced on Wednesday, the 9th of October, 2013, at
(DR. O.K. NARAYANAN) (S.S. GODARA)
VICE PRESIDENT JUDICIAL MEMBER
Dated: 09th October, 2013.
Copy to: Appellant/Respondent/CIT(A)/CIT/DR
:- 5 -: I.T.A.No.644/Mds/2013