2005 (6) TMI 246

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..... 263 dt. 3rd Oct., 2000, vide which he pointed out two errors on the basis of tax audit report vide Sch. 13 of accounting policy and notes of accounts, one in the valuation of the closing stock and the other in closing stock of finished goods and work-in-progress, which according to him were undervalued. The CIT concluded after hearing the assessee that on both the above counts, the assessment order in question is erroneous as well as prejudicial to the interest of the Revenue. Consequently, he revised the assessment order and enhanced the assessed income of the assessee by Rs. 1,45,301. 3. The assessee-company is aggrieved against this order. 4. We have heard the rival submissions and perused the evidence available on record. 5. ....

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....y not a State. Needless to say, the Parliament has given a very limited power of revision under this Act only in a case where the order is erroneous as well as prejudicial to the interest of Revenue and not otherwise, meaning thereby, an order can be revised when it is both erroneous and prejudicial to the interest of Revenue. When an order is erroneous alone, it cannot be1 revised, likewise, when an order is prejudicial to the interest of the Revenue alone, it cannot be revised. Both these conditions must co-exist to give revisional powers to the CIT. 7. Having stated something about the legal provision, we would now revert to the facts of the case in hand. Before we move further, we would like to mention that the notice issued by the C....

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..... Addl. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del), Hon'ble Madhya Pradesh High Court in the case of CIT vs. Kohinoor Tobacco Products (P) Ltd. (1998) 148 CTR (MP) 536 : (1998) 234 ITR 557 (MP) and Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), and has come to the conclusion that the assessment order is erroneous. The CIT has not accepted the submission of the assessee that the assessment order was made after thorough and detailed enquiry and, therefore, s. 263 cannot be invoked. The assessee has also relied on the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Shiv Hari Madhusudhan (1998) 145 CTR (Raj) 349 : (1998) 233 ITR 649 (Raj). 9. Sec. ....

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....t and octroi of the raw materials are included, it will not increase the cost of the produced article. In any case, when the method is regularly employed by the assessee it will make no difference as a whole on the taxability of income and in that case the order cannot be said to be erroneous. The decisions relied by learned CIT are not applicable in this case. The AO has made requisite enquiries. It is not necessary that he should enter necessarily in detailed correspondence, etc. for the matter. Thus, it cannot be said that the AO has not applied his mind. This is very vague term and if it is given a very enlarged interpretation, it will engulf each and every order in its sphere and render this provision redundant. The Rajasthan High Cour....