TaxTMI 
TaxTMI 
2010 (10) TMI 490
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....9.7.2005 declaring total income of Rs. 20,51,886. Assessment was completed u/s 143(3) on 27.11.2006. In this order, various additions were made and the income was computed at much higher than declared by the assessee by making additions on the following reasons: 1. Fair market value as on 1.4.1981 was adopted @ Rs. 1 lakh/ground instead of Rs. 3,24,500 adopted by the assessee. 2. Indexation for building value was disallowed. 3. Expenses to the tune of Rs. 1.98 crores was disallowed. 3. Aggrieved by the above order, first appeal was filed before the ld. CIT(A) , who vide his order dated 31.12.2007 partly allowing the appeal directed the Assessing Officer as under: 1. Adopt fair market value of the property ....
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....o Rs. 35.25 lakhs 5. For revising the order, the ld. CIT show caused the assessee u/s 263 of the Act and after hearing the version of the assessee, it was found that the Assessing Officer has not dealt with the following issues: 1. Adopt fair market value of the property as on 1.4.1981 at Rs. 3,24,500 . 2. Allow the benefit of indexation while computing the long term capital gains/loss on building. 3. Allow Rs. 42,50,000 being payment made to Mr.Naresh Reddy of Rs. 30 lakhs and Mr.Suresh Reddy of Rs. 12.5 lakhs to vacate the property, as these expenditure were incurred wholly and exclusively in connection with transfer of property. 6. Therefore, the ld. CIT cancelled the order and directed the Assessing Offic....
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....e that an order can be revised only and only if twin conditions of 'error in the order' and 'prejudice caused to the Revenue' co-exist. The subject of 'revision under section 263' has been vastly examined and analysed by various Courts including that of Hon'ble Apex Court. The revisional power conferred on the CIT vide section 263 is of vide amplitude. It enables the CIT to call for and examine the records of any proceeding under the Act. It empowers the CIT to make or cause to be made such an enquiry as he deems necessary in order to find out if any order passed by Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. The only limitation on his powers is that he must have some material(s) which would....
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....e above context. The fundamental principles which emerge from the several cases regarding the powers of the CIT under section 263 may be summarized below: (i) The CIT must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interests of the revenue. Both the conditions must be fulfilled. (ii) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement or order being erroneous. (iv) If the order is pas....
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....writing and the Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 8. After hearing both sides, it was noticed that in so far as application of section 50C was not in vogue at the relevant time as it was made effective with effect from 1.4.2003. It was argued that all these issues involved in this appeal had already been the subject matter of first appeal before the ld. CIT(A), who vide his order dated 31.12.2007 in I.T.A.No. 117/06-07, gave part relief to the assessee against which the Department has preferred appeal before the Tribunal in I.T.....