TaxTMI 
TaxTMI 
2012 (8) TMI 96
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.... additions/disallowances including the disallowance of Rs.3,63,541 u/s 40a(ia). The CIT issued a show cause notice dated 19.12.2011 to assessee requiring the assessee to show cause as to why the assessment order u/s 143(3) should not be treated as "erroneous and prejudicial to the interest of the revenue" and accordingly the assessment order passed u/s 143(3) be made subject matter of revision u/s.263 for two reasons namely the deduction of TDS without surcharge and on allowability of depreciation on WDV of the block of building. The CIT was of the view that the scrutiny of the details of TDS deducted and deposited revealed that the TDS has been deducted on various payments without surcharge. According to CIT the assessee has deducted TDS at lesser rate (without surcharge) instead of deducting it with surcharge of 10% and accordingly the amount of Rs.76,52,996/- was required to be disallowed u/s.40a(ia) and therefore the order of the AO was erroneous and prejudicial to the interest of the Revenue. 3. In response to the show cause notice, the assessee replied and interalia submitted that the as per the provisions of section 2(6) of the Finance Act 2007, the TDS computed under the r....
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....ated 21.10.2011 of Kolkata Tribunal in the case of DCIT Vs S.K.Tekriwal (ITA No 1136/Kol/2010) wherein it was held that the conditions laid down u/s 40a(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed u/s 40a(ia) of the Act but where tax is deducted by the assessee, even under bona fide wrong impression, under wrong provisions of TDS, the provisions of section 40a(ia) of the Act cannot be invoked. 6. The Ld. A.R. further submitted that for the purpose of invoking the provisions of section 263 both the conditions i.e. the order is prejudicial to the interest of Revenue and the order is erroneous has to be simultaneously fulfilled. If only one condition is fulfilled, then also provisions of s. 263 cannot be invoked. The Ld..A.R. further stated that the CIT has not stated and given a finding as to how the order passed by the AO is erroneous and is also prejudicial to the interest of Revenue. He thus urged that the order of CIT passed u/s.263 be quashed. 7. On the other hand the Ld. D.R. supported the order of CIT. 8. We have heard the rival contentions....
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....junction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue." 11. The Bombay High Court in the case of CIT Vs Gabriel India Ltd [1993] 203 ITR 108 [Bom] has discussed the exercise of power of CIT to make revision suo moto. The Hon'ble High Court has held as under: "The power of suo motu revision under sub-section (1) of section 263 of the Income-tax Act, 1961, is in the nature of supervisory jurisdiction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section, viz., (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elabo....
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....was made to the decision of this court in Gee Vee Enterprise (1975) 99 ITR 375 (Del). There is no discussion in the order of the Commissioner as to how and in what manner the enquiry was lacking and what was the fault and default committed by the AO. The AO had examined the said aspect in the original assessment proceedings and accepted the stand of the assessee. There is no finding of the CIT that the order passed by the AO was erroneous and prejudicial to the interest of the Revenue. 14. The question of "lack of inquiry" and "inadequate inquiry" has been explained by this court in the case of CIT Vs Sunbeam Auto Ltd (2011) 332 ITR 167 (Del) and it has been observed as under (page 179): "... There are judgements galore laying down the principle that the AO in the assessment 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. If there was any inquiry, even inadequate, that would not by itself give occasion to the CIT to pass order u/s.263 of the Act merely because he has a different ....
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....ut the CIT conducting verification /inquiry. The order of the AO may be or may not be wrong. The CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. This is not permissible. An order is not erroneous unless the CIT holds and records reasons why it is erroneous. An order will not become erroneous because on remit, the AO may decide that the order is erroneous. Therefore, the CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the AO but also the record as it stands at the time of examination by the CIT (see CIT vs Shree Manjunathesware Packing Products and Camphor Works (1998) 231 ITR 53 (SC). Nothing bars/ prohibits the CIT from collecting and relying upon new / additional material /evidence to show and state that the order of the AO is errone....