TaxTMI 
TaxTMI 
2012 (10) TMI 281
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....aring total income at Rs. 23,70,09,056/-. Case was taken up for scrutiny. Assessment was completed u/s. 143(3) vide order dated 27-11-2009 and after making additions the taxable income was determined at Rs. 23,86,42,916/-. Thereafter Ld. Commissioner of Income tax issued a show cause notice dated 19-5-2011 (page 1-3 of the written submissions) 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 be made subject matter of revision u/s. 263 for 3 reasons, namely, the assessee had not included the unutilized CENVAT credit of Rs. 2,72,67,.432/- while valuing the closing stock of raw materials and work in progress. Secondly, the refund of excise duty of Rs. 23,68,72,826/- was not included while computing the total income and thirdly the assessee had wrongly claimed "additional depreciation of Rs. 1,34,73,161/- on windmills to which the assessee was not entitled to. According to CIT as the A.O. had failed to examine the aforesaid 3 issues the order of the A.O. was erroneous and prejudicial to the interest of the Revenue. 4. In response to the sh....
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....ns to justify its stand. With respect to the 3rd issue of depreciation on wind mills, the Ld. A.R. submitted that before the A.O. the details of commencement of wind mill operations and power generated through it were furnished. After being satisfied with the submissions of the assessee, the A.O. made no addition on that account. 5. The assessee further submitted that the assessment u/s. 143(3) was completed by A.O. after detailed inquiry, verification of the details, books of accounts and other records called for from time to time. The specific queries raised during the course of hearing were replied to the satisfaction of the A.O. and the order was passed by A.O. after being satisfied by the replies and submissions furnished before him. Thus the order of the A.O., cannot be said to be without application of mind and therefore the order of the A.O. was not erroneous and prejudicial to the interest of Revenue. The assessee submitted before the Ld. CIT that the requirements of invoking the provisions of section 263 was that the order of the A.O. should be erroneous and prejudicial to the interest of the Revenue. Since both these conditions are not satisfied in the case of the ....
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....fter calling for all the necessary details, along with detailed explanations of the assessee and after making the requisite inquiries bringing all relevant facts on record and after having applied his mind to all aspects of the case." 7. Aggrieved by the aforesaid order of CIT, the assessee is in appeal before us. 8. Before us, the Ld. A.R. reiterated the submissions made before CIT. The Ld. A.R. placed on record the copy of the letter of DCIT dated 6-10- 2008 wherein the various details were called for from the assessee. The assessee placed on record the covering letter addressed to DCIT wherein the assessee had submitted the various details from time to time. The Ld. A.R. submitted that the assessee was following exclusive method of accounting for the purpose of accounting of sales, purchase and valuation of stock. Accordingly, the excise duty was not included. Even if the assessee followed inclusive method of accounting, the same would be tax neutral and which was demonstrated by the working given in the tax audit report. With respect to windmill, he pointed out to the fact that in the letter dated 24-11-2009, the assessee had explained that the entry passed in the books f....
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.... (1995) 213 ITR 843 (Raj.) (c) Ashok Leyland Ltd vs. CIT (2003) 260 ITR 599 (Mad.) 11. We have heard the rival contentions and perused the material on record. The issue before us is whether the CIT was justified in passing an order u/s. 263 of the Act. We observe that the CIT after verifying the assessment records was of the view that the order of the A.O. was erroneous and prejudicial to the interest of Revenue on three counts mentioned hereinabove in para 4. 12. A bare reading of Sec. 263 makes it clear that to justify exercise of jurisdiction by CIT, the order of the A.O. is to be erroneous in so far as it is prejudicial to the interest of the Revenue. The satisfaction of the aforesaid twin conditions is a prerequisite to justify intervention by the CIT under sec. 263 of the Act. The order should be erroneous so that Sec. 263 is attracted. Similarly, the second condition of the order being 'prejudicial to the interest of the Revenue' is to be applied in conjunction with an erroneous order of the A.O. So however, where the A.O. has adopted one of the course permissible in law or where two views are possible and the A.O. has taken a view which the Ld. CIT does not a....
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....ercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfies with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself would not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, that the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interests of the Revenue, then the power of suo motto revision cannot be exercised. Any and every erroneous order cannot be the subject matter of revision because the second requirement must be fulfilled." 14. It is also well-settled that order passed by the Assessing Officer would be erroneous only if the A.O. has not considered all materials or had not done proper examination or enquiry or verification or if the A.O. had completely omitted the issue, in question, from consideration and made the assessment in an arbitrary manner. In the case of CIT vs. Hero Auto Ltd. (2012) 343 ....
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....e of Gabriel India Ltd. (supra) specifically observed that "such decision of the ITO cannot be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. With respect to the issue as to whether the stand of the A.O. on the issue can be said to be unsustainable in law, the decision of the A.O, is supported on the issue of MODVAT credit, by the decision of the coordinate Bench in the case of DCIT vs. Bahubali Electronics relying on the decision of Apex Court in the case of CIT vs. Indo Nippon Chemicals Co. 261 ITR 275 (SC) has held that no addition on account of modvat credit can be made. With respect to the issue on depreciation on Windmills, the co-ordinate bench in the case of ACIT vs. Parry Engineering has held that depreciation at 80% is allowable in renewable energy device including windmill. In the case of DCIT vs. Bahubali Electronics (supra) on the issue of considering the impact of MODVAT credit, the Co-ordinate Bench has held as under: "4. On a perusal of the order of the first appellate authority on the issue of addition u/s. 145A, at para 2.3. page, he held as follows: "2.3. I have carefully considered ....