TaxTMI 
TaxTMI 
2014 (1) TMI 1324
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....he facts relating to the case are stated in brief. The assessment in the hands of the assessee was completed u/s. 143(3) of the Act on 15-12-2011 for the year under consideration. The Ld. CIT, on examination of the record, found that the assessment order is erroneous and prejudicial to the interests of Revenue for the following reasons: "2. It is observed from the records that while completing the assessment for the A.Y. 2009-10, an amount of Rs. 76,38,143/- was allowed as deduction u/s. 80P after disallowing interest income of Rs. 6,50,000/- earned from investment made with Treasury. The Assessing Officer has treated the assessee as a Primary Agricultural Credit Society (PACS). However, it is observed from the records that the Agricultu....
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....8,29,05,932/-) etc. as expenditure. The Assessing Officer is seen to have not conducted any enquiry about the above items which are claimed as expenditure. The "reserve created" or "provision made" are not allowable as per the provisions of the Income Tax Act, unless they are specifically provided under the Act. Moreover deductibility towards bad debts etc. are governed by various provisions of the Income Tax Act. The Assessing Officer has failed to conduct any enquiry what so ever about the nature of the claim and also about its allowability. Similarly certain items credited in the Profit & Loss Account are to be excluded while arriving at net profit for the year for taxation purposes. The Assessing Officer has also not verified the correc....
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....es pointed out by Ld CIT in the impugned revision order. 6. We have heard the rival contentions and perused the record. Admittedly, the assessment order is cryptic and it did not contain any discussion about the interest expenditure relating to the loan taken by the partners. It is well settled proposition of law that the assessment order would be rendered erroneous and prejudicial to the interests of the revenue, if there is lack of enquiry on the part of the assessing officer on any of the issues having tax impact. For this proposition, a gainful reference may be made to the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Vs. CIT (243 ITR 83). We feel it pertinent to refer to the decision rendered by the Hon'ble....
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.... that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (head note) : "The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction 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, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Office....