TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 672
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....f Rs. 9,000/- and, therefore, is not eligible to wright off the expenses for increase in the authorized capital. By an assessment order dated 29th April, 2011, the Authority assessed the loss at Rs. 7,429/- after disallowing the access preliminary expenses of Rs. 9,000/- as well as a sum of Rs. 3,000/- under Section 14A of the said Act and computed the tax at rupees 'Nil'. The Commissioner of Income Tax issued the purported show cause notice under Section 263 intending to revise the order of reassessment made under Section 147 and 148 of the said Act raising doubt over the subscription of shares on premium in absence of any business activities and non-conducting of proper inquiry regarding the identity and worthiness of the shareholders. The Authority thought that in absence of any proper inquiry, the order is erroneous and prejudicial to the interest of the revenue. Subsequently the petitioner disclosed before this Court that the Commissioner has passed the order under Section 263 of the said Act on 18th March, 2014 which was communicated after the filing of the instant writ petition. The challenge is further made to the said order dated 18th March, 2014 on the ground of violation....
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.... issued upon the petitioner. He further submits that an opportunity of hearing was given to the petitioner before passing the order dated 18th March, 2014 and, therefore, the said order cannot be said to have been passed in violation of principle of natural justice. He lastly submits that the order passed under Section 263 of the said Act is appellable under Section 253 (1) (c) of the said Act before the Appellate Tribunal. Before proceeding to deal with the points canvassed by the respective parties, it would be profitable to quote the relevant provisions as under: " Sec.253. (1) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order- (c) an order passed by a Commissioner under Section 12AA or under clause (vi) of sub-section (5) of section 80G or under section 263 or under section 271 or under section 272A or an order passed by him under section 154 amending his order under section 263 or an order passed by a Chief Commissioner or a Director General or a Director under section 272;" 263. (1) The Commissioner may call for and examine the record of any by the Assessing Officer is erroneous in so far as it is prejudicial to ....
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....tions it is clear that 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 a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself." The assumption of incorrect facts or incorrect application of law may be brought within the purview of erroneous order which should be manifest from the materials available with the Commissioner. Branding the order to be erroneous by the Commissioner because he thought that another view is possible when the view taken by the Assessing Officer is otherwise valid, is clearly impermissible. The le....
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....Sons Ltd. (supra). The following passage can be aptly quoted in this regard: "There could be no quarrel with the proposition that the court exercising jurisdiction under article 226 will interfere with the issuance of a notice under section 263 when there is an initial lack of jurisdiction. But in neither of the cases cited by the respondents did the courts hold that the ambit of the court's power is limited to scrutinizing whether the jurisdiction was properly assumed or not by the Commissioner. In the case of Indian Cardboard Industries v. Collector of Central Excise (1992) 58 ELT 508 (Cal), after considering the decision cited, I had held that the court in exercising the jurisdiction under article 226 of the Constitution will interfere with the show cause notice in the following circumstances: "(1) When the show cause notice ex facie or on the basis of admitted facts does not disclose the offence alleged to be committed. (2) When the show cause notice is otherwise without jurisdiction. (3) When the show cause notice suffers from an incurable infirmity. (4) When the show cause notice is contrary to judicial decision or decision of the Tribunal. (5) When there is no materia....