TaxTMI 
TaxTMI 
2014 (8) TMI 58
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....utiny assessment and notices u/s 143(2) and 142(1) were issued and served upon the assessee. The learned Assessing Officer has passed the assessment order u/s 143(3) on 4/12/2009. The learned Commissioner after going through the record arrived at a conclusion that the assessment order for A.Y 2007-08 is erroneous order which has caused prejudice to the revenue on the following issues: a) The assessee firm, during the financial year relevant to the assessment year has recognized revenue from it's project named Apna Ashiana on percentage of completion method based on Accounting Standard 7 issued by the Institute of Chartered Accountants of India wherein it has adopted Rs. 450/- per sq.ft for the purposes of estimating the sale proceeds from the sale of sites. However, no documentary evidence for adopting the same was furnished by the assessee as borne out from the assessment records. b) The assessee firm has included a sum of Rs. 4.82 crores as proportionate cost of club house for adopting the estimated cost for purposes of revenue recognition. Since the ownership of the club house remains with the firm, the club house expenditure ought not to have been considered for purposes ....
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....ecognition. Since the fact finding authrity i.e. the Assessing Officer, who, in my opinion, has failed in ascertaining the above issues correctly and arrive at a logical conclusion while framing the assessment order, which undoubtedly has made the order thus passed, erroneous and prejudicial to the interests of revenue. Such being the case, the assessment order made on 04.12.2009 by the Assessing Officer in the assessee's case warrants setting aside as the same is erroneous and prejudicial to interests of revenue. In view of the powers vested upon me u/s 263 of the Act, I hereby calcel the assessment order and set aside the assessment thus made, for redoing the same. In the assessment proceedings, the basis for adopting the cost of the club house in computng the gross profit based on percetnage completion method of revenue recognition is to be verified. The Assessing Officer shall also verify whether categofical transfer of ownership is mentioned in any of documents conveying the right of the club house to the prospective buyers, and conclude the re-assessment proceedings". 4. The learned Counsel for the assessee while impugning the order of the CIT, contended that, as per th....
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....ery loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed expl....
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....Vs. Addl. CIT & Ors. (1975) 99 ITR 375 (Del.) has propounded the role required to be played by the Assessing Officer. "The reason is obvious. The position and function of the Income Tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may he accepted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income Tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this contract. It is because it is incumbent on the Income Tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous ....