TaxTMI 
TaxTMI 
TaxTMI 
2014 (12) TMI 426
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....laid down repeatedly by Court and we may refer only to a few of those decision in 229 ITR 383(SC), 187 ITR 688 (SC), 199 ITR 351 (Bom. FB), 193 ITR 624 (Ker.). Being unaware of the correct position in law and the same has now been brought to my knowledge by my counsels. Hence, it is prayed that the above ground may be entertained and disposed of in accordance with law." 3. The brief facts of the case are that the assessee company is Co-op Bank registered under Karnataka State Co-operative Society Act 1956 as defined u/s 2(1a) of the Income Tax Act carrying on the business of banking and is governed by the banking regulation Act 1949. The assessee has filed the return of income for A.Y.2008-09 on 30.09.2008 declaring the total income of Rs. 4,89,77,310/-. Subsequently revised the return computing the total income of Rs. 46,85,39,465/-. The Assessing Officer has allowed the gross dividend receipts of Rs. 62,18,000 in the P&L account (Rs.62,16,000) from KSC Apex Bank Ltd, Bangalore and Rs. 2,000 from KSC Apex Bank Ltd., Bangalore and Rs. 2,000/- from Indian Farmers Fertilizers Co-op Ltd) and claimed the said income as exempt from tax in the statement of computation of income. 3.1. T....
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....s not failed to examine the said issue, there has been no lack of application of mind of the Assessing Officer. In fact couple of other items of very big quantity have been brought under the tax purview. The broader meaning of 80P(4) is as far discussed and understood is to tax the income of the banking business undertaken by the Co.operative Society." After considering the reply the Commissioner of Income Tax has enhanced the income on the ground that assessee is a Co-operative Bank, in view of overriding provisions of Section 80P (4), deduction u/s. 80P is not available to assessee and for that reason it is not entitled to any deduction of dividend income from its gross total income u/s. 80P(2)(d). The Commissioner was of the view that assessee has without any basis claimed the dividend income of Rs. 62,18,000/- was exempt from tax. The Assessing Officer failed to apply the law and had erred in not brining to tax of income Rs. 62,18,000/-. The impugned order of Assessing Officer was erroneous as well as prejudicial to the interest of revenue. In view of this the facts on record and provisions of the Act, the Commissioner has enhanced the income of Rs. 62,18,000/-. 4. The Learn....
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.... of Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83. 6. We have heard the rival contention of both the parties and perused the material on record along with the case laws relied by the DR. The Commissioner has exercised his power u/s. 263 in respect of order passed by AO u/s. 143(3). The main contention of the Commissioner of Income Tax that the assessee has claiming the dividend income of Rs. 62,18,000/- as exempt. The Commissioner was of view that the Assessing Officer failed to examine as to how the dividend income received by the Co-operative was exempt from the tax under the provisions of ITAct 1961. The Commissioner was of the view that there was a lack of examination and lack of application of mind by the Assessing Officer. The Commissioner has held that as per provisions of Section 80P(2)(d) in case of specified Co-operative Society. The income by way of interest and dividend derived by the Co-operative Society from the investment with any other Co-operative Society will be deducted from the gross total income. The provisions of Section 80P(4) were inserted w.e.f 1.4.2007 i.e. from A.Y.2007-08. As per this sub-section 80P shall not apply in relation to any Co-operative bank....
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....o be revised is erroneous; and (ii) it is prejudicial to the interest of revenue. If one of them is absent-if the order of Commissioner is erroneous but is not prejudicial to the interest of revenue or if it is not erroneous but is prejudicial to the revenue -the recourse cannot be held to u/s. 263(1) on the Act. The provisions cannot be invoked to correct each and every type of mistake or error committed by Assessing Officer, it is only when an order is erroneous that section will be attracted. Failure to make the enquiry where the enquiry is prima facie wanted to constitute to prejudicial to the revenue whether any under statement of income is otherwise inferable or not only case the Commissioner setting aside the assessment. Action U/s. 263 would be valid though he has not indicated the extent of understatement of income tax act. It was held in the case of CIT vs. Assam Tee House 344 ITR 507 (P&H) High Court wherein it is held that Assessing Office did not undertake verification of closing stock and purchase and did not check the books of accounts. If the Assessing Officer failed to verify the books of account these are goods grounds and enough reasons for invoking the section 2....
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....case of Malabar Industrial Co. Ltd v. CIT 243 ITR 83(SC) wherein it is held as under: "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 ITO adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. Rampyuari Devi Saraogi Vs. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal Vs. CIT (1973) 88 ITR 323 (SC). In the instant case, the Commissioner noted that the ITO passed the ....