TaxTMI 
TaxTMI 
2014 (12) TMI 669
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....ld that assessment order dated 23.8.2011 is erroneous in as much as prejudicial to the interest of revenue." 3 The present appeal filed by the assessee is against the order of revision passed under section 263 of the Income Tax Act. 4 The brief facts of the case are that the assessment in the case of the assessee was completed under section 143(3) of the Act vide order dated 23.08.2011 on a total income of Rs. 158,990/- as against returned income of Rs. 133,990/-. The Commissioner of Income Tax, on the perusal of records noted that the assessee had sold land for Rs. 29,35,000/- against which it had claimed deduction under section 54F of the Act. The sale consideration in entirety was received in cash against which the residential plot measuring 666.66 sq.yds. was purchased for total consideration of Rs. 11,62,300/- including Stamp Duty charges. The balance sum of Rs. 17,72,700/- was claimed to have been invested in the construction on the said plot. The Commissioner of Income Tax observed that the assessee had failed to furnish any documentary evidence regarding construction on the said plot, neither any approval for construction of plot from the Municipal Committee was available....
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....ake fresh assessment on the issue of deduction under section 54F of the Act and investment in the land. 7. The ld. AR for the assessee pointed out that complete details available were furnished before the Assessing Officer and claim of the assessee was looked into by the Assessing Officer during the first round and complete details were also filed before Commissioner of Income Tax including the approval of map and source of withdrawal from the capital account with M/s Sita Ram Parkash Chand for the said investment against which the assessee had claimed deduction under section 54F of the Act and there is no merit in the order passed under section 263 of the Act. 8. The ld. DR for the revenue placed reliance on the order of the Commissioner of Income Tax. 9. We have heard the rival contentions and perused the record. Under the provisions of section 263 of the Act, the Commissioner is empowered to call for and examine the record of any proceedings under the Act and where he considers that the order passed by the Assessing Officer is both erroneous and prejudicial to the interest of revenue, then he may after giving an opportunity to the assessee and/or after making any enquiry as h....
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....#39; observed that "During assessment proceedings, the assessee was confronted with the AIR information and was asked to justify the claim of deduction under section 54 in the return. The assessee has filed the reply and information as called for during the assessment proceedings, which is placed on record. The contention of the assessee had been test checked and verified with reference to the books of account and other material produced during the assessment proceedings. After discussion, addition of Rs. 25,000/- is made on agreed basis." The assessment order was thereafter passed under section 143(3) of the Act on total income of Rs. 158,990/-. 11. The Commissioner of Income Tax, in the abovesaid facts and circumstances had invoked his power under section 263 of the Act holding the assessment framed by the Assessing Officer to be both erroneous and prejudicial to the interest of revenue as the Assessing Officer had failed to make the enquiries. The basis for such conclusion was that no evidence of the approved map being produced before the Assessing Officer was available on record. The Commissioner of Income Tax was of the view that the Assessing Officer had not called for requi....
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....reed basic. 2. On an examination of your assessment record for the assessment year 2009-10, it is seen that, you have sold land for Rs. 29,35,000/- against which you have claimed deduction u/s 54F of the I.T.Act, 1961. On further perusal of records, it is seen that you have received the entire sale consideration amounting to Rs. 29,35,000/- in cash against which you have purchased a residential plot measuring 666.66 Sq. Yards for total consideration of Rs. 11,62,300/- including Stamp duty charges. The balance amount of Rs. 17,72,700/- have been claimed to have been invested in the construction on said plot. Neither have you submitted nor has the AO obtained any documentary evidence regarding construction on the said plot. No documentary evidence regarding approval for construction of plot from the Municipal Committee is available on record. No sanctioned map is available on record. No bills of construction expenses have been placed on record. The AO has not even asked you to furnish the bank account where the said cash was deposited. No independent enquiry has been made by the AO to justify the claim of deduction u/s 54F of the IT. Act, 1961. The unutilized amount was required to ....
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....ing issued to the assessee under section 263 of the Act and the same are reversed. 15. Now coming to the second aspect of the show cause notice issued under section 263 of the Act in relation to the enquiries made by the Assessing Officer vis-à-vis the cost of construction of the plot of land and the claim of the assessee under section 54 of the Act. The perusal of the assessment order reflects that the assessment in the case was made after the case was selected for scrutiny through CASS on the basis of AIR information. The said information was show caused to the assessee and the assessee was also asked to justify the claim of deduction under section 54 of the Act. The Assessing Officer has given a finding that the assessee had filed the reply and has also furnished the information as called for during the assessment proceedings. The Assessing Officer, thereafter accepted the claim of the assessee vis-à-vis the exemption claimed under section 54F of the Act, except to make agreed addition of Rs. 25,000/-. In the entirety of the facts and circumstances, we are not in conformity with the observation of the Commissioner of Income Tax that the Assessing Officer has faile....
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....t be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration." In our view, this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue". 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 p....