AI Drafter 
TaxTMI 
TaxTMI 
2015 (7) TMI 904
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....ing examination of the facts without in any manner proving that the assessment order dated 07.04.2011 suffered from any specific error which caused prejudice to the interests of the Revenue. 3. For that on the facts and in the circumstances of the case and in law, when the Ld. CIT passed the order u/s 263 he ought to have proved that the assessment order dated 07.04.2011 suffered from specific error which caused prejudice to the interests of the Revenue and in absence of any such finding, the LD. CIT's order suffered from infirmity and therefore liable to be set aside and/or cancelled. 4. For that on the facts and in the circumstances of the case and in law, the Assessing Officer in the notice U/S 142(1) having specifically raised and thereafter examined the issue of allowability of lease rents paid in respect of leased motor cars the Ld. CIT was unjustified in considering the assessment order dated 07.04.2011 to be erroneous merely because on the same set of facts he entertained a different opinion/view. 5. For that on the facts and in the circumstances of the case and in law, the dispute Resolution Panel in assessee's own case for the immediate preceding year hav....
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....al before us. 4. The Ld. Counsel for the assessee submitted that the assessment order passed by AO was neither erroneous nor prejudicial to the interest of revenue because it was passed after issuing notice dated 12.08.2010 u/s. 142(1) of the Act along with a questionnaire, requiring the assessee to explain the information/documents mentioned therein. He referred to page no. 11 of the assessee's paper book, wherein vide question no. (g), the AO asked about the lease rental for vehicles debited to P&L Account. He further stated that the assessee vide reply dated 11.11.2010 explained to the AO all the details relating to the said question, a reference was made to page no. 19 of assessee's paper book. He further stated that for the AY 2003-04, a similar disallowance was made by AO against which the assessee went in appeal before Ld. CIT(A), who vide Paras 9.1 to 9.4 of the order dated 31.03.2006 deleted the addition. A reference was made to page no. 51 and 52 of the assessee's paper book. It was further stated that a similar disallowance was also deleted for AY 2004-05 by the Ld. CIT(A) vide order dated 30.06.2009, a reference was made to page no. 71 of assessee's p....
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....ing Officer is erroneous and also prejudicial to the interests of the Revenue, the Ld. CIT is empowered to pass an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the assessment. He is also empowered to cancel the assessment and direct to frame a fresh assessment. He is empowered to take recourse to any of the three courses indicated in section 263 of the Act. So, it is clear that the Ld. CIT does not have unfettered and unchequered discretion to revise an order. He is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of 'audi alteram partem' as envisaged in the Constitution of India as well as in section 263 of the Act. An order can be treated as 'erroneous' if it was passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts. The 'prejudice' that is contemplated under section 263 of the Act is the prejudice to the Income Tax administration as a whole. Th....
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....g satisfied with the explanation of the assessee, the decision of the Assessing officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard." 8. Reverting to the facts of the present case, it is noticed that the AO before allowing the claim of the assessee on account of lease rental issued a questionnaire along with notice u/s. 142(1) of the Act. The assessee furnished the requisite details and evidences to the AO, who on being satisfied allowed the claim of the assessee. It is also noticed that for AY 2006-07 the similar issue was before the DRP, who also directed the AO to delete the similar disallowance. In the present case, the Ld. CIT(A) on the similar issue for AYs 2004-05 and 2005-06 has deleted the additions made by AO. Therefore, it can be said that the view taken by AO was one of the possible view so it cannot be said that the assessment order passed by him was erroneous or prejudicial to the interest of revenue. 9. On a similar issue the Hon'ble Supreme Court in the case of CIT Vs. Max (India) Ltd. (supra) has held as under: "The phrase "prejudicial to the interests of the Revenue" in section 263....