TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2246
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.... assessee is in the business of construction and development of real estate. The return for the year was filed on 29.09.2009 declaring loss of Rs. 20,64,158/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. After discussion and verification of the details filed by the assessee, the Assessing Officer completed the assessment accepting the returned loss of Rs. 20,64,158/-. 3. Assuming the jurisdiction and assuming power conferred upon him by section 263 of the Act, the CIT issued notice to the assessee. The relevant contents of the impugned notice is reads as under :- "On verification of the records, certain discrepancies were found in the assessment order dt. 30.....
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....bai dated 30.11.2011 appears to be erroneous and prejudicial to the interest of Revenue and it is evident that the Assessing Officer has committed the lapse of not applying his mind to the issues discussed above. I, therefore, propose to pass such order thereon as the circumstance of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment under the provisions of Section 263". In response to the aforementioned notice, the assessee filed a detailed reply dated 15.01.2014. It was strongly contended that complete details were furnished by the assessee to the Assessing Officer in the assessment proceedings. It was pointed out that a complete submission regarding ....
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....263 of the Act, which are also exhibited elsewhere. After going through the factual matrix, we find that the CIT(A) has proceeded on wrong assumption of facts. The CIT has held that the preliminary expenditure claimed by the assessee were incurred during the financial year 2008-09 whereas the business has commenced from 10.07.2007 relevant to assessment year 2008-09, therefore, the claim of the expense as 'prior period expense' and allowable u/s 35D of the Act carries no weightage. This entire finding of the CIT is based on the wrong assumption of fact that the assessee's business has commenced from 10.07.2007. The correct fact is that the assessee company was incorporated on 10.07.2007. The business has been commenced only duri....
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....roneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous ; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot e invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order bein....
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.... disregard any of the judgments of the Hon'ble Bombay High Court, whether in the case of Thana Electricity Supply Ltd. [1994] 206 ITR 727 or in the case of Godavaridevi Saraf's case [1978] 113 ITR 589. It is indeed our duty to loyally extent utmost respect and reverence to the hon'ble High Court, and to read these two judgments by the Division Benches of equal strength of the hon'ble jurisdictional High Court, i.e., in the cases of Thana Electricity Supply Ltd. [1994] 206 ITR 727 (Bom) and Godavaridevi Saraf's case [1978] 113 ITR 589 (Bom), in a harmonious manner" And at Para 13, the Tribunal has further observed as under :- "It is thus clear that while the issue before the hon'ble High Court in Thana Electricity....
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....ight of the facts of the case in hand, in our considered opinion, the Assessing Officer has taken a view which may be different from the view of the Ld. Commissioner and assuming that the view taken by the Assessing Officer is a loss to the revenue but the Hon'ble Supreme Court in Malabar Industrial Co. (supra) has held that "every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue", for example, when an ITO adopted one of the courses presumably 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 Ld. Commissioner does not agree, it cannot be treated as an order which is erroneous or p....