TaxTMI 
TaxTMI 
2011 (1) TMI 1367
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....vehicle repairs and maintenance, telephone and depreciation on car for personal use was disallowed. The total disallowance worked out to Rs. 23,445/-. Thus, the total income was computed at Rs. 3,65,310/-. 2. The record of the assessee was examined by the CIT, Meerut. It was found that the case was selected for scrutiny on account of low profit, and high sundry creditors, advances and loans. The Assessing Officer did not examine these aspects. Therefore, notice u/s 263 was issued requesting the assessee to explain as to why the order may not be set aside as it was erroneous and prejudicial to the interest of the revenue. The assessee made various submissions, both on facts and law, before the learned CIT. However, the learned CIT was not convinced with the submissions of the assessee. It has been mentioned that the Assessing Officer accepted the version of the assessee without making any inquiry or verification. It is the settled law that mere failure to make inquiries, necessary for making the assessment, renders the order to be erroneous and prejudicial to the interest of the revenue. Therefore, the assessment order was set aside with a direction to the Assessing Officer to ex....
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....s makes an order erroneous. The error may not be apparent on the basis of the order. The CIT may consider an order to be erroneous not only if it contains some apparent error of facts or law but also if it is a stereo-typed order which simply accepts the submissions of the assessee without making inquiries, which are called for in the circumstances of the case. In this connection, reliance has been placed on the decision of the Apex Court in the case of Rampyari Devi Saraogi Vs. CIT (1968) 67 ITR 84 and Tara Devi Aggarwal Vs. CIT (1973) 88 ITR 323. In paragraph No.13, it has been mentioned that it is not necessary for the CIT to make further inquiries before setting aside the assessment order. He can regard the order as erroneous on the ground that in the circumstances of the case, the Assessing Officer should have made further inquiries before accepting the submissions made by the assessee. The reason is that the Assessing Officer is not only an adjudicator but also an investigator who 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. For this purpose, r....
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....ght a number of adjournments. However, books of account and vouchers were produced before the Assessing Officer. Confirmations of creditors and sundry creditors were filed on or about 17.05.2007. The case was discussed on 30.05.2007 and the assessment order was passed on the same day. There is no evidence that any inquiry was conducted in respect of creditors and sundry creditors and the truthfulness of the confirmation letter was accepted without demur. The question is - whether the order is erroneous and prejudicial to the interest of revenue? 6.1 The assessee has relied on the decision of Hon'ble Delhi High Court in the case of International Travel House Limited (supra). The facts are that the assessee filed its return on 28.11.2003 declaring total income of Rs. 3,37,35,810/- and long term capital gain of Rs. 7,788/-. The return was processed u/s 143(1) on 28.06.2004. The assessee filed a revised return on 31.03.2005 reducing its income to Rs. 3,17,16,700/-. Assessment proceedings were initiated by issuing notice on 08.10.2004. In the course of proceedings, the assessee inter alia filed details of foreign travel expenses of Rs. 4,02,421/-. The Assessing Officer came to the co....
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....0/-. The CIT examined the records and a notice was issued to the assessee that the genuineness of capital invested by two partners Smt. Ratna Devi and Shri Sagar Mal of Rs. 49,000/- and Rs. 40,000/- respectively, and unsecured loans of Rs. 98,500/- from Stutee Chit and Finance (P) Ltd. were not examined. It was also observed that manufacturing account was not examined by the Assessing Officer. Finally, the assessment was set aside holding the order to be erroneous and prejudicial to the interest of the revenue. The Tribunal held that the Commissioner failed to justify how the order was prejudicial to the interest of the revenue. Various arguments were made before the Hon'ble High Court. It was mentioned that there are pre-requisite conditions for exercising revisionery powers. Therefore, a bare reiteration that the order is erroneous and prejudicial to the interest of the revenue will not suffice. The exercise of power is quasi judicial in nature. Therefore, the reason must be shown that enhancement, modification or cancellation of the assessment was required for making a fresh assessment. The facts must lead to a conclusion that the assessment order was not only erroneous but also....
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.... the assessee is Rampiyari Devi Saraogi, and as the Income Tax Officer, D Ward, Hawrah, who has made the assessments, had only jurisdiction over cases of new assesses, whose names began with the alphabetical letters from 'S' to 'Z', with a view to camouflage the name and make it appear to fall within the jurisdiction of the Income Tax Officer, the name has been given in the reverse order by putting the surname first and her own name afterwards, as will be apparent from the returns filed. In the return of income for the assessment year 1961-62, the assessee has given her residential address as 90, Feeder Road, Belgharia, Calcutta, while in that for 1962-63, the office address has been given as 90, Feeder Road, Belgharia, Calcutta." He then concluded: "It is apparent that with a view to fall within the jurisdiction of this particular Income Tax Officer, i.e., Income Tax Officer, D-Ward, Hawrah, a fictitious address was given and the order of the names reversed. Hence, all the assessments made are without jurisdiction ab inito null and void." We agree with the High Court that all this material was supporting material and did not constitute the basic grounds on which the orders u/s 33B....
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....se the Assessing Officer should have made further inquiries before accepting the statements made by the assessee in his return. Point No.2 above was elaborated as under:- "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 be 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 context. 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 fa....