2016 (6) TMI 1076

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.... ld.CIT noticed that the assessee had unutilized balance of CENVAT credits in the balance-sheet under the 'loans and advances' which according to him should have been included in the closing stock u/s.145A of the I.T.Act, 1961. He also noted that assessee had incurred expenditure by way of interest which was not disallowed as per section 14A of the Act r.w.Rule 8D of the IT Rules, 1962. He was, therefore, of the view that the assessment order passed by AO u/s.143(3) of the Act was erroneous and prejudicial to the interest of Revenue. He, Accordingly, issued a notice dated 09/02/2015 and called upon the assessee to show cause as to why appropriate order u/s.263 of the Act not be passed. In response to the aforesaid note, assessee inter-alia objected to the initiation of the proceedings u/s.263 of the Act and on merits submitted that no error was committed by the AO while computing the assessment. The submissions of the assessee were not found acceptable to the ld.CIT. He was of the view that in terms of provisions of section 145A of the Act, the closing balance as Rs. 8,58,547/- in the CENVAT credit was required to be included as part of closing stock and non-inclusion of it, while ....

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....out the correct disallowance as per section 14A of the Act r.w.r. 8D of the IT Rules. It is submitted that the view so taken of holding the assessment order passed by A.O. as erroneous and prejudicial to the interest of Revenue is incorrect and illegal and accordingly the direction to set aside the original assessment order and passing the fresh assessment order be cancelled. It be so held now. 5. The order passed by the learned Pr. C.I.T. is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 6. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing. 3. Before us, ld.AR at the outset submitted that the issue in the present appeal is invoking of revisionary proceedings u/s.263 of the Act as the required conditions are not fulfilled. Before us, ld.AR reiterated the submissions made before the ld.CIT and submitted that in the present case the pre-requisite conditions specified u/s.263 of the Act were not fulfilled and, therefore, the proceedings u/s.263 of the Act lacks jurisdiction and are bad in law. With respect to the non-inclusion of unutilized balance of CENVAT c....

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....O was erroneous and prejudicial to the interests of the Revenue. He thus supported the order of CIT. 4. We have heard the rival submissions and perused the material on record. The issue in the present case is above the invoking of provisions of Section 263 by CIT. 5. S. 263(1) of the Act, the powers under which CIT has assumed power for revision reads as under: "The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment." 6. The reading of the above provisions makes it very clear that the power of suo motu revision u/s 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable ....

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.... wherein the High Court has held as under:- "An order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and, left to the Commissioner, he would have estimated the income at a higher figure than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the qua....