TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 256
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....me of the assessee was accepted u/s 153A of the Income Tax Act, 1961 vide assessment order dated 30/12/2010. Subsequently, the Ld. Commissioner of Income Tax (Central)-III, New Delhi issued a show cause notice dated 29/01/2013 u/s 263 of the Income Tax on the ground that in the case of LT Foods Pvt. Ltd., the Flagship Company of Dawat Group, special audit u/s 142(2A) was conducted in which the special auditor had pointed out that during the financial year 2006-07, relevant to the AY 2007-08, the assessee held 14.57% shares of LT Foods Ltd. and that during this period M/s LT Foods Ltd. was not a company in which the public were substantially interested. The Show Cause Notice stated that as per the special auditor's report, during AY 2007-08, LT Foods Ltd. had advanced a loan of Rs. 1,74,000/- to the assessee on various dates and the assessee was required to show cause as to why this amount of Rs. 1,74,000/- should not be deemed as dividend u/s 22(2)(e) of the Income Tax Act. In response the assessee submitted that the amount of Rs. 1,74,000/- was neither an advance nor a loan to the assessee shareholder but was simply an imprest to meet the day to day business expenditure of the com....
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.... of the Appellant. 4. That the Commissioner of Income Tax has in view of the facts and circumstances of the case has failed to appreciate that special audit report was obtained in the case of L T Foods Limited and not in the case of assessee. Hence it cannot be said that it has been ignored by the Assessing Officer or it is the part of the record of assessee. 5. That without prejudice the Commissioner of Income Tax has in view of the facts and circumstances of the case has failed to appropriate that the report of the special auditors had exceeded its term of reference and as such the Assessing Officer could not have taken cognizance of such a report even if it would have been received before the completion of assessment. 6. That in view of the facts and circumstances of the case the order of the Commissioner of Income Tax is unjust, illegal and bad in law because the amount given by the company for safe custody to its director / senior employees is neither a loan nor an advance and as such the provisions of section 2(22)(e) are not applicable. 7. That the Commissioner of Income Tax has ignored the fact that keeping of cash with the Director / Senior Employees is a normal bu....
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....d, therefore, it cannot be a case of lack of enquiry. The Ld. AR drew our attention to pages 25 & 26 of the Paper Book which contained a copy of questionnaire dated 18/08/2010, wherein the relevant question appears at Sl. No. 13. He also drew attention to page 28 of the PB, wherein at Sl. No. 18 the details of loans have been provided to the AO during the assessment proceedings. The Ld. AR submitted that in view of his submissions the impugned order u/s 263 was not at all maintainable and was hence liable to be quashed. He also drew our attention to pages 62 & 63 of the PB which is a copy of the account of Mr. Ashok Arora in the books of LT Foods Ltd. to highlight the point that cash was paid into the custody of the assessee for safe-keeping as well as withdrawn from his custody regularly depending on the business necessities. It was also emphasized that no incriminating material was found during the course of search and the returned income was accepted in the order passed u/s 153A of the Act and on that count also, the proceedings u/s 263 of the Act were not legally tenable. 5. The Ld. CIT (DR), in response, defended the impugned order and submitted that 263 proceedings had been ....
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....ous" unless it is not in accordance with law. If Assessing Officer acting in accordance with law makes a certain assessment, the same cannot be branded as "erroneous" by the Commissioner simply because, according to him, the order should have been written differently or more elaborately. The Section does not visualize the substitution of the judgment of the Commissioner for that of the Assessing Officer, who passed the order unless the decision is not in accordance with law. Then again, any and every erroneous order cannot be the subject matter of revision because the second requirement also must be fulfilled. There must be material on record to show that tax which was lawfully exigible has not been imposed [See Gabriel India Ltd. (supra)]. However, the expression "prejudicial to the interest of the revenue", as held by the Hon'ble Supreme Court in the Malabar Industrial Co. Ltd.'s case, is not an expression of art and is not defined in the Act and, therefore, must be understood in its ordinary meaning. It is of wide import and is not confined to the loss of tax [see Dawjee Dadabhoy & Co. (supra), CIT vs. T. Narayana Pai (1975) 98 ITR 422 (KAR), CIT vs. Gabriel India Ltd. (supr....
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.... by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualized where the Income-tax Officer 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 estimate 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 figure higher than the one determined by the Income-tax Officer. 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 Income-tax Officer has exercised the quasijudicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner ....
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....se of substitution of the judgment of the commissioner for that of the Assessing Officer unless the decision is held to be erroneous. Cases may be visualized where the Assessing Officer examines the accounts, makes enquires, applies his mind to the facts and circumstances of the case and determines the income either by making 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 was on lower side and, left to the commissioner, he would have estimated the income at a higher figure that the one determined by the Assessing Officer. That would not vest the Commissioner with the power to re-examine the accounts and determine the income himself at a higher figure. Further in the case of Infosys Technologies V JCIT (Asst) (2006) 286 ITR (AT) 211, the Bangalore Bench of the ITAT held that where the A.O as examined and considered and issue, though not mentioned in the assessment order, it cannot be said that the order passed was erroneous. In CIT v Gabriel India Ltd. (1993) 203 ITR 108 (Bom), the Hon'ble Bombay High Court held that once the Assessing Officer has exercised the quasi-judicial ....