AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1172
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....O for the present assessment year 2011-2 is erroneous and prejudicial to the interests of the Revenue 3. The learned PCIT erred in directing the A.O to examine as to whether the eligibility under Section 54Fof the Act provided to the Appellant is to be disqualified on the ground that the residential property was not completed before the due date, even though the said direction does not pertain to this assessment year 4. The learned PCIT failed to consider that for an assessee to claim exemption under Section 54F, it is sufficient to show to the A.O that he has deposited the capital gains amount arising out of transfer of long term capital asset to a capital gains scheme account and has started the process of construction of the residential house. 5. The learned PCIT erred in holding that the A.O had failed to make necessary verification and enquiry with respect to the sale consideration of the shares as per RBI Notifications and that it wasn't in accordance with the Capital Gains Scheme of the Central Government. 6. The learned PCIT failed to realize that the transaction pertaining to shares was between the Appellant, who is an individual and a Company and therefore the....
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....period lapsed on 01.01.2014. The balance amount was invested in the Mutual Fund. The AO had accepted the claim without any discussion, in two simple paragraphs which is reproduced as under:- "3. The Authorised Representative of assessee was required to produce investment details, bank account details and proof regarding sales of shares (i.e. share certificates). The Authorized Representative of assessee provided the same and verified by me (AO). The Authorized Representative of assessee also clarified that the assessee has started the construction of a residential house in the purchased land and will be completed before the year end. 4. Though verification of all the above details, it is found correct. Thus, the assessment is completed by accepting the return of income." As the assessment order passed by the AO is cryptic and also without any kind of discussion relating to valuation of sale value of the shares sold etc., the ld. CIT issued a show cause notice u/s.263 of the Act on 27.10.2015 and a further reminder on 14.09.2015. In response, the ld.A.R filed written submissions challenging the assumption of jurisdiction u/s.263 of the Act. In the Show cause notice, it is c....
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....nue, set aside the assessment order with a direction to redo the assessment on the specific issues highlighted in the order u/s.263 of the Act. Against this, the assessee is in appeal before us. 4. We have heard both the parties and perused the material on record. The Ld.A.R submitte that at the time of assessment proceedings, the AO issued a questionnaire vide letter dated 26.06.2013 wherein the AO asked various queries and this was duly replied by the assessee on 03.10.2013 and the AO passed the order after adequate enquiry, even if there is inadequate enquiry, that would not by itself give occasion to the CIT to assume jurisdiction u/s.263 of the Act, merely because he has a different opinion in the matter. According to ld.A.R, Ld. CIT can do this only when there is a lack of enquiry by the AO. According to ld.A.R, in the present case the assessment order may not be a detailed one and the AO has not put all the details of enquiry caused and he passed a short order, that itself cannot be a reason for assuming jurisdiction u/s.263 of the Act. Further, he contended that on perusal of the record, CIT was of the opinion that assessment was made at lower side and had it left to the....
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....the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interest of the revenue. As held in the case of Malabar Industries Co. Ltd., (243 ITR 82(SC)), the Commissioner can exercise revision jurisdictional u/s 263 if he is satisfied that the order of the assessing officer sought to be revised is (i)erroneous; and also (ii) prejudicial to the interests of the revenue. The word 'erroneous' has not been defined in the Income Tax Act. It has been however defined at page 562 in Black's Law Dictionary (seventh Edition) thus'; 'erroneous, adj. Involving error, deviating from the law'. 4.2.1 The word 'error' has been defined at the same page in the same dictionary thus: 'error No. 1 : A psychological state that does not conform to Objective reality; a brief that what is false is true or that what is true is false'. At page 649/650 in P. Ramanatha Aiyer's Law Lexicon Reprint 2002, the word 'error' has been defined to mean 'Error: A mistaken judgement or deviation from the truth in matters of fact, and from the law in matters of judgement 'error' is a fault in judgement, or in the ....
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....revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo moto proceedings either where the Assessing Officer takes a wrong decision without considering the materials available on record or he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warranted. The Commissioner will be well within his powers to regard an order as erroneous on the ground that in the circumstances of the case, the Assessing Officer should have made further inquiries before accepting the claim made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral in giving a decision on the basis of evidence produced before it, the role of an Assessing Officer under the Income-tax Act is not only that of an adjudicator but also of an investigator. He cannot remain passive in the face of a return, which is apparently in order but calls for further enquiry. He must discharge both the roles effectively. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produc....
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....the Hon'ble Supreme Court in Rampyari Devi Saraogi (supra), Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC), and Malabar Industrial Co. Ltd's (supra). 4.5. In Malabar Industrial Co. Ltd. case (supra) the Hon'ble Court has held as under: "There can be no doubt that the provision cannot be 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 being erroneous. In the same category fall the orders passed without applying the principles of natural justice or without application of mind. 4.6 In our humble view, arbitrariness in decision-making would always need correction regardless of whether it causes prejudice to an assessee or to the State Exchequer. The Legislature has taken ample care to provide for the mechanism to have such prejudice removed. While an assessee can have it corrected through revisional jurisdiction of the Commissioner under Section 264 or through appeals and other means of judicial review, the prejudice caused to the ....
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.... a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge." 4.7 Similar view was earlier taken by the Hon'ble Supreme Court in Siemens Engg. & Mfg. Co. of India Ltd. v. Union of India AIR 1976 SC 1785. It is settled law that while making assessment on assessee, the ITO acts in a quasi-judicial capacity. An assessment order is amenable to appeal by the assessee and to revision by the Commissioner under Sections 263 and 264. Therefore, a reasoned order on a substantial issue is legally necessary. The judgments on which reliance was placed by the learned Counsel for the assessee also points to the same direction. They have held that orders, which are subversive of the administ....