TaxTMI 
TaxTMI 
2017 (8) TMI 716
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.... set aside both the issues to the file of the Assessing Officer and directed him to pass assessment order de-novo. Aggrieved the assessee is in appeal before the Tribunal. 4. The first issue relates to claim of the assessee relating to provision of 3.15 crores made for redelivery of aircraft. The learned AR submitted that the assessee has taken certain aircrafts on lease. After expiry of the lease period, the assessee is required to redeliver the aircraft by carrying out necessary repairs in order to restore the aircraft to the same condition, in which it was taken on lease. The assessee usually estimates the amount of expenses that would be incurred on repairing the aircraft and creates provision for the said estimated amount by creating provision every year over the lease period. He submitted that the Assessing Officer considered the claim of the assessee under the head redelivery of aircraft as contingent liability in the earlier years and, accordingly, disallowed the same. However, the ITAT has allowed the claim of the assessee by holding that the provision of expenses so claimed by the assessee is not contingent liability. The learned AR further submitted that the Assessing O....
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.... be caused to the revenue. 7. With regard to the second issue relating to initiation of penalty proceedings u/s. 271E of the Act, the learned AR submitted that the Assessing Officer did not levy penalty u/s. 271E of the Act after considering the facts of the case and, hence, this issue has become academic. 8. The learned DR submitted that the profit and loss account of the assessee does not show the credit of Rs. 0.44 crore and, hence, the claim of the learned AR requires verification. He further submitted that the assessing officer did not examine actual expenditure incurred against the provision and hence his examination cannot be considered to be adequate. Further the Assessing Officer did not discuss about this claim of the assessment order and hence it is not clear as to whether the AO applied his mind on this issue or not. The learned DR placed his reliance on the decision rendered by the co-ordinate bench in the case of Horizon Investment Co. Ltd (ITA No.1593/Mum/2013 dated 27-06-2014), wherein it is held that the application of mind on the part of the Assessing Officer should be demonstrated. He further submitted that the assessing officer, in the instant case, did not ex....
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....rejudicial to the interests of the Revenue". This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : "The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order....
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....of Bank of Baroda (supra) that the decision of ITAT is binding on the assessing officer. Accordingly, it was contended that the order passed by the Assessing Officer cannot be considered to be erroneous and prejudicial to the interests of revenue, since it has followed the decision rendered by ITAT. 14. We find merit in the said contentions of the learned AR. Since the claim of the assessee has been held to be allowable by the ITAT in the earlier years, in our considered view, non-disallowance of the same would not make the assessment order an erroneous only, since the same results in a possible view, that too, backed by the order passed by the Tribunal. The learned AR invited our attention to the assessment order passed by the Assessing Officer for assessment year 2014-15 in order to substantiate his contention that the Assessing Officer has been disallowing only the net amount of provision. If that be the case, the net amount of provision has worked to a negative figure of 0.44 crore during the year under consideration and hence no disallowance is required to be made. 15. This issue can be looked from another angle also. It is the case of the revenue that the provision made by ....