TaxTMI 
TaxTMI 
2017 (11) TMI 633
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....come Tax Act, 1961 by the PCIT setting aside the assessment order by holding that the same is erroneous and prejudicial to the interest of Revenue. 3. Brief facts of the case are that the assessment was completed by the AO under section 143(3) of the Act on 29.3.2016 by assessing the total income of Rs. 25.37.651/- as against the returned income of Rs. 23,16,530/-. Thereafter, the Principal Commissioner of Income Tax(PCIT) upon examination of the records observed that the order dated 29.3.2016 is erroneous and prejudicial to the interest of Revenue as the disallowance was not as per the provisions of section 14A of the Act r.w.r.8D and accordingly issued a show cause notice dated 14.2.2017 u/s 263 of the Act which is reproduced below : ....
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....me, set aside the assessment order of the AO by holding that the same is erroneous and prejudicial to the interest of revenue on the ground that AO has made adhoc addition at the rate of 5% of the dividend instead of following Rule 8D of the Income Tax Rules 1962. The PCIT further observed that the AO followed the order of the ITAT in assesee‟s own case for the assessment years 2010-11 and 2011-12 despite the fact that these orders were challenged by the Revenue before the Jurisdictional High Court. The ld. PCIT noted that it is a case of complete non-application of mind by the AO as the inquiry conducted is exceedingly inadequate and hence fall in the category of „no-inquiry‟ conducted by the AO thereby resulting into inc....
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....orted in 156 ITR 11(Bom). 6. The ld.DR relied on the decision of ld. PCIT and also the decision rendered in the case of Garden Silk Mills Ltd V/s CIT 221 ITR 861. The ld .DR relied heavily on the order of ld.PCIT by submitted that when the order is challenged before the higher forum, the AO has committed the error by a by accepting the order in assessee‟s own case for the assessment years 2010-11 and 2011-12 applied the rate of 5% exempt income to make u/s 14A r.w.r.8D despite the fact that there is a specific mechanism provided under the Act to deal with such type of disallowances. The ld. DR relied on the following decisions : a) Rajrnandir Estates Pvt Ltd -386 ITR 162 b) Subhlakshmi Vanijya Pvt. Ltd -155 ITD 17....
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....tax free income but was holding the shares as stock-in-trade as the assessee was making purchase of shares for the purpose of trading in shares and securities. Having all the facts of the case and in the light of various decisions as cited by both the parties, we are not in agreement with the ld. PCIT that the order of the AO is erroneous and prejudicial to the interest of revenue as the AO after calling for information from the assessee on the issue of disallowance u/s 14A r.w.r 8D has taken a conscious view which is a possible view out of two views and applied the decision of the Tribunal in assessee‟s own case in the earlier years. The mere fact that the revenue has challenged the decision of the Tribunal in assessee‟s own ca....
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....t which a different view is not rationally possible." * In the case of Garden Silk Mills Ltd (supra) it has been observed and held : "merely because the Department is contemplating to file a special leave petition, the Commissioner cannot refuse to follow the decision when the court has settled the law in question. It may happen that the decision of an appellate authority or the Tribunal pertaining to an earlier assessment year on a particular point is in favour of the assessee and that is followed in the assessment relating to the subsequent assessment years. It may happen that the Commissioner may consider that such a decision of the appellate authority or the Tribunal is not in accordance with law and may also find that....