TaxTMI 
TaxTMI 
2017 (12) TMI 361
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act) determining the total income at NIL. The CIT (Exemption), Kolkata invoked his powers under section 263 of the Act and held that the assessee is not entitled to get benefit of exemption under section 11 of the Income Tax Act, 1961 as the registration granted to the assessee under section 12AA was cancelled vide order dated 11.12.2015 with effect from A.Y. 2009-10 and hence the impugned assessment order passed on 27.03.2014 is erroneous and prejudicial to the interest of the revenue. The A.O. was directed to modify this order and do a fresh assessment after giving the assessee adequate opportunity. 3. The learned counsel for the assessee submitted that the order under section 263 was passed on the ground that the registration granted to the assessee under section 12AA of the Act was cancelled and hence the assessee was not eligible to claim exemption under section 11and consequently the order passed under section 147 r.w.s. 143(3), wherein exemption under section 11 was granted to the assessee, was erroneous and prejudicial to the interest of the revenue. He submitted that the Ld. CIT was wrong for the reason that registration under section 12AA cannot be cancelled retrospectiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion under s. 12A came to be incorporated by way of amendment introduced by Finance Act, 2010 w.e.f. 1st June, 2010. The CBDT Circular o. 1 of 2011 dt. 6th April, 2011 explains that this amendment will apply for assessment year 2011-12 and subsequent years. Whereas in the case under consideration, the CIT cancelled registration under s. 12A for assessment year 2009-10 which is not in accordance with the law - N.H. Kapadia vs Director of IT (Exemptiion) (ITA No. 1420/Ahd/2011 dt. 3rd Feb, 2010) and Director of IT (Exemption) vs Mool Chand Khairati Ram Trust (2011) 243 CTR (Del) 245 : (2011) 58 DTR (Del)254 relied on." 7. The Kolkata Bench of the Tribunal in the case of Mukesh Bhansali Charities Trust vs CIT (Exemption) ITA No. 1250/Kol/2016 order dated 09.06.2017 applied the Circular No. 1 of 2011 dated 06.04.2011 issued by the CBDT and held that section 12AA(3) is applicable only from the assessment year 2011-12. 8. Respectfully following the proposition of law laid down in these case laws, we hold that this ground on which an order under section 263 of the Act was passed by the Ld. CIT is bad in law. 9. Coming to the second reason for which the Ld. CIT (Exemption) invoking powe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. RampyarideviSaraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC)". 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co.Ltd. (2 Supra) and observed that every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is uns....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. 27. In Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sted; that to do so is to divide one argument into two and multiply the litigation. It held that cases may be visualized where the Income Tax Officer while making an assessment examines the accounts, makes inquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the account or by making some estimate himself; that the Commissioner, on perusal of the record, 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; but that would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh inquiry in matters which have already been concluded unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue. For example, when an Incometax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. c) To invoke suomotu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion/issue are not per se or normally treated as erroneous and prejudicial to the interest of the Revenue because the revisionary authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken. INCOME TAX OFFICER vs. DG HOUSING PROJECTS LTD343 ITR 329 (Delhi) Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression "prejudicial to the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct and in the absence of the finding that the order is erroneous and prejudicial to the interest of Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged "inadequate investigation", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled by the assessee, was in accordance with law, he was under no obligation to justify as to why was he satisfied. On the top of that the Assessing Officer by his order dated 28th March, 2008 did not adversely affect any right of the assessee nor was any civil right of the assessee prejudiced. He was as such under no obligation in law to give reasons. The fact, that all requisite papers were summoned and thereafter the matter was heard from time to time coupled with the fact that the view taken by him is not shown by the revenue to be erroneous and was also considered both by the Tribunal as also by us to be a possible view, strengthens the presumption under Clause (e) of Section 114 of the Evidence Act. A prima facie evidence, on the basis of the aforesaid presumption, is thus converted into a conclusive proof of the fact that the order was passed by the assessing officer after due application of mind. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116 /Coch/ 2012; CIT vs. Infosys Technologies Ltd., 341 ITR 293 (Karnataka); S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984; A. A. Doshi vs. JCIT, 256 ITR 685; Hindusthan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distingu....