AI Drafter 
TaxTMI 
TaxTMI 
2004 (4) TMI 47
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....tion. On the basis of the rent received by the assessee, the income from the property was disclosed by the three brothers. The Assessing Officer completed the assessment under section 143(3) of the Act for the assessment year 1998-99 on March 9, 2001. The Commissioner of Income-tax set aside the aforesaid assessment order under section 263 holding that the assessment order dated March 9, 2001, is prejudicial to the interests of the Revenue on the following grounds: (i) Reasons for the selection of the case under scrutiny was to investigate the correct income from house property and to investigate the loss brought forward from the earlier year. To investigate the investment in the construction of the house property was also an issue for bringing the case under scrutiny. However, the assessment order in question reveals that the Assessing Officer has investigated none of the issues. (ii) The assessment has been made in a very routine manner and no certification with reference to the rental income disclosed with that of the fair market value of the properties let out could be made. (iii) Investment in the construction of the property could not be investigated as no enquiry....
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.... could not do the required investigations in the case of the assessee. Hence, the Commissioner of Income-tax was of the opinion that the order of the Assessing Officer was prejudicial to the interests of the Revenue. The Commissioner of Income-tax therefore set aside the assessment order dated March 9, 2001, and directed the Assessing Officer to make a fresh assessment after ascertaining the fair valuation of the property let out by the assessee to the sister concern and also ascertaining the cost of construction of the property at Minhajpur, Allahabad. Against this order an appeal was filed before the Tribunal which has been dismissed and hence this appeal. Learned counsel for the appellant submitted that all details regarding the income from the property were furnished before the Assessing Officer and these details show computation of the income furnished by the assessee along with the return. A valuation report was also furnished before the Assessing Officer. It is alleged that the assessment was not done in undue haste. It is alleged that the Commissioner of Income-tax considered the office note written by the Assessing Officer but there is no law which permits the Assess....
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....No. 1) v. CIT [1991] 187 ITR 412 (All); CIT v. Rampiyari Khemka [1967] 63 ITR 367 (Cal); Bagsu Devi Bafna v. CIT [1967] 63 ITR 333 (Cal); CIT v. Kiran Debi Singhee [1967] 65 ITR 501 (Cal); CIT v. Mahavar Traders [1996] 220 ITR 167 (MP); CIT v. Everest Cold Storage [1996] 220 ITR 241 (MP) and Duggal and Co. v. CIT [1996] 220 ITR 456 (Delhi), etc. Learned counsel for the appellant has stated that the Assessing Officer made all necessary enquiries. We cannot agree with this submission. The Assessing Officer had himself stated that he could not make the relevant enquiries, as the assessment was becoming time barred. There is no reason to disbelieve this note of the Assessing Officer. In paragraph 11 of the order of the Tribunal the full details have been given and we are satisfied on perusing the same that the Assessing Officer did not make the proper enquiries as he was expected to do as he has himself admitted. As regards the appellant's contention that the Assessing Officer cannot made an office note after passing an assessment order because there is no provision for doing so we cannot accept this submission. The office note indicates that proper enquiries were not made by the....
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....t and direct a fresh assessment. In this way, the Commissioner's order cannot be faulted because he cancelled the assessment and directed a fresh assessment. The Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 defines the words "erroneous and prejudicial to the Revenue" as follows: "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 orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the Revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Assessing Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue." In the present case it prima facie appears that the appellant has not made correct disclosure. He ha....