TaxTMI 
TaxTMI 
2005 (7) TMI 90
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....nd on facts in cancelling the order made by the Commissioner of Income-tax in exercise of the powers under section 263 of the Income-tax Act, 1961?" Question No. 2: "Whether, when the Commissioner of Income-tax was satisfied that the registration was granted by the Income-tax Officer without examining the genuineness of the firm the Appellate Tribunal was justified in law in cancelling the said order?" 2. The assessment year is 1981-82 and the relevant accounting period is Samvat Year 2036. The assessee, a partnership firm, sought registration in terms of the provisions of section 185 of the Act. The Assessing Officer passed an order on November 17, 1983, granting registration to the assessee-firm in the following words....
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....ce that the firm may not be genuine. In other words, according to the Tribunal, the Commissioner of Income-tax had doubted the genuineness of the firm by reading the statement of the partners in a truncated manner. The Tribunal has held that a document has to be read as a whole in order to decide its importance instead of picking up answers to one or two questions, which may favour one party or the other. The Tribunal has further found on reading the various statements of the partners that when the said documents are read as a whole, it was difficult to concur with the view taken by the Commissioner of Income-tax while initiating proceedings under section 263 of the Act. 5. The Tribunal has further found that the basis for initiation of ....
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....Act is defined by the apex court in the case of Malabar Industrial Co. Ltd. v. CIT reported in [2000] 243 ITR 83. While explaining the phrase "prejudicial to the interests of the Revenue", it is stated that the order made by the assessing authority cannot be treated as prejudicial to the interests of the Revenue when an officer has adopted one of the courses permissible in law, or where two views are possible and the officer has taken one view with which, the Commissioner of Income-tax does not agree. That in such circumstances, apart from the order not being prejudicial to the interests of the Revenue, it cannot be treated as an erroneous order also, unless the view taken by the Assessing Officer is unsustainable in law. 10. Applying th....
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....n be seen from the order under section 185(1)(a) of the Act extracted hereinbefore, the Assessing Officer has taken into consideration the fact that all the requisite formalities as laid down in the Act have been fulfilled by the firm, and it is further found that the firm was genuine. In the circumstances, at the highest, it would amount to taking one view from the material available on record, with which, the Commissioner of Income-tax does not agree and this by itself, as held by the apex court, cannot constitute a valid reason for exercise of jurisdiction under section 263 of the Act. 12. Therefore, both on facts and in law, it is not possible to hold that the impugned order of the Tribunal requires any interference. The Tribunal has....