AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 272
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.... the tune of Rs. 1,49,16,583/-. The ld PCIT was of the opinion that the Assessing Officer was required to examine and verity the justification of share premium with regard to FMV and the creditworthiness of the subscriber to whom the said shares have been allotted at a huge premium. 3. According to the ld. PCIT, since the Assessing Officer had failed to apply his mind and to examine the same, this non-application of mind of the Assessing Officer in framing the assessment order leads to the completion of order as erroneous and prejudicial to the Revenue. Accordingly, the ld. PCIT issued notice u/s 263 of the Act. Proceedings were attended and queries raised by the ld. PCIT were duly replied by the assessee. 4. After considering the submissions of the assessee, the ld. PCIT concluded that the Assessing Officer has failed to apply his mind and has not examined the receipt of share premium thereby making the assessment order erroneous and prejudicial to the interest of the Revenue and accordingly, the ld. PCIT set aside the assessment order and directed the Assessing Officer to pass fresh assessment order after making proper enquiries/verifications. 5. Before us, the ld. counsel fo....
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....4,110/- to Rs. 38,27,850/-. Simultaneously, security premium increased from Rs. 43,25,890/- to Rs. 2,18,07,423/-. A perusal of the balance sheet details clearly proves that substantial part of the share capital was subsumed in CCD coming from the previous Assessment Year. 10. Exhibit 14 is notice u/s 142(1) of the Act dated 08.06.2016 wherein, vide Point No. 1, the Assessing Officer asked the assessee to justify large share premium received during the year, give complete names and addresses of applicants on shares alongwith PAN, file a copy of ledger account alongwith documents filed with ROC. 11. Reply of the assessee is placed at page 15 which shows the details of documents filed with reply. Vide notice dated 01.08.2016, the Assessing Officer further asked the assessee to furnish proof that the debenture money has been received in F.Y.2012-13 and valuation report of shares to justify premium amount. 12. Reply to this query is placed at page 139 of the paper book wherein the assessee has furnished complete details of debentures justifying that they were taken in F.Y. 2012-13 supported by copy of valuation report of shares justifying he premium of conversion on which basis CCD b....
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....on 263 which is not disputed by the assessee before ITAT." 15. And the Hon'ble High Court, after considering the facts, held. as under:- "6. It can thus be seen that though final order of assessment was silent on this aspect, the Assessing Officer had carried out inquiries about the nature of sale of land and about the validity of the assessee's claim of deduction under section 54F of the Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details . A.Y. 2009-10 supplied by the assessee, we are unable to accept such a condition. In that view of the matter, the observation of the Tribunal that the Assessing Officer having made inquiries and when two views are possible, revisional powers could. not be exercised, called for no interference. Since with respect to computation and assertions of other aspects of deduction under section 54Fofthe Act, the ....
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....ower of revision. Minutely examined, the provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interest of the Revenue will not suffice. The assessee must be called, his explanation sought for and examined by the CIT and thereafter if the CIT still feels that the order is erroneous and prejudicial to the interest of the Revenue, the CIT may pass revisional orders. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to the interest of the Revenue, he may choose not to exercise his power of revision. This is for the reason that if a query is raised during the....
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....his sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions "erroneous", "erroneous assessment" and "erroneous judgment" have been defined in Black's Law Dictionary. According to the definition, "erroneous" means "involving error; deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles". 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous b....
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....e already held. what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held. as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would. be open to the courts to examine whether the relevant objective factors were available from the re....