TaxTMI 
TaxTMI 
2019 (11) TMI 517
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.... order. 3. Brief facts of the case are that the assessee has filed his return of income on 9.3.2012 electronically declaring total income at Rs. 11,48,620/- .This return was scrutinized, and assessment order was passed on 13.3.2014 under section 143(3) of the Act, whereby the returned income was accepted. The assessment was reopened for the reason that the assessee has received a gift of Rs. 4,25,000/- from Satish Garg HUF, which is the HUF of his brother and it was harboured that HUF of his brother does not fall within the ambit of "relative" provided under section 56(2) of the Act. Since gift was exceeding Rs. 50,000/- therefore it was to be assessed as income of the assessee. Accordingly, the assessment order was reopened. The ld.AO has....
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....s. 6 lakhs was also received by the assessee from his own HUF and in the understanding of the CIT, even own HUF will also not be treated as relative within the meaning of definition "relative" provided in section 56(2). Therefore, the ld.CIT issued an additional show cause notice under section 263 on 21.3.2018. The ld.CIT thereafter gone through submissions of the assessee and held that order of the Assessing Officer is erroneous as well as prejudicial to the interest of the Revenue. Hence, he set aside the assessment order, and remitted the issue to the file of the Assessing Officer for fresh examination and re-adjudication. 5. Before us, the ld.counsel for the assessee contended that both the HUFs ought to be treated as relative and gif....
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....nly when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, make....
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....ed as erroneous. The following observations of the Hon'ble Delhi High Court are worth to note: "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure a....
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.... have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the cir....
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.... has erred in construing position of law while accepting the stand of the assessee. A perusal of the assessment order would indicate that no proper inquiry has been made by the Assessing Officer with regard to construing the meaning of expression "relative" employed in section 56(2) of the Act. The Assessing Officer has based his finding on a decision where HUF has given gifts to its members, and not stranger HUF, therefore, order of the Assessing Officer is erroneous to this extent. 12. Without going into the larger aspect, whether HUF can be considered as a relative or not, we examine the aspect, whether the Assessing Officer has conducted an inquiry and formed an opinion on the basis of record available before him. He has misread the ju....