TaxTMI 
TaxTMI 
2020 (1) TMI 162
X X X X Extracts X X X X
X X X X Extracts X X X X
....est of revenue and thereby setting aside and/or cancelling the order passed by Id. AO under section 263 of the Act . 1.1. Ld. Pr. CIT has erred in holding the order passed by Id. AO as erroneous and prejudicial to revenue on the contention that Id. AO passed the order without making enquiries and verification and therefore, without appreciating the fact that Id. AO had made detailed enquiry on the issue under consideration and after having satisfied himself with the same, order was passed by Id. AO. 1.2. Ld. Pr. CIT has erred in law in holding the order passed by Id. AO as erroneous and prejudicial to revenue while treating interest income as 'Income from Other Sources' by placing reliance on case laws which are not applicable to facts of the Appellant and has further erred in not appreciating that same issue has been categorically analyzed and decided in favour of Appellant by Id. CIT (A) in its own case for AY 2011-12 and AY 2012-13. 1.3. Ld. Pr. CIT has erred in law in holding the order passed by Id. AO as erroneous and prejudicial to revenue by applying decision of Malabar Industrial Co. Ltd. v. CIT [243 ITR 83] - [SC], without providing any basis or justification....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s provisions written back aggregating to Rs. 1.08 Lacs were brought to tax as Income from other sources. The Book profits u/s 115JB was accepted to be at Rs. 23.18 Lacs as offered by the assessee. The assessee has been found liable to pay tax on Book Profit as per the provisions of Sec.115JB since the tax on income under normal provisions was lower than tax on Book Profits as computed u/s 115JB. 3.2 Subsequently, upon perusal of case records, Ld. Pr.CIT formed an opinion that the quantum assessment order was erroneous and prejudicial to revenue which require exercise of revisional jurisdiction u/s 263. Accordingly, a show-cause notice was issued on 30/11/2017, the contents of which have already been extracted in the impugned order in para-1. It was pointed out that interest income of Rs. 27.13 Lacs as credited to Profit & Loss Account as Other Income was accepted as business income and the assessee has claimed set-off of brought forward business losses of earlier AY against the same. It was also stated that interest income was earned out of idle funds borrowed for the business which had neither commenced nor carried out during the year under consideration and therefore, the inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for AY 2011-12 was accepted by the department, loosing sight of the fact that no further appeal was filed due to low tax effect and in principal, the decision was not accepted by the department. Therefore, finding that Ld.AO failed to examine the chargeability of interest income, the explanation-2 to Sec. 263 was applicable to the factual matrix. Consequently, the assessment order passed on this issue was set-aside / cancelled and Ld. AO was directed to pass fresh order after providing reasonable opportunity of being heard to the assessee. Aggrieved by aforesaid directions, the assessee is under further appeal before us. 4.1 Upon careful consideration, we find that the prime argument of Ld. AR would revolve around the fact that specific queries were raised by Ld. AO during regular assessment proceedings vis-à-vis chargeability of interest income which was duly responded to by the assessee along with sufficient details and explanations. The Ld. AO, after considering the same, chose to accept assessee's claim with due application of mind and adopted one of the two possible views and therefore, the order could not be termed as erroneous. Au Contraire, the prime argument of Ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
....brought to tax under the head income from other sources. Specific queries were raised by Ld.AO as to taxability of interest income under appropriate heads which were duly responded to by the assessee with requisite details and explanations. Therefore, we are of the considered opinion that there was due application of mind to the issue by Ld. AO and the claim was accepted after due consideration of factual matrix rather than by merely relying upon the appellate order for AY 2011-12. Therefore, the allegations of Ld. Pr.CIT that the interest was assessed as business income overlooking the fact that the appellate order for AY 2011-12 was not contested by the revenue due to low tax effect, could not be accepted. 4.4 We find that as per the provisions of Section 263 of Income Tax Act, 1961, specified revenue authorities may call for and examine the record of any proceedings under the Act and may proceed to revise the same provided two conditions are satisfied-(i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the revenue. If one of the condition is absent i.e. if the order of the Incometax Officer is erroneous but is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... further observed that there is a fine though subtle distinction between "lack of inquiry" and "inadequate inquiry". It is only in cases of "lack of inquiry" that the Commissioner is empowered to exercise his revisional powers by calling for and examining the records of any proceedings under the Act and passing orders thereon. In Gabriel India Ltd. (supra), it was expressly observed: - "The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity [Parashuram Pottery Works Co. Ltd. vs. ITO, (1977) 106 ITR 1 (SC)]. It was further observed as under: - "From the aforesaid definitions as 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 assess....