TaxTMI 
TaxTMI 
2020 (2) TMI 93
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....by sec. 115JB computation of Rs.1,51,79,827/-. 3. Case file suggests that the PCIT thereafter proposed to invoke his sec. 263 revision jurisdiction by treating the above regular assessment as erroneous causing prejudice to the interest of Revenue. He issued his show cause notice dated 12.12.2018 pin-pointing the following two issues:- "3. In this regard the following discrepancies have been observed: As per schedule 15 of the Balance sheet an amount of Rs. 78,73,866/- was deposited with national bank for agricultural and rural development on or before 26.08.2014. A deduction u/s 33AB amounting to Rs. 1,57,47,599/- as claimed by you in your computation of income was allowed. An amount of Rs. 78,73,733/- [Rs. 1,57,47,599/-(-) Rs. 78,73,866/-] was not deposited with the NABARD in conformity with the provision as laid down in section -33AB of the I.T. Act, 1961, i.e. before the expiry of six months from the end of previous year ending or before the due date of furnishing the return of his income whichever is earlier. Therefore, Rs. 78,73,733/- was required to be added back to your total income in the assessment order passed us.143(3) on 18.10.2016. An agriculture income of Rs. 1,5....
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....f law satisfies the requirement of law i.e. order being erroneous and prejudicial to the interest of revenue. The order passed by the AO. without application of mind or order showing apparent error of reasoning or the order where the A.O. simply accepts whatever the assessee Slated in his return of income and fails to make the enquiries which are called for in the facts and circumstances of the case will also call for intervention u/s 263 of the Act by the CIT/Pr. CIT. It is a trite law that the disclosure of facts by the assessee, in the return of income and / or in the course of assessment proceedings cannot give immunity from revisional jurisdiction of the CIT/Pr. CIT u/s 263. In this context, it may be mentioned here that in the case of Commissioner of Income tax, Central-l Kolkata Vs. Maithan International. It was held by Calcutta High Court [2015] 56 taxmann.com 283(Calcutta) that: " ..... it is not the law that the Assessing Officer occupying the position of an investigator and adjudicator can discharge his function by perfunctory or inadequate investigation . Such a course is bound to result in erroneous and prejudicial order. Where the relevant enquiry was not undertaken....
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.... Steel Suppliers Complex: 395 ITR 1 (SC) CIT vs. Amitabh Bachchan: 384 ITR 200 (SC) CIT v. Hindustan Lever Ltd: 343 ITR 161 (Born.) CIT v. Vikas Polymers: 341 ITR 537 (Del.) CIT v. Sunbeam Auto Ltd.: 332 ITR 167 (Del) CIT vs. Development Credit Bank Ltd: 323 ITR 206 (Born.) Vimgi Investment (P) Limited: 290 ITR 505 (Del) Hari Iron Trading Co. vs. CIT: 263 ITR 437 (P&H) CIT vs. Gabriel India Limited: 203 ITR 108 (Born). 6.5 It may be further noticed that in order to provide clarity on the issue of "erroneous in so far as it is prejudicial to the interest of the revenue", a new Explanation has been inserted to clarify that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if in the opinion of the Principal Commissioner or Commissioner "(a) The order is passed without making inquiries or verification which, should have been made; (b) The order is passed allowing any relief without inquiring into the claim; (c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) The order has not been passed in acco....
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....w of the facts and the legal position stated above, I am of the considered view that the order passed on an incorrect assumption of facts or incorrect application of law and without making requisite inquiries will satisfy the requirement of the order being erroneous and pre-judicial to the interest of the revenue within the meaning and scope of Section 263 of the Income Tax Act, 1961. 6.9 The afore stated decisions postulate that when the officer is expected to make an inquiry of a particular item of income and if he does not make an inquiry as expected, that would be a ground for the Commissioner to interfere with the order passed by the Officer since such an order passed by the Officer is erroneous and prejudicial to the interests of the Revenue (K.A. Ramaswamy Chettiar V. CIT, (1996) 220 ITR 657). 7. Having regard to the facts and circumstances of the case and in the light of the aforesaid decisions of Hon'ble Supreme Court and Hon'ble High Court and in accordance with the amendment made to Section 263 of the' Act' with effect from 01.06.2015. I hold that the impugned assessment order dated 18.10.2016 passed by the A.O. is erroneous in so far as it is prejudi....
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....n jurisdiction holding the Assessing Officer to have not carried out any factual verification / enquiry as sec. 33AB claim goes against the record of the case. The assessee's third argument sought to invite our attention to the paper book pages No. 34 to 48 comprising of NABARD is ledgers confirming the deposits in the Tea Development Accounts, its auditor's certificate in Form No.3AC dated 29.11.2014 showing utilization of funds withdrawn from NABARD to be in compliance u/s 33AB of the Act, copy of Tea Development Scheme, 2007 indicating provision of withdrawal and utilization of the amount deposited as well as copy of statement showing details of machinery purchased; respectively. Its case therefore is that once the corresponding withdrawals satisfied the relevant purposes envisaged in the Tea Development Accounts Scheme,2007, there is neither any error nor prejudicial caused to the interest of the Revenue as canvassed in the PCIT's revision directions under challenge. Learned counsel has also taken pains to refer to various judicial precedents which shall be taken note of in succeeding paragraphs. 6. Learned CIT-DR has vehemently supported the PCIT's impugned revision direction....
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....r scrutiny. It can be seen from the grounds of appeal that the assessee wants to contend that the very initiation of proceedings u/s 143(3) of the Act on the basis of regular scrutiny under the Act was bad in law. The proceedings under section 143(3) of the Act should have been limited to the extent of the information gathered through AIR. Accordingly the proceedings u/s 263 of the Act cannot be expanded beyond the issue raised in AIR. Thus the order u/s 143(3) of the Act beyond the points of AIR is invalid in law and so the same is with the order passed u/s 263 of the Act. It is the further contention of the assessee that in the items which are not subject matter of AIR cannot subject matter of scrutiny. Such matters include salary of the assessee, loans & interest on loans, payment of LIC, Commission & brokerage income etc. It is the case of the assessee that in the assessment order passed u/s 143(3) of the Act, the AO has travelled beyond the points of the AIR on the basis of which the case of scrutiny was selected under CASS module. It is the plea of the assessee that when no addition/disallowance can be made beyond the points mentioned in AIR in the assessment proceedings th....