TaxTMI 
TaxTMI 
2021 (6) TMI 1016
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction u/s. 148 of the Act, the Assessing Officer issued notice u/s. 16.03.2009. On 17.03.2009, the ld. CIT assumed jurisdiction u/s. 263 of the Act by issuing following notice dated 17.03.2009: "The Principal Officer, Bharti Broadband Ltd. (Formerly Known as Comsat Max Ltd.) Unltech World Cyber Park, Tower - A, 4th floor, Sector - 39, Gurgaon -122 001 Sir/Madam, Sub.: Notice u/s. 263 of the I.T, Act for A.Y. 2004-05 - Reg. Please refer to the above. This office letter dated 06.03.2009 fixing the hearing on 17.03.2009 on the above mentioned subject is returned by the postal authorities with remarks "Not Known' at your address 5th Floor, Centre Point, Junction of S.V. Road & Juhu Road, Santacruz (E), Mumbai - 400 054. On perusal of assessment records, it is found that the assessment made by the A O. u/s. 143(3)(ii) of the I.T, Act, 1961 on 22.12.2006 is erroneous and prejudicial to the interest of revenue on account of the following reasons: It is seen from the records that you have received an amount of Rs. 5,10,83,475/- by way of cessation of liabilities which at....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on fulfillment of the conditions stipulated in the aforesaid agreement the loans including accumulated interest thereon, given by CUM and its associates to the Company, were deemed to have been repaid in full and extinguished, during the financial year. Accordingly, loans related to acquisition of fixed assets amounting to Rs. 38,478,473 have been set off against cost of the related fixed assets and the corresponding accumulated depreciation amounting to Rs. 31,998,187 has been reversed and set off against current year's depreciation charge. The balance amount of Rs. 51,083,475 included in the total loan amount was retained by the Company to continue to maintain and support its infrastructure thereby enabling, through a deemed grant by virtue of the Corporate Guarantee referred to above, as approved by the Board of Directors, the strengthening of its net worth position. The amount so retained has been transferred to Capital reserves." 7. This note to the accounts has to be considered with the following relevant extracts of the balance sheet: 8. The following statement of account of provisions no longer required - written back would make the facts clear to understand: 9....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar Industrial Co. Ltd., 243 ITR 83, has laid down the following ratio: "A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent--if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue--recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous ". 16. We find that the Hon'ble Delhi High Court in the case of CIT Vs. Ani....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were I.T. assessees and the unsecured loan taken from M/s. Stutee Chit & Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee." 64. Since in the instant case the A.O after considering the various submissions made by the assessee from time to time and has taken a possible view, therefore, merely because the DIT does not agree with the opinion of the A.O, he cannot invoke the provisions of section 263 to substitute his own opinion. It has further been held in several decisions that when the A.O has made enquiry to his satisfaction and it is not a case of no enquiry and the DIT/CIT wants that the case could have been investigated/probed in a particular manner, he canno....
X X X X Extracts X X X X
X X X X Extracts X X X X
....some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Hence the provisions of section 263 of the Act were not applicable to the instant case and, therefore, the commissioner was not justified in setting aside the assessment order." 19. Considering the facts of the case in hand, as discussed elsewhere, and in light of the judicial decisions discussed hereinabove, we are of the considered opinion that the assessment order dated 22.12.2006 framed u/s. 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. Therefore, the assumption of jurisdiction u/s. 263 of the Act by the ld. CIT is bad in law. We, accordingly, set aside the order of the ld. CIT dated 25.03.2009 and restore that of the Assessing Officer dated 22.12.2006. 20. In the result, appeal of the assessee in ITA No. 389....