TaxTMI 
TaxTMI 
2021 (7) TMI 1185
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....e three issues raised by Ld. Pr. CIT. 2. Against direction for de novo assessment regarding reduction claimed for maintenance compensation amounting Rs. 407404/- from certain rental income: For that on the facts and circumstances of the case and in law, ld. Pr. CIT erred in directing Ld. A/O for de novo assessment regarding reduction claimed for maintenance compensation amounting Rs. 407404/- from rental income from house property at Ashoka Towers, Mumbai while computing 'annual value' u/s. 23 of Income tax Act, 1961. 3. Against direction for de novo assessment on the issue of notional rental income from undivided share of an unrented ancestral building: For that on the facts and circumstances of the case and in law, Ld. Pr. CIT erred in directing Ld. A/O for de novo assessment on the issue of notional rental income from undivided share of an unrented ancestral building at Didwana (Raj.) while computing 'annual value' u/s. 23 of Income tax Act, 1961. 4. Against direction for de novo assessment on the issue of interest u/s. 234B: For that on the facts and circumstances of the case and in law, Ld. Pr. CIT erred in ....
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....ed in the assessment u/s. 143(3) dated 27.12.2017, which consequently appear to have rendered the assessment erroneous and prejudicial to the interest of revenue. In view of the above, proceedings u/s. 263 of the I.T. Act, 1961 is being initiated in your case. 4. Assailing the action of the Ld. Pr. CIT the Ld. A.R. Shri P.R. Kothari, FCA submitted that the issue/faults pointed out by the Ld. Pr. CIT are (a) the A.O. erred in allowing deduction claimed for maintenance/compensation amounting to Rs. 4,07,404/- related to rental income when only standard deduction of 30% is allowable which amounts to double deduction (b) on the issue of notional rental income from undivided share of an unrented ancestral building and (c) on the issue of interest u/s. 234B of the Act. First of all, the Ld. A.R. pointed out that Ld. PCIT is wrong to observe in the SCN that assessee's case was selected for 'Limited Scrutiny' whereas it was selected for 'Complete Scrutiny'. Secondly according to the Ld. A.R., the A.O. had made enquiry into the issue in respect of the deduction u/s. 24 of the Act of house property amounting to Rs. 4,07,404/- by issuing notice u/s. 142(1) of t....
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....spectfully following the decisions cited by the learned counsel for the assessee as discussed above, we allow the claim of the assessee. The A.O. is directed to determine the income from house property after reducing Rs. 1,55,159 from the assessee's share of gross rent of the property. The alternative submission of the assessee to allow deduction u/s. 24(a) of the Act @ 30% of Rs. 1,55,159 is rejected accordingly." 5. The Ld. A.R. also pointed out that in the assessee's own case for A.Y. 1992-93, 1994-95 and 2012-13, the department has been allowing this claim in scrutiny proceeding u/s. 143(3) of the Act; and in the all other assessment years no disallowance was made though it was intimation under section 143(1) of the Act. Taking note of these facts, the A.O. had allowed the claim of the assessee and, therefore, there is no error on the part of the A.O. and it cannot be said that there was no enquiry and he referred to Hon'ble Calcutta High Court decision in the case of CIT Vs. J.L. Morrison India Ltd. 366 ITR 593 wherein the Hon'ble Calcutta High Court has held at Para 88 & 89 as under: "88. The Assessing Officer was required to examine the return fil....
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....acts are the same, and there is no change in law, the A.O. taking note of the rule of consistency did not make any addition on this issue. So, the AO's action cannot be held to be erroneous. 8. Coming to the next fault i.e. non-computation of interest u/s. 234B of the Act, the Ld. A.R. submitted that the assessee is a senior citizen and, therefore, he need not have to deposit advance tax since he is exempted u/s. 207(2) of the Act and since the assessee is not getting any profit and gains from any business or profession. So, he is exempt from giving any advance tax. So, according to Ld. A.R., therefore, the question of interest u/s. 234B of the Act does not arise and, therefore, the action of the A.O. in not levying interest u/s. 234 of the Act cannot be held to be erroneous as well as prejudicial to the interest of the revenue and, therefore, according to the Ld. A.R., the action of the Ld. Pr. CIT to invoke revisional jurisdiction u/s. 263 of the Act is without jurisdiction and is bad in law, therefore, need to be quashed. 9. Per contra, the Ld. CITDR Devi Saran Singh vehemently opposed the submission of Ld. A.R. and supporting the decision of the Ld. Pr. CIT submitted ....
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....ust be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the A.O. can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii) Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the A.O. has not investigated the issue before him; [because A.O. has to discharge dual role of an investigator as well as that of an adjudicator] then in aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the A.O. can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by....
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....mine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 2.--For the purposes of this section, it is hereby declared 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 [Chief Commissioner or Chief Commissioner or 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;" 12. From a perusal of the aforesaid Explanation (2) clause (a) and (b) of section 263 of the Act it can be seen that if A.O. passes....
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....the admitted fact was that A.O. had summoned all requisite papers and heard the assessee several times, which has been taken note by the Hon'ble High Court. Moreover at para 76 of this order, the Hon'ble High Court has taken note of the contents of the AO's notice u/s. 142(1) of the Act and the reply of the assessee on the issue raised by CIT u/s. 263 of the Act, therefore the Hon'ble High Court upheld the action of Tribunal quashing the CIT's order passed u/s. 263 of the Act. That is not the case of this assessee before us. It is a case of no-enquiry at all on these issues and it is not the case of the assessee that A.O. was made aware that issues have been settled by the Tribunal and accepted by the department. In the light of the above facts since the A.O. has not made any enquiry into the faults pointed out by the Ld. Pr. CIT, the order passed by the A.O. has to be treated as erroneous as well as prejudicial to the interest of the revenue. Therefore, the Ld. Pr. CIT gets jurisdiction to invoke revisional jurisdiction u/s. 263 of the Act and thus the legal issue raised by the assessee is dismissed. The other issues raised in the other grounds need factual enq....