TaxTMI 
TaxTMI 
2021 (11) TMI 922
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....ed in passing the order when no issue was identified in the notices issued by the Pr. CIT, whereas the notice u/s 263 was based on the information as per the audit objection which the Pr. CIT having alleged that the order passed by the AO was erroneous and prejudicial to the interest of the revenue. 4. That the revision order passed u/s 263 pursuant to the amendment made w.e.f. 1st June 2015 is bad in law. 5. That the Pr. CIT grossly erred in law in holding that the order passed by the Assessing Officer was very casual and passed in a hurried manner did not examine all the material facts of the case and was erroneous and prejudicial to the interest of revenue. 6. That the order passed u/s 263 without giving a proper opportunity to the assessee and have not appreciated the issues which were explained on the various items identified by the Pr. CIT in his order is bad in law and prayed to be quashed. 7. the each grounds is dependent of and without prejudice to the other grounds raised herein 2. The registry has informed that the present appeal is delayed by 37 days. Ld. Counsel for the assessee submitted that the delay in filing the appeal is due....
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....00/- which was classified as loss assets and subsequently recovered during the previous year was required to be added back to the assessee's income which was not done by the AO. The omissions resulted in under assessment of income to that extent resulted in notional tax effect of Rs. 52,77,406/-. Keeping in view of the above, the assessment order passed by the Assessing Officer is considered to be erroneous is so far as it is prejudicial to the interest of revenue, and therefore, I, propose to invoke powers vested u/s 263 of the Income Tax Act, 1961 in respect of the order referred to above. You are hereby given an opportunity of being heard as per section 263(1) of the Income Tax Act to present yourself in person or through an authorized representative on 28.01.2020 at 11:30 AM to explain your case. In case no reply is received by stipulated date, it will be presumed that you have nothing to say in the mater and a decision will be taken on the basis of material available in this office. 5. Now the assessee is in appeal before the Tribunal challenging the jurisdiction of Ld. PCIT assumed u/s 263 of the Act. 6. Ld. Counsel for the assessee apart from placing reliance ....
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....ncome under the head 'Profits and Gains from Business or Profession'. Since it was a case of loss, the loss has been reduced to the extent of add back. 4. Accordingly, in the impugned year when the excess provision made for bad and doubtful debts on ICD was written back, the same was deducted from the net profit as per the audited financial statements while computing income under the head 'Profits and Gains from Business or Profession'. It is a fact on record that during the impugned year, assessee was engaged in the process of recovery of loans and interest which were granted earlier. No fresh lending was done. Before the Ld. Pr. CIT all the documentary evidences were placed on record. [PB 22 and 41] 5. The opening balance as on 01.04.2014 of ledger 'inter corporate deposits' is Rs. 156,89,42,845. Out of this, during the impugned year an amount of Rs. 14,75,00,000 was recovered from Som Distilleries Limited. This recovered amount has been reduced from net profit while computing the income under the head 'profits and gains from business and profession' for the impugned year. There is no benefit claimed by the assessee in terms of section 41(1) in respect ....
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....ed that the notional tax effect is of Rs. 52,77,406. It is submitted that under the Income-Tax Act, tax is charged on the income earned by the assessee i.e. income when it is either accrued or is received by the assessee. There is no concept of notional income and hence there cannot be notional tax. 11. Ld. Pr.CIT erred in stating that there was a notional tax effect of Rs. 52,77,406 making the order passed by Ld. AO erroneous and prejudicial to the interest of Revenue. 12. Ld. Pr.CIT has directed AO to decide the issue i.e. amount recovered out of the loss assets, on merits and as per law. No specific finding on merits has been given by Ld. Pr.CIT on examination of written submissions and all the documentary evidences placed on record. No specific enquiry or investigation has been made by Ld. Pr.CIT to establish and show the error or mistake made by the assessing officer making the order unsustainable in law. Reliance is placed on the decision of Hon'ble Delhi High Court in the case of D G Housing Projects Ltd - [2012] 20 taxmann.com 587. [PB 148] B. Enquiry conducted by Ld. AO - no lack of enquiry and C. Application of the min....
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....s. Ld. AO has applied his mind while conducting the assessment proceedings. 7. It is not a case of non application of mind by Ld. AO. It is also not a case where Ld. AO has allowed the claim without enquiring into the same. Invoking provisions of section 263 is not in accordance with the law. Ld. Pr. CIT has not pointed out any shortcomings in the verification so conducted by Ld. AO. 8. The twin conditions required to invoke the provisions of section 263 i.e. order should be erroneous and also prejudicial to the interest of revenue are not satisfied. 9. Being erroneous always refers to 'being an error of law / jurisdiction' i.e. an incorrect application of law. An order passed by an Assessing Officer can be treated as erroneous if the view taken by the assessing officer is unsustainable in law. Thus, when a plausible view sustainable in law has been taken by assessing officer the order so passed cannot be treated as erroneous. In the instant case, Ld. AO has made the enquiries during the assessment proceedings on the issues raised by Ld. Pr.CIT in the proceedings u/s 263. Ld. AO has allowed the claim on being satisfied with the explanation given ....
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....rial development and infrastructure. Assessee is a Government company in which 100% shareholding is of the government of Madhya Pradesh and complete control and management is by the Board of Directors on the directives of Government of Madhya Pradesh. We observe that it is on record that the details in respect of amount shown in the return for A.Y. 2015-16 as per point no.32 in BP i.e. computation of income from Business or profession, item wise break up of Rs. 20,01,58,544/- was given which included withdrawal of provision of Inter Corporate Deposit (ICD) and provision of interest on ICD totalling to Rs. 15,04,64,954/-. We further observe that from the profit and loss account these amounts were credited and since they did not form part of income from business or profession the same were excluded for computation of income under the head income from business or profession. 9. We also observe that in the course of revisionary proceedings assessee had explained that the provision for bad and doubtful debts on ICD and interest thereon was made in the earlier years i.e. A.Y. 2002-03 to 2004-05 while computing the total income of these year. The amount of provision for bad and doubtfu....
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....nt Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such....
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....y the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a showcause notice pointing out the reasons for the formation of his belief that action under section 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the fourth compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. 13. It is well settled law that for invoking the provisions of section 263 of the Act both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. 14. Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. - [2000] 243 ITR 83 - order p....
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....ust record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Both the conditions must be fulfilled. (ii) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it was only 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 Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income-tax does not agree. If cannot be treated as erroneous order, unless the view taken by the Assessing Officer is unsustainable under law . (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to ....
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....ct of such trading liability by way of remission or cessation thereof. We find that Ld. Pr.CIT has grossly erred in applying the provisions of section 41(1) in the present case which in no situation is applicable in the facts of the present case. 17. We further find that the Ld. Pr.CIT has directed AO to decide the issue i.e. amount recovered out of the loss assets, on merits and as per law but no specific finding on merits has been given by Ld. Pr.CIT on examination of written submissions and all the documentary evidences placed on record. No specific enquiry or investigation has been made by Ld. Pr.CIT to establish and show the error or mistake made by the assessing officer making the order unsustainable in law. This action of Ld. Pr. CIT can stand only if it is found that the assessment order is erroneous so far as prejudicial to the interest of revenue and no enquiry has been conducted by the Ld. AO with regard to the issue raised in the show cause notice issued u/s 263 of the Act. For this proposition the Ld. counsel for the assessee relied upon the ratio laid down in the decision passed in the case of D.G. Housing Projects Ltd. (2012) 20 taxmann.com 587. 18. On consider....