2022 (11) TMI 317

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....essment of the assessee of the year under consideration was completed by the assessing officer u/s 143(3) of the Act on 26.08.2019. It is pertinent to note that the assessment was completed by the AO through E proceedings. After considering the replies filed by the assessee, the AO completed the assessment accepting the income returned by the assessee. Upon examination of assessment records, the Ld PCIT took the view that the assessment order is erroneous and prejudicial to the interests of revenue on the following issues:- (a) The assessee has claimed deduction u/s 54F of the Act, but the details of purchase/investment in property and construction expenses were not submitted. (b) The assessee has received gift of Rs.3,50,....

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.... and the assessee has also duly furnished the replies. He submitted the assessment was completed under e-proceedings and hence the notices issued u/s 142(1) by the AO and the replies filed by the assessee are very much available in the income tax portal. He submitted that the Ld PCIT has not examined all these details and has made scathing observations about the assessment proceedings, which was otherwise conducted properly. The Ld A.R invited our attention to the notices issued by the AO and the replies furnished by the assessee. The Ld A.R also placed his reliance on the decision rendered by Hon'ble Rajasthan High Court in the case of Laxmi Narayan vs. CIT (402 ITR 117)(Raj). Accordingly, the Ld A.R submitted that the Explanation 2 to sec....

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....abar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the in....

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....o whether an order is erroneous in so far it is prejudicial to the interests of Revenue must be based on materials on record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded. 6. We shall now examine the facts prevailing in the present case. The AO has issued a notice dated 03-01-2019 u/s 142(1) of the Act to the assessee, wherein he, inter alia, raised queries on ....