TaxTMI 
TaxTMI 
2024 (9) TMI 25
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....8,74,28,484/-. The case of the petitioner was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS) vide Notice No. ITBA/AST/S/143 (2)/2018-19/1010964997(1) dated 09.08.2018 under Section 143 (2) of the Act. 4. The petitioner responded by its communication dated 20.12.2018 in the said assessment proceedings. The Assessing Officer by order dated 31.12.2018 passed the final assessment order under Section 153A/153D/143 (3) of the Act vide Assessment Order dated 31.12.2018, making an addition of Rs. 87,29,120/-, thereby reducing the total loss to Rs.57,86,99,364/-. The said assessment order was passed by taking into account the records and evidences filed by the writ petitioner. Thereafter, the respondent No.4 forwarded a proposal to the respondent No. 2 dated 10.03.2021 for revision of the Assessment Order dated 31.12.2018 under Section 263 of the Act. The respondent No. 2 solely on the basis of the proposal dated 10.03.2021, issued a Show Cause Notice No. ITBA/REV/F/REV1/2020-21/1031736946 (1) dated 24.03.2021 directing the petitioner to show cause as to why the order under Section 263 of the Income Tax Act should not be issued for revision of the Assessment Or....
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....rmed accurately as to whether the assessee did not claim the deduction for the earlier years. It was held that although the explanation of the assessee seems plausible, in the opinion of the Revisional Authority, it would be better if the matter was examined at length. Learned Senior Counsel for the petitioner submits that a plain reading of the impugned order reveals that there was no finding by the Revisional Authority that the order of the Assessing Officer was erroneous and that it was also prejudicial to the interests of revenue. 7] Learned Senior Counsel for the petitioner submits that the Revisional Authority came to a finding that whether the benefit was claimed or not by the assessee could not be confirmed accurately. As such, there was no finding that the order passed by the Assessing Officer is erroneous and the benefit granted to the petitioner is prejudicial to the interests of revenue. The order of the Assessing Officer calls for a remission is required to be revised under Section 263 of the Act. The term "erroneous" is not defined under the act. 8] Learned Senior Counsel has pressed into service the judgment of the Apex Court rendered in Malabar Industrial Company ....
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....in support of his contentions. 9] It is submitted that a satisfaction has to be arrived at by the Revisional Authority that the order passed by the Assessing Officer is erroneous and also prejudicial to the interest of revenue. It is submitted that the Apex Court has held that these preconditions which are required to be present and once this twin satisfaction is arrived at by the Revisional Authority, they can invoke their jurisdiction to pass orders under Section 263 of the Income Tax Act. Learner Senior Counsel for the petitioner has also referred to the judgment of the Bombay High Court rendered in Commissioner of Income Tax vs. Gabriel India Limited, reported in (1993) SCC Online Bom 526. 10] Referring to the judgments placed above, learned Senior Counsel submits that the impugned order passed by the Revisional Authority does not satisfy the twin preconditions necessary to invoke jurisdiction under Section 263 of the Income Tax Act. He submits that a plain reading of the impugned order dated 31.03.2021 reveals that there was no satisfaction arrived at by the Revisional Authority. That being the position, the preconditions required to be satisfied before invoking the jurisdic....
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....n has been filed by disputing the contentions raised by the learned Senior Counsel for the petitioner. He submits that it is because the order of the Assessing Officer is found to be erroneous and prejudicial to the revenue that the Revisional Authority has invoked his jurisdiction under Section 263 of the Income Tax Act and has directed the Assessing Officer to make assessment of the assessee afresh by examining all the aspects after making detailed enquiry and affording a reasonable opportunity to the writ petitioner. He submits that the judgments referred to by the learned Senior Counsel for the petitioner are rendered by the Courts in the facts and circumstances of each case. He submits that in the facts of the present case, while there is no quarrel with the principle laid down by the Apex Court as well as by this Court, the fact remains that the Revisional Authority noticed certain anomalies which were not clarified by examination of the records and therefore, the Revisional Authority has correctly passed the order impugned in the present writ petition and directing the Assessing Officer to reassess the assessee after detailed examination and enquiry. He, therefore, submits t....
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....eard and after making or causing such enquiry as he deems necessary, may pass the order thereon as the circumstances of the case justifies. From the plain reading of the Section, it is seen that the Revisional Authority must examine the record of the case by calling for it and upon due examination, if he considers that the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of revenue, then after giving an opportunity of being heard to the assessee and after making such enquiry or examination, it can pass such orders as the circumstances of the case may justify, including an order modifying or cancelling the assessment and directing a fresh assessment. 17] Since the issue which was examined by the Revisional Authority was as to whether the deduction of expenditure of the prior period was allowable to the assessee under section 37 of the Act, a reference to section 37 is also apposite. Section 37 reads as under: "37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively f....
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....the Act. Understood in its ordinary meaning, it is of wide import and is not confined to loss of tax. The phrase "prejudicial to the interests of Revenue" has to be read in conjunction with the erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of revenue. Further, when two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order "prejudicial to the interests of Revenue" unless the view taken by the ITO is unsustainable in law. Relevant paragraphs of this Judgments are extracted below: "6. A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income-tax Officer is erroneous insofar 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 ord....
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....interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi Vs. Commissioner of Income-tax [67 ITR 84] and in Smt. Tara Devi Aggarwal Vs. Commissioner of Income-tax, West Bengal [88 ITR 323]." 22] In Rajendra Singh vs. the Superintendent of Taxes & Others, a Division Bench of this Court held that "erroneous assessme....
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....ting from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is therefore invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the assessing officer in fixing the amount of valuation of the property. Similarly "erroneous judgment" means : "One rendered according to course and practice of court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles". 10. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an officer acting in accordance with law makes certain assessment and determines the turnover of a dealer, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the Commissioner for that of the officer, who passed the order, unless the decision of the subordinate officer is held to be erroneous. Cases may be visualised where assessing officer while making an assessment examines the accounts, makes his enquiries, appli....
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....he findings of the Apex Court as well as the High Court is that for an order to be erroneous, it must be contrary to the provisions of law and only then it can be held to be an erroneous assessment. Further referring again to the judgment of the Apex Court in Amitabh Bachchan (supra), it has to be held that for invoking a jurisdiction under the provisions of Section 263 of the Income Tax Act, the parameters required to be maintained by the Revisional Authority are that the assessment order must be erroneous and that it must also be found to be prejudicial to the interests of the revenue. Unless these two conditions are simultaneously satisfied, the jurisdiction under Section 263 of the Income Tax Act cannot be invoked. 24] From the impugned order dated 31.03.2021 it is clear that there is no specific finding by the Revisional Authority that the benefit claimed by the assessee under Section 37 of the Income Tax Act was wrongly allowed by the Assessing Officer. Rather, the impugned ordered dated 31.03.2021 categorically holds that it is not clear as to whether assessee was permitted the benefit after making the proper enquiry. The powers under Section 263 of the Income Tax Act are t....