TaxTMI 
TaxTMI 
2025 (7) TMI 424
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....he order dated 23.09.2021 on appellant bank, wherein the AO passed the order after considering material and evidences submitted during the course of assessment in respect of- (a) Disallowance u/s 14A (b) Disallowance of bad debts written off (c) Disallowance of amounts paid for not following the internal guidelines of regulator. (d) Disallowance of interest on perpetual bonds (e) Taxing of the recovery in respect of bad debts written off. 3. Without prejudice the Id. PCIT erred in revising the order u/s 143(3) dated 29.09.2021 passed on predecessor bank wherein the AO passed the order after considering material and evidences submitted during the course of assessment in respect of- (a) Depreciation on investments (b) Provision for wage arrears Without prejudice to the above even on merits In the order u/s 143(3) dated 23.09.2021 on appellant in respect of its separate assessable Income that- 4. The Ld. PCIT erred in directing the AO to add back the provisions which are reduced from the assets ignoring the binding decision of hon'ble ITAT in appellant's own case where it was hel....
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....unt of depreciation on investments, provided as per RBI guidelines ignoring the binding Income Computation and Disclosure Standards (ICDS). 11. The Ld. PCIT erred in directing the AO to disallow the amount of provision for wage arrears contrary to judicial precedents. 12. The PCIT erred in directing the AO to examine the expenses u/s 37 without specifying any specific expenditure and concluding that the order of AO is erroneous or prejudicial to the interest of revenue. Your appellant craves leave to add, to amend, and / or vary the grounds of appeal before or at the time of hearing." 3. Representatives were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. The entire quarrel revolves around the assumption of jurisdiction u/s 263 of the Act by the ld. Pr. CIT and holding that assessment order dated 23/09/2021 framed u/s 143(3) r.w.s. 144B of the Act is not only erroneous but also prejudicial to the interest of the revenue. 5. Before embarking on the facts of the case, let us understand the jurisprudence for the assumption o....
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....T has considered the issues which pertained to Andhra Bank. We are in AY 2019-20 and Andhra Bank merged with Union Bank of India by the Gazette Notification w.e.f. 01/04/2020. Therefore, till AY 2019-20, Andhra Bank was a separate entity. Therefore, any issue pertaining to Andhra Bank till AY 2019-20 cannot be considered in the hands of the assessee Union Bank of India. Therefore, the issues pertaining to Andhra Bank cannot make the impugned assessment order erroneous and prejudicial to the interest of the revenue. 10. The aforementioned discussion has to be considered in the light of the following judicial decisions. 11. The Hon'ble High Court of Guwahati in the case of Karan Jain vs. UOI & Ors [2024] 465 ITR 1 (Gauhati), had the occasion to consider an identical situation and held as under:- "30. Section 263 of the Act would not be invoked merely to correct a mistake or error committed by the Assessing Officer unless it has caused prejudice to the interests of the revenue. If an order is based on incorrect assumption of facts or on incorrect application of law or without applying the principles of natural justice and without application of mind, it would be treated....
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....e open to the Courts to examine whether the relevant objective factors were available from records called for and examined by such authority. 33. In Baijnath Biswanath v. State of Assam [1998] 2 GLR 474 this Hon'ble Court held that the suo moto power of revision conferred on the Commissioner cannot be exercised mechanically or at the behest of some other authority other than on the own discretion of the assigned Officer. The Commissioner cannot exercise his discretion on the dictation of some other authority. In the said judgment it was held as under- "As indicated earlier, the suo moto power of revision conferred on the Commissioner is of wide amplitude. He can revise an assessment when the order of assessment passed is not in accordance with law in consequences of which the State is deprived of its lawful revenue. The power reposed on the Commissioner, no doubt, is a power of judicial nature and therefore such power is to be exercised lawfully and with due application of mind. The power cannot be exercised mechanically or at the behest of some other authority other than on the own discretion of the assigned officer. The Commissioner, therefore, is not to exercise his....
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....ply, the consideration that the assessment order is erroneous and prejudicial to the interests of the Revenue should flow from and be the consequence of examination of the record of proceedings by the CIT(A). If such a consideration is not preceded by the examination of record of the proceedings under the Act, the condition for revision does not get magnetized. It is trite that a power which vests exclusively in one authority, cannot be invoked or cause to be invoked by another, either directly or indirectly. Sec. 263 confers power on the CIT to revise an assessment order, subject to certain conditions. In this case the revision was initiated on the basis of the proposal sent by the AO to the CIT and not on the CIT suo motu calling for and examining the record of the assessment proceedings and thereafter considering the assessment order erroneous and prejudicial to the interests of the Revenue. The AO recommending a revision to the CIT has no statutory sanction and is a course of action unknown to the law. If AO, after passing an assessment order, finds something amiss in it to the detriment of the Revenue, he has ample power to either reassess the earlier assessment in terms of s.....
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....e. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. Our aforesaid conclusion gets full support from a decision of Sabyasachi Mukharji J. (as his Lordship then was) in Russell Properties Pvt. Lt....
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....fficer was erroneous and prejudicial to the interests of the Revenue. Without doing so, he does not get the power to set aside the assessment. In the instant case, the Commissioner did so and it is for that reason that the Tribunal did not approve his action and set aside his order. We do not find any infirmity in the above conclusion of the Tribunal." 15. The Hon'ble Supreme Court in the case of CIT vs. Max India Ltd. reported in [2007] 295 ITR 282 (SC), had the occasion to consider a similar challenge to 263 proceedings and held as under:- "1. In our view at the relevant time two views were possible on the word 'profits' in the proviso to section 80HHC(3). It is true that vide 2005 amendment the law has been clarified with retrospective effect by insertion of the word 'loss' in the new proviso. We express no opinion on the scope of the said amendment of 2005. Suffice it to state that in this particular case when the order of the Commissioner was passed under section 263 of the Income-tax Act two views on the said word 'profits' existed. In our view the matter is squarely covered by the judgment of this Court in the case of Malabar Industrial Co....