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TMI Blog2005 (8) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Subsequently, the ld. CIT examined the assessment records and noted that the assessee s accounts have been credited by a sum of Rs. 20.39 lakhs by way of gift received from one Shri Vraj Lal G Pau residing in London through his minor son Master Kamesh Manmani. The Indian address of the donor was in Chennai. The ld. CIT observed that while accepting the gift as genuine, the Assessing Officer has not made any worthwhile enquiries. He, therefore, felt that the assessment order passed by the Assessing Officer was erroneous insofar as prejudicial to the interests of Revenue. He, therefore, issued a show-cause notice to the assessee on 7-3-2005 as to why the assessment order passed by the Assessing Officer may not be enhanced, modified or cancelled and the Assessing Officer be directed to pass fresh assessment order. 4. The assessee, vide his reply dated 14-3-2005 stated that during the assessment proceedings, the Assessing Officer had asked the assessee to file various evidences in support of the genuineness of the gift. In order to prove the genuineness of the gift, the assessee had furnished the following documents before the Assessing Officer : (1)Confirmation from the don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Counsel that in his order under section 263, the ld. CIT has observed that in the instant case, the crucial issue was examining the relationship between the donor and the donee. He stated that relationship between the donor and donee was not a pre-requisite for valid gift during the year under consideration. He stated that the Allahabad Bench of the Tribunal in the case of ITO v. Matadin Snehlata (HUF) [2004] 90 ITD 203 , has observed that relationship between the donor and donee was irrelevant for the validity of the gift. The Delhi Bench of the Tribunal in the case of Hari Chand Ghanshyam Dass [I.T. Appeal No. 4398 (Delhi) of 1992] has also considered this issue. Vide its order, the Tribunal held that it was not necessary that the donor and the donee should be real relations. There may be relation by behaviour. He argued that for the validity of gift, the Assessing Officer has to examine the legal effect of the transaction. The Hon ble Supreme Court in the case of CIT v. B.M. Kharwar [1969] 72 ITR 603, has held that in revenue cases regard must be had to the substance of the transaction rather than its mere form. He stated that the Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same deserves to be cancelled. 10. On the other hand, the ld. D.R. stated that the assessee s accounts have been credited by huge sums which was claimed to have been received by way of gift. During assessment proceedings, the Assessing Officer did not enquire the genuineness of the gift by issue of a questionnaire. The assessment was made in a very casual manner. Relying on various cases, the ld. D.R. stated that non-application of mind makes the assessment order erroneous insofar as prejudicial to the interests of Revenue. The ld. CIT has, therefore, rightly assumed jurisdiction under section 263 of the Act. She, therefore, supported the order of the ld. CIT. 11. We have considered the rival submissions. Section 263 of the Act reads as under : "The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "prejudicial to the interests of the revenue" have not been defined, but they must mean that the orders of the assessment challenged are such as are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. Our views find support from the decisions in Addl. CIT v. Mukur Corpn. [1978] 111 ITR 312 (Guj.), Gabriel India Ltd. s case ( supra ) and CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81 (Guj.). 15. The phrase "prejudicial to the interests of revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. As has been held in various cases reported in Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC), Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) and Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC), every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of revenue. For example, when an Assessing 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 Assessing Officer has taken one vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st that the ld. Commissioner was looking for a lot of enquiry or information on points which were not necessary in a case of the present nature like the nature of accounts maintained by the Trust. Neither the papers on the record nor any other material which was before the ITO or the Commissioner suggested such a course of enquiry nor arouse any suspicion. May be that the ITO should have written a more detailed order but for want of it, it would not become erroneous or prejudicial to the interests of the revenue. The CIT was not justified in initiating action on the basis of mere guess work, possibilities or suspicion under section 263." 18. The Bombay Bench of the ITAT in the case of Patel Cotton Co. Ltd. v. Asstt. CIT [1998] 64 ITD 273 , also considered the scope of the provisions of section 263 of the Act. Hon ble Bench observed as under : "Admittedly, when there are two views possible in a case then mere fact that the Assessing Officer has taken one view would not render his order as erroneous though it may be prejudicial to the interests of the revenue. For exercising powers under section 263, two conditions must be satisfied. Firstly, the order sought to be revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the gift to be genuine, the Assessing Officer has applied his mind and therefore, it cannot be said to be case of non-application of mind. No material whatsoever has been brought on record by the ld. CIT which go to show that there was any discrepancy or falsity in the evidences furnished by the assessee. There is force in the contention put forth by the learned counsel that the order has been held to be erroneous in this respect merely on guess work and in the expectation of finding out some discrepancy. The revisionary jurisdiction as has been conferred on the ld. CIT under section 263 cannot be exercised on the basis of such a possibility or guess work. As the Assessing Officer has examined the documents filed before him and has come to a definite conclusion, the ld. CIT could not have thrust his own finding in this respect, even if such an opinion, if implemented, can fetch some more revenue. Unless and until some specific error of law is pointed out, as has not been done here, the ld. CIT s order under section 263, will have to be held to be based on extraneous material/consideration. 21. Considering the facts as a whole, we hold that the order passed by the Assessing O ..... 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