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TMI Blog2013 (7) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and the same was allowed by the Assessing Officer, though the assessee has not furnished the proof of Bad Debts during the course of assessment proceedings. Further, the income from advertising commission at the rate of 15% per cent was calculated incorrectly by adopting incorrect figure and amount paid to ad-agencies commission was reduced without enquiry and satisfying about the ad-agencies commission paid to them. Thus, the Commissioner was of opinion that the assessment order is erroneous so far as it is prejudicial to the interest or revenue and in exercising power conferred under section 263 of the Act, he proposed to consider this matter. Accordingly, a show cause notice u/s 263 was issued on 16.03.2005. After considering the reply of the assessee to the show cause notice, the Commissioner passed the revision order, whereby the assessment order with respect to three issues was set aside with the direction to the AO to conduct enquiries and complete the assessment proceedings with respect to these issues after examining all relevant facts and also allowing reasonable opportunity of being heard to the assessee. In the assessment order passed in pursuant to the revision ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as explained before the AO, that the advance written off represents the sum paid to the vendor in the ordinary course of business and the assessee could neither obtain the deliverable nor recover the money advanced, the same had to be written-off. Thus, the amount written off is liable to be considered as business loss u/s 28 read with section 37 of the Act. The Learned Counsel submitted that the assessment order cannot be termed as erroneous unless it is not in accordance with law. If AO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately as held by the Hon'ble Jurisdiction of the High Court in case of CIT Vs. Gabriel India Ltd. [(1993) 203 ITR 108 (Bom.)]. The Learned Counsel has relied upon the decision of Hon'ble Delhi High Court in case of ITO v. DG Housing Projects Ltd. [(2012) 343 ITR 329 (Del.)] and submitted that the Hon'ble High Court has held that a distinction must be drawn in case where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order erroneous and prejudicial interests of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings. (ii) The income from advertising commission @ 15 % was calculated incorrectly by adopting incorrect figure of gross advertising receipts at Rs. 302,82,37,824/- instead of Rs. 356,26,32,734/- (iii) Further it is seen that from the advertising commission, that the amount paid to ad-agencies commission was reduced without enquiring and satisfying about how much ad-agencies commission was paid, to whom it was paid, is there any agreement for this, percentage of commission paid etc. 7. Out of these three issues, which were remanded to the records of the Assessing Officer for further enquiry and verification by the Commissioner while passing the impugned order revision order dated 13.3.2005, the Assessing Officer while passing the consequential order in pursuant to the revision order, found the claim of the assessee with respect to Item No.(ii) and (iii) as correct and no addition or disallowance was made. Only with respect to the claim of deduction of Rs.50 lac on account of written off advance, the Assessing Officer disallowed the same and made addition. Thus, as we have already noted that the sustainability of the order passed under section 263 has to be tested only with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in para 18 as under. "18. This distinction must be kept in mind by the Commissioner of Income- tax while exercising jurisdiction under section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interests of the Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged " inadequate investigation", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as in investigator, is erroneous, without the Commissioner of Income-tax conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. The Commissioner of Income-tax cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the Commissioner of Income -tax to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the Commissioner of Income-tax hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore, the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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