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TMI Blog2014 (1) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT. 3. The facts relating to the issue are stated in brief. The assessments for the years under consideration were completed in the hands of the assessee u/s. 143(3) r.w.s. 153C of the Act. In assessment year 2007-08, the assessee had declared income from short term capital gain arising from purchase and sale of immovable properties and the same was accepted by the Assessing officer without making any discussion about it. The Ld. CIT noticed that the assessee had undertaken many transactions of purchase and sale of immovable properties and accordingly, he took the view that the assessee was carrying on business in immovable properties. Accordingly, the Ld CIT took the view that the profit arising from sale of immovable properties s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel for the assessee submitted that the assessee did not carry on the business activity of purchase and sale of immovable properties as presumed by Ld CIT. Hence, the assessee offered the profit arising from sale of immovable properties under the head "short term capital gain". The Ld. AR further submitted that the Ld. CIT has reached conclusions on the basis of presumptions only and he has not brought any material on record to substantiate his views. The Ld. AR further submitted that in order to invoke the revision proceedings u/s. 263 of the Act, two conditions specified in that section have to be cumulatively satisfied, i.e., the assessment order should not only be erroneous but it should also be prejudicial to the interests of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. The Ld Counsel further submitted that the Tribunal has already passed the order on this issue. Accordingly, he submitted that issue relating to fund deficiency got merged with the order of the Ld. CIT(A) and the Tribunal and hence, the Ld. CIT was not legally correct in invoking revision proceedings on this issue. 5. On the contrary, the Ld. DR submitted that the Assessing officer did not discuss anything about the short term capital gain in the assessment order and it clearly shows that the Assessing officer has not applied his mind on this issue. With regard to the peak deficiency, the Ld. Counsel for the department submitted that the peak fund deficiency worked out by the Ld. CIT was more than that assessed by the assessing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that the order must be considered by the Commissioner to be "erroneous in so far as it is prejudicial to the interests of the Revenue". This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar 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 natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions, 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 order of the income tax officer is erroneous but is not prejudicial to the interests of Revenue of if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act." 6.2 It is also pertinent to note that the power to revise the order shall extent only on such matters which were not considered and decided in any appeal, as per the provisions of clause (c) to Explanation below sec. 263(1) of the Act. 7. Keeping in mind above cited the propositions laid down by the Hon'ble Supreme Court and also the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit from business as presumed by the Ld CIT. Since no prejudice is caused to the revenue on assessing the gain arising on sale of immovable properties, one of the twin conditions does not get satisfied, in which case, the revision order passed by Ld CIT on this issue shall fail. Accordingly we set aside his order on this issue. 8. With regard to the issue relating to "Peak fund deficiency" relating to the assessment year 2008-09, it is not disputed that the assessee has accepted the assessment order, i.e., no appeal has been filed before Ld CIT(A) challenging the said issue. The amount of deficiency assessed by the AO was Rs.12,48,040 for this year, whereas the Ld CIT has worked out the deficiency at Rs.20,85,111/-. Thus, there is dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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