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TMI Blog2014 (12) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. Hence, we condone the delay and admit the appeal for adjudication. 2. The grievance of the assessee is with regard to disallowance of the income from Yoga, ayurvedic treatment etc. as business income. 3. The brief facts of the case are that the assessee filed its return of income for the assessment year under consideration on 29/07/2009 returning total income as 'Nil'. The return was selected for scrutiny and the assessment was completed u/s. 143(3) of the I.T. Act on 30/11/2011. On examination of the assessment records, the CIT noticed that the assessee had income under the heads Yoga, Ayurveda and other programmes etc. These were construed as business expenses. The objects and activities of the assessee fall under "advancement of any other object of general public utility, thereby attracting the provisions of section 2(15) of the I.T. Act. The assessee was, however, allowed exemption u/s. 11 of the Act. The then CIT vide proceedings dated 04/03/2011 had withdrawn the registration u/s. 12A granted to the assessee. Thereafter a notice was issued to the assessee on 09/01/2011 proposing to revise the assessment order by CIT u/s. 263 of the I.T. Act. 4. The Ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of section 2(15). The word 'education' as given in sec. 2(15) means systematic instruction, schooling or training and the process of training and developing the knowledge, skill, mind and character of students by normal schooling. The CIT relied on the decision of the Hon'ble Supreme Court in the case of Lok Sikshana Trust (101 ITR 234) wherein it was held that the advancement of education resulting indirectly does not come under the head 'education'. The various course and programmes conducted by the assessee are imparted by charging fees and therefore, the declared objects and actual activities of the trust could not be construed as 'education' for the purpose of sec. 2(15) and can be categorized only under the head 'general public utility'. 7. Regarding exemption of medical relief, the CIT observed that yoga has not recognized system of medicine and does not figure in the approved list nor is there any scientific body of evidence to establish that yoga is a medical science which would provide medical relief. Yoga is only supplementary and therapeutic in value and cannot be considered as a system of treatment for diseases by itself. The assessee was not able to establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, or in the process or proceeding to judgement or in the execution upon the same, in a Court of Record; which in the Civil Law is called a Nullityie" (termes de la ley). Something incorrectly done through ignorance or inadvertence S.99 CPC and S.215 Cr.PC. Error, Fault, Error respects the act; fault respect the agent, an error may lay in the judgement, or in the conduct, but a fault lies in the will or intention." 10. At page 650 of the aforesaid Law Lexicon, the scope of Error, Mistake, Blunder, and Hallucination has been explained thus: "An error is any deviation from the standard or course of right, truth, justice or accuracy, which is not intentional. A mistake is an error committed under a misapprehension of misconception of the nature of a case. An error may be from the absence of knowledge, a mistake is from insufficient or false observation. Blunder is a practical error of a peculiarly gross or awkward kind, committed through glaring ignorance, heedlessness, or awkwardness. An error may be overlooked or atoned for, a mistake may be rectified, but the shame or ridicule which is occasioned by a blunder, who can counteract. Strictly speaking, Hallucination is an illus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee before him. The scheme of assessment has undergone radical changes in recent years. It deserves to be noted that the present assessment was made u/s. 143(3) of the Income-tax Act. In other words, the Assessing Officer was statutorily required to make the assessment under Section 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. Bulk of the returns filed by the assessees across the country is accepted by the Department under Section 143(1) without any scrutiny. Only a few cases are picked up for scrutiny. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. He should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of that is legitimately due from him, and on the other hand, he has a duty to protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chequer can also be corrected by invoking revisional jurisdiction of the Commissioner under Section 263. Arbitrariness in decision-making causing prejudice to either party cannot therefore be allowed to stand and stare at the legal system. It is difficult to countenance such arbitrariness in the actions of the Assessing Officer. It is the duty of the Assessing Officer to adequately protect the interest of both the parties, namely, the assessee as well as the State. If he fails to discharge his duties fairly, his arbitrary actions culminating in erroneous orders can always be corrected either at the instance of the assessee, if the assessee is prejudiced or at the instance of the Commissioner, if the revenue is prejudiced. While making an assessment, the ITO has a varied role to play. He is the investigator, prosecutor as well as adjudicator. As an adjudicator he is an arbitrator between the revenue and the taxpayer and he has to be fair to both. His duty to act fairly requires that when he enquires into a substantial matter like the present one, he must record a finding on the relevant issue giving, howsoever briefly, his reasons therefor. In S.N. Mukherjee v. Union of India AIR 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be regarded as erroneous and prejudicial to the interests of the revenue. If the Assessing Officers are allowed to make assessments in an arbitrary manner, as has been done in the case before us, the administration of revenue is bound to suffer. If without discussing the nature of the transaction and materials on record, the Assessing Officer had made certain addition to the income of the assessee, the same would have been considered erroneous by any appellate authority as being violative of the principles of natural justice which require that the authority must indicate the reasons for an adverse order. We find no reason why the same view should not be taken when an order is against the interests of the revenue. As a matter of fact such orders are prejudicial to the interests of both the parties, because even the assessee is deprived of the benefit of a positive finding in his favour, though he may have sufficiently established his case. 15. In view of the foregoing, it can safely be said that an order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the Revenue under Section 263 in the following cases: (i) The order sought to be revised c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the revisional jurisdiction under Section 263. We have given our thoughtful consideration to the aforesaid submissions. As already stated earlier, an order becomes erroneous because inquiries, which ought to have been made on the facts of the case, were not made and not because there is anything wrong with the order if all the facts stated or the claims made in the return are assumed to be correct. Thus, it is mere failure on the part of the Assessing Officer to make the necessary inquiries or to examine the claim made by the assessee in accordance with law, which renders the resultant order erroneous and prejudicial to the interest of the revenue. Nothing more is required to be established in such a case. One would not know as to what would have happened if the Assessing Officer had made the requisite inquiries or examined the claim of the assessee in accordance with law. He could have accepted the assessee's claim. Equally, he could have also rejected the assessee's claim depending upon the results of his enquiry or examination into the claim of the assessee. Thus, the formation of any view by the Assessing Officer would necessarily depend upon the results of his inq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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