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TMI Blog2015 (5) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... e novo enquiry, to consider whether the explanation offered by the assessee to the points raised by the Commissioner is proper or not. When once the Commissioner has got power to point out the errors which had the effect on the revenue, the Tribunal cannot sit as an appellate authority on the order of the Commissioner passed under Section 263 of the Act. If the power exists in the Commissioner and is exercised by him after satisfying himself on the facts of the case, it is not for the Tribunal to re-appreciate the said satisfaction of the Commissioner. It is only when the Commissioner does not exercise the power properly in satisfying the twin test contemplated under Section 263 of the Act, the order of the Commissioner can be held to be perverse, but not by re- appreciating the order of the Commissioner. A prima facie perusal of the order of the Commissioner shows that the Commissioner was satisfied that there were errors which had effect on the interests of the revenue and it needed a further probe by the Assessing Officer. In the facts and circumstances of the case, we are satisfied that the order passed by the Commissioner is proper and validly exercised as per the powers co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to Sri Venkata Santhamani Modern Rice, Groundnut Oil Mill, in respect of which a survey under Section 133A of the Act was conducted and the case of the assessee was also taken up for scrutiny by the Assessing Officer. The Assessing Officer passed an order on 15.03.2000 as follows: The assessee has filed return of income for the Assessment year 1999-2000 on 31.12.1999 by declaring income of ₹ 4,60,960/- and the same has been processed U/s.143(1). This case is connected case to Sri Venkata Santhamani Modern Rice G.N.Oil Mill where in Survey under Section 133A was conducted. Hence it has been taken up for scrutiny and notices U/s.143(2) have been issued. In response there to the assessee and his Authorised Representative appeared and discussed about the case. As the assessee has filed return of income by admitting income and paid the taxes as agreed at the time of survey, the assessment is completed by accepting the returned income. Rs. Income Returned : 4,60,960 Add: Agrl. Income : 38,200 Total 4,99,160 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the explanation, the Commissioner considered it desirable to restore the entire assessment order for making fresh assessment de novo and in the concluding paragraph of his order he observed as follows: In the totality of the facts and circumstances of the case, the assessment order passed by the Assessing Officer u/s.143(3) on 15.03.2000 is hereby set aside and the A.O. is directed to initiate fresh assessment proceedings and carry out necessary enquiries/cross verification in respect of the various points stated in the show-cause notice served u/s.263 of the I.T.Act, 1961 and provide reasonable opportunity to the assessee to produce its regular books of accounts/bills and vouchers/documents which he may choose to rely upon for substantiating his own claim. During the fresh assessment proceedings, the A.O should call for the minimum support of price fixed by State Govt., towards purchase cost of different variety of paddy for the F.Y.98-99 and also the sale price of rice fixed in respect of levy rice sold to FCI for the F.Y.98-99 and examine whether the purchase cost of paddy was properly shown in the accounts of assessee and the sale price of the rice was properly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O was a cryptic one as has been in the impugned case. Hence in our considered view when the issue raised by the CIT in the show cause notice in pursuance to invoking of Section 263 in no way are fatal to the interest of the Revenue when the assessee has already disclosed income at the time of survey u/s.133(A) amounting to ₹ 3,60,000/- and has accepted the same on agreed basis after due discussions and deliberations along with his authorized representative before the AO at the time of assessment proceedings which means sticking to his disclosure at the time of survey, in all fairness there does not remain any scope for the CIT to invoke Section 263 and assume his revisional jurisdiction. Further we do not find any infirmity in the order of the AO in the impugned case as per the two limbs contemplated u/s.263 (i.e., erroneous and prejudicial to the interest of the Revenue); hence in our considered opinion in the present facts and circumstances of the case assumption of jurisdiction u/s.263 by the CIT does not stand on a sound footing. We therefore, set aside the order of the CIT and restore the order of the AO. Against the said finding recorded by the Tribunal, the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessing Officer does not commit any error affecting the interests of the revenue. We will consider the cases relied on by the learned Commissioner of Income Tax while passing the order impugned before the Tribunal. The first case is Rampyari Devi Saraogi (supra) decided by the Supreme Court. In the said case the appellant, who was an assessee, was sent a notice by the Commissioner of Income Tax, West Bengal, under Section 33B of the Income Tax Act, 1922, proposing to pass an order under Section 33B of the said Act and, accordingly, giving an opportunity to her. The Tax Consultant, on behalf of the assessee, wrote a letter to the Commissioner stating that the show cause notice was bad in law, illegal, void and without jurisdiction. However, the assessee appeared before the Commissioner, and the Commissioner passed an order on the same day cancelling the assessments made in favour of the assessee and directing the Income Tax Officer to do fresh assessments according to law after making proper enquires and investigation with regard to the jurisdiction, carrying on of the business, possession of initial capital, gifts received and the sources of the moneys invested in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not conferred to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy Co. v. S.P. Jain Anr. [(1957) 31 ITR 872 (Cal)], the High Court of Karnataka in Commissioner of Income-tax, Mysore v. T. Narayana Pai [(1975) 98 ITR 422 (Kant)], the High Court of Bombay in Commissioner of Income-tax v. Gabriel India Ltd. [(1993) 203 ITR 108 (Bom)] and the High Court of Gujarat in Commissioner of Income-tax v. Smt. Minalben S. [(1995) 215 ITR 81 (Guj)] treated loss of tax as prejudicial to the interests of the revenue. 9. Mr. Abaraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. Commissioner of Income-tax [(1987) 163 ITR 129 (Mad)] interpreting prejudicial to the interests of the revenue . The High Court held: In this context, (it must) be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the errors pointed out by the Commissioner have no effect on the revenue. Ultimately, it is for the Assessing Officer, at the time of de novo enquiry, to consider whether the explanation offered by the assessee to the points raised by the Commissioner is proper or not. When once the Commissioner has got power to point out the errors which had the effect on the revenue, the Tribunal cannot sit as an appellate authority on the order of the Commissioner passed under Section 263 of the Act. If the power exists in the Commissioner and is exercised by him after satisfying himself on the facts of the case, it is not for the Tribunal to re-appreciate the said satisfaction of the Commissioner. It is only when the Commissioner does not exercise the power properly in satisfying the twin test contemplated under Section 263 of the Act, the order of the Commissioner can be held to be perverse, but not by re- appreciating the order of the Commissioner. A prima facie perusal of the order of the Commissioner shows that the Commissioner was satisfied that there were errors which had effect on the interests of the revenue and it needed a further probe by the Assessing Officer. In the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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