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TMI Blog2015 (9) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... at AO had not applied his mind on it. Malabar Industrial Co. Ltd. case(2000 (2) TMI 10 - SUPREME Court) squarely applies wherein held that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase “ prejudicial to the interests of the Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax 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 Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. The ld. CIT had set aside the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence. The impugned order therefore lacks valid jurisdiction u/s 263 of the Act and hence, the impugned order kindly be quashed. 2. Brief facts of the case are that the assessee is a commission agent and wholesale general merchant of grains. All the grounds of the assessee are revolving around section 263 order passed for assessment year 2010-11 by ld. CIT, Alwar. In this case the AO scrutinized the case under section 143(3) of the IT Act which was completed on 31.12.2012. The ld. CIT observed that assessee filed her return on 14.10.2010 declaring total income of ₹ 87,28,100/-. The assessment under section 143(3) of the Act was completed on 31.12.2012 at the total income of ₹ 87,61,650/- by DCIT Circle, Bharatpur. The ld. CIT issued show cause notice under section 263 to the assessee on 06.02.2014 treating the assessment order erroneous and prejudicial to the interests of the revenue which has been reproduced by the ld. CIT at pages 1, 2 3, fixing the case for hearing on 25.02.2014. In response to show cause notice, the assessee filed the reply dated 04.03.2014 which has also been reproduced by the ld. CIT at pages 4,5,6,7 8. After considering the assessee s rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter month-wise totaling. The ld. A/R of the assessee tried to explain that this was the difference on account of weight of the gunny bags and debit notes received in the month of February, 2010. This aspect has not been considered by the AO while framing the assessment. Therefore, it is held by him that the order of the AO was passed without enquiry and application of mind. 2.2. During the year under consideration the assessee had given advance of ₹ 2,50,000/- to Shri Jagdish Meena s/o Shri Ram Chand Meena, resident of Devli, District Bharatpur which was remained unpaid till date of assessment. On verification of confirmation filed by the ld. A/R, it was found that no interest has been charged from him. The assessee has also borrowed money from market as well as from relatives for business purposes and paid interest on it. The AO had not verified the purpose/business expediency in advancing interest free loans. Thus the assessment was passed without proper enquiry on this issue. 2.3. The assessee paid interest charges totaling to ₹ 8363.50 on various dates which are penal in nature. The AO has not examined this issue while framing the assessment order. The ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel for the assessee had produced the books of accounts, stock register, purchase and sale expenses vouchers and various other details as required by the AO which were duly examined by him. The ld. AO after examining the books of accounts had made no adverse remarks on the truthfulness and fairness of accounts. The ld. AO vide order sheet entry dated 21.12.2012 asked the assessee to file confirmation for commission paid with complete address which has been filed by the assessee on 28.12.2012, which contained complete name, address, mobile no., telephone no., GST/CST No. along with brokerage bill dated 25.02.2010. Therefore, the AO had discussed this issue in detail during the course of assessment proceedings and applied his mind. The AO had formed the opinion and explanation submitted by the assessee was found reasonable. Subsequently, the ld. CIT has formed another opinion on same set of evidences available on record. Therefore, it is a case of change of opinion. Similarly, the difference in quantity in stock statement has also been verified by the AO by raising query and considering the assessee s reply. The difference was on account of debit/credit notes received from vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative details, there was a discrepancy in assessment record which has not been verified by the AO during the assessment proceedings which is also lack of application of mind. Similarly, no interest has been charged by the assessee on loans given to Shri Jagdish Meena but the AO has collected the information from the assessee and simply put on record which also shows that AO had not applied his mind on it. The Hon ble Supreme Court decision in case of Malabar Industrial Co. Ltd. (supra) squarely applies wherein the Hon ble Supreme Court has held as under :- The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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