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TMI Blog2016 (7) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded. Entire revision proceedings had been triggered merely on the basis that the advances received were remaining outstanding in the balance sheet as on 31.3.2008. This might at best could be construed only as an error committed by the assessee in his books. But that does not make the order of the ld. AO erroneous. In these circumstances, it could only be inferred that the ld. AO had taken one of the possible views by duly appreciating the contentions of the assessee that the advance received had already been taxed in the earlier years and he had rightly not brought the same to tax in the assessment even though the same is framed u/s 144 of the Act. Thus the order passed by the ld. AO is neither erroneous nor prejudicial to the interests of the revenue. Accordingly, the order passed by the ld. CIT u/s 263 of the Act is hereby quashed - Decided in favour of assessee - I.T.A No. 1251/Kol/2013 - - - Dated:- 1-7-2016 - Shri M.Balaganesh, AM Sri S.S.Viswanethra Ravi, JM For The Appellant : Shri T.K.Chakraborty, A.R. For The Respondent : Shri G.Mallikarjun, CIT, DR ORDER Per M.Balaganesh, AM This appeal of the assessee arises out of the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and the same was done by the ld. AO commencing from Asst Years 1999-2000 onwards till Asst Year 2005-06. However, the assessee stated that he had not passed necessary adjustment entries in his books of accounts for giving effect to the same by reducing the advance received and transferring to income, even though there is no violation of provisions of the Income Tax Act. 6. The ld. CIT ignoring the submissions of the assessee resorted to pass an order u/s 263 revising the assessment framed for the Asst Year 2008-09 u/s 143(3) dated 31.12.2010 by treating the order of ld. AO as erroneous and prejudicial to the interests of the revenue. According to ld. CIT , the issue was not properly examined by the ld. AO during assessment proceedings. He set aside the assessment with the direction to examine the above issue afresh in the light of the decisions taken by the appellate authorities on the said issue for Asst Years 1999-2000 and 2005-06. 7. Aggrieved, the assessee is in appeal before us on the following grounds :- 1. That, on the facts and in the circumstances of the case, the assumption of Jurisdiction U/s 263 of the I.T. Act, 1961 by the Ld. CI.T. is wrong as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be construed of having taken one possible view by the ld. AO which cannot be the subject matter of revision u/s 263 of the Act. He also argued that the ld. CIT had never stated in his revision order as to how the order passed by the ld. AO is erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of section 263 of the Act. It was also argued that if in the opinion of the ld. CIT , the ld.AO had not made any enquiry on the impugned issue , then it is for the ld. CIT to make adequate enquiries to arrive at a primafacie conclusion by pointing out the error in the order of the ld. AO and the prejudice that is caused to the revenue due to enquiry. In the instant case, the ld. CIT had absolutely not made any enquiry and had simply directed the ld. AO to make fishing or roving enquiry in order to find out whether the order contains any error and whether it is prejudicial to the interests of the revenue. In support of his arguments, he placed reliance on the following decisions :- Malabar Industrial Co. Ltd vs CIT reported in (2000) 243 ITR 83 (SC) CIT vs Gabriel India Ltd reported in (1993) 203 ITR 108 (Bom) 9. In response to this, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ro0ceeding under this Act, and if he considers that any order passed therein by the [ Assessing ] Officer is erroneo8us in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being head and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 11.1. We find that the above provisions are very clear that the ld. CIT had to make enquiry if he deems necessary on examination of the records. Based on such enquiry alone, he could arrive at a prima facie conclusion by pinpointing the error in the order of the ld. AO. He need not finally conclude the issue based on his enquiry. We hold that the ld. CIT cannot delegate the powers to ld. AO to verify whether the order is erroneous or prejudicial to the interests of the revenue. In the instant case, the assessee had duly replied to the show cause notice by stating that the advances received remaining in the balance sheet had already been taxed in the earlier years commencing fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, The Commissioner has to be satisfied of twin conditions, 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 Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous, In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a higher figure than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. This is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself would not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, that the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interests of the Revenue, then the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject matter of revision b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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