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TMI Blog2016 (7) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of jurisdiction by the CIT u/s.263 of the Act, is bad in law. Accordingly, we uphold the order of the CIT to the extent that the Assessing Officer is not justified in considering the FMV as on 1.4.1981 at ₹ 300 per sq.ft.. However, the CIT cannot determine the FMV of the property, himself. In the present case, the CIT, himself fixed the FMV of the properties as on 1.4.1981 at ₹ 40 per sq.ft., which is not correct. Accordingly, we direct the AO to refer the matter both, landed properties as well as buildings to the DVO and decide the issue afresh. It is needless to say that the DVO has to consider comparable cases in the immediate vicinity of the properties, where it is located and also give an opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes. - ITA No. 980/Mds/2015, ITA No. 981/Mds/2015 - - - Dated:- 27-4-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellants by : Shri T. Vasudevan, Advocate For The Respondent by : Shri A.V.Sreekanth, JCIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These appeals by different assessees are directed again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 (SC), the Commissioner can exercise revision jurisdictional u/s. 263 of the Act, if he is satisfied that the order of the assessing officer sought to be revised is (i) erroneous; and also (ii) prejudicial to the interests of the revenue. The word erroneous has not been defined in the Income Tax Act. It has been however defined at page 562 in Black s Law Dictionary (seventh Edition) thus ; erroneous, adj. Involving error, deviating from the law . The word error has been defined at the same page in the same dictionary thus: error No. 1 : A psychological state that does not conform to Objective reality; a brief that what is false is true or that what is true is false . At page 649/650 in P. Ramanatha Aiyer s Law Lexicon Reprint 2002, the word error has been defined to mean- Error: A mistaken judgement or deviation from the truth in matters of fact, and from the law in matters of judgement error is a fault in judgement, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warranted. The Commissioner will be well within his powers to regard an order as erroneous on the ground that in the circumstances of the case, the Assessing Officer should have made further inquiries before accepting the claim made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral in giving a decision on the basis of evidence produced before it, the role of an Assessing Officer under the Income-tax Act is not only that of an adjudicator but also of an investigator. He cannot remain passive in the face of a return, which is apparently in order but calls for further enquiry. He must discharge both the roles effectively. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The scheme of assessment has undergone radical changes in recent years. 8.1 It deserves to be noted that the present assessment was made under Section 143(3) of the Income-tax Act. In other words, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Court has held as under: There can be no doubt that 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 the orders passed without applying the principles of natural justice or without application of mind. In our humble view, arbitrariness in decision-making would always need correction regardless of whether it causes prejudice to an assessee or to the State Exchequer. The Legislature has taken ample care to provide for the mechanism to have such prejudice removed. While an assessee can have it corrected through revisional jurisdiction of the Commissioner under Section 264 or through appeals and other means of judicial review, the prejudice caused to the State Exchequer can also be corrected by invoking revisional jurisdiction of the Commissioner under Section 263. Arbitrariness in decisionmaking causing prejudice to either party cannot therefore be allowed to stand and st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. 10. Similar view was earlier taken by the Supreme Court in Siemens Engg. Mfg. Co. Ltd. v. Union of India AIR 1976 SC 1785. It is settled law that while making assessment on assessee, the ITO acts in a quasi-judicial capacity. An assessment order is amenable to appeal by the assessee and to revision by the Commissioner under Sections 263 and 264. Therefore, a reasoned order on a substantial issue is legally necessary. The judgments on which reliance was placed by the learned Counsel for the assessee also points to the same direction. They have held that orders, which are subversive of the administration of revenue, must 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous as it was passed without proper examination or enquiry or verification or objective consideration of the claim made by the assessee. The Assessing Officer has completely omitted to examine the issues in question from consideration and made the assessment in an arbitrary manner. His order is a completely non-speaking order. In our view, it was a fit case for the learned Commissioner to exercise his revisional jurisdiction under section 263 which he rightly exercised by cancelling the assessment order and directing the Assessing Officer to pass a fresh order considering the issues raised by the CIT. In our view, the assessee should have no grievance in the action of learned Commissioner in exercising the jurisdiction u/s. 263 of the IT Act. 13. In view of this, the Assessing Officer cannot take a view either against or in favour of the assessee without making proper enquiries and without proper examination of the claim made by the assessee in the light of applicable law. In the present case, the Assessing Officer considered the FMV at ₹ 300 per sq.ft. as on 1.4.1981 as submitted by the assessee without bringing any comparable cases or referring the matter to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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