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TMI Blog2003 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal, Rajkot Bench, Rajkot, in I.T.A. No. 5/RJT of 2001, for the block period from April 1, 1987, to January 29, 1998, decided on January 3, 2003; "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally justified in quashing the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act? Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally justified in holding that the order of the Assessing Officer was not erroneous and prejudicial to the interests of the Revenue?" During the course of hearing of this tax appeal, one more substantial question of law is proposed to be raised by Mr. Pranav G. Desai, learned counsel appearing for the Department, which is as under; "Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal is right in law in relying upon the affidavit of the assessee retracting confession at its face value and not considering voluntary confession of disclosure made on oath before the authorities in the presence of witnesses?" The brief facts, giving rise to the present tax appeal are as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, vide his order dated July 13, 1998. The Commissioner of Income-tax, Jamnagar, the appellant herein, was of the view that the order passed by the Assessing Officer under section 158BC of the Act on July 13, 1998, was erroneous one and it was prejudicial to the interests of the Revenue. He therefore initiated proceedings under section 263 of the Act. The main reason for holding the order so was that the affidavit dated February 7, 1998, was filed as late as on May 25, 1998, and that there was no purpose in opening a supplementary cash book which contained entries relating to the disclosure made under the Voluntary Disclosure of Income Scheme only and the sum of Rs. 40 lakhs was credited in the cash book of Halar Maritime Agencies. The computer printouts of the respondent-assessee's books were given after the assessment order was passed and therefore the Assessing Officer did not verify the correctness of the respondent-assessee's contentions that the statement on the day of search was given under pressure and that there was no inquiry as to why the respondent-assessee was carrying so much cash with him and hence the order under section 158BC suffered from the vice of lack of inq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax, Jamnagar, the appellant herein, has filed the present appeal under section 260A of the Act. Mr. Pranav G. Desai, learned standing counsel appearing for the Income-tax Department has submitted that the Income-tax Appellate Tribunal has substantially erred in law and on facts in coming to the conclusion that, even though there may not be any coercion on the part of the search party it did not necessarily mean that the person cannot come under pressure on his own. He has further submitted that there was no justification in arriving at the conclusion that the respondent-assessee must be wanting to get released as soon as possible to attend to his Chennai engagements and the pressure along with the sudden interception could have triggered a thought to accept Rs. 20 lakhs as undisclosed income. He has further submitted that the Income-tax Appellate Tribunal has erroneously jumped to the conclusion that much credence should not be given to the admission made by the respondent-assessee at the time of search and/or recording his statement under section 132(4) of the Act. The Income-tax Appellate Tribunal has also materially erred in accepting the explanation given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had declared Rs. 40 lakhs in Voluntary Disclosure of Income Scheme and this amount of Rs. 40 lakhs was in the form of cash. The said amount was taken in supplementary cash book and after deducting Rs. 20 lakhs seized by the Department the balance was transferred to the regular cash book. He has further submitted that the reason for opening a supplementary cash book was that the regular cash book for the period ending on December 31, 1997, was already closed and even otherwise the said amount has to be shown in the supplementary cash book. He has further submitted that the admission made by the respondent-assessee should not be given undue importance as it was not a formal search in the sense that it was not at the place of residence or at the business place but was at the airport and it had taken nearly 3 and 112 hours to record the statement. He has further submitted that no adverse inference should be drawn from the fact that the computer print-outs of the account books were furnished after the assessment order was passed inasmuch as that the original handwritten account books were examined by the Assessing Officer. Mr. Kaji has further submitted that the Income-tax Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 import and is not confined to loss of tax. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal has not taken into consideration the relevant material and based its order on irrelevant material. This court is also of the view that even on facts a different view is hardly possible. And in such facts, no question of law arises. This view is further fortified by the observations made by the Supreme Court in the case of Malabar Industrial Co. Ltd. [2000] 243 ITR 83 wherein it is in terms held that: "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. Having regard to the facts and circumstances of the case, it cannot be said that the view taken by the Assessing Officer to the effect that the seized cash of Rs. 20 lakhs formed part of the amount of Rs. 40 lakhs disclosed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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