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TMI Blog2018 (1) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... to 263 proceedings, no addition has made and, therefore, to the extent the jurisdiction assumed by the Ld. CIT under Section 263, we are not convinced with this argument of the Ld. counsel. The validity of the assuming jurisdiction under Section 263 of the Act is decided whether the Assessing Officer carried out any enquiry on the issue in original assessment proceedings. If he did not carry out any enquiry in the original assessment order, that order is erroneous and prejudicial to the interest of the Revenue and the CIT has assumed the jurisdiction validly. The subsequent action of the Assessing Officer of making no addition after examination of the issue, cannot make the action of the Ld. CIT under Section 263 of the Act, invalid. - Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 41,88,630/-. Subsequently, the Ld. CIT on perusal of the records observed that commission income of ₹ 11,64,761.35/- was not offered for income and interest was not capitalized in contravention of section 36(1)(iii) of the Act out of the interest expenses of ₹ 46,09,878/-. The Ld. CIT noted that no enquiry was carried out by the Assessing Officer in this respect. In the opinion of Ld. CIT, the assessment order dated 25/10/2013 passed by the Assessing Officer was erroneous so as to prejudicial to the interest of Revenue and accordingly, he issued show-cause notice under section 263 of the Act calling for explanation from the assessee. The assessee was given opportunity of being heard. Before the Ld. CIT, the Authorized R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en examined by the Assessing Officer in assessment order passed in consequence to order under section 263 of the Act and no addition has been made on this account, and, thus, the order of CIT u/s 263 of the Act is not a valid order. 4. On the contrary, the Ld. CIT(DR) submitted that the assessment order has been passed by the Assessing Officer without making enquiries or verification, which should have been made on the issues of commission income and interest expenditure and, thus, the order of the Assessing Officer is deemed to be erroneous insofar as it is prejudicial to the interest of the Revenue in view of Explanation-2 to section 263 of the Act. According to her, the assessment order has been passed without application of the mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Nagesh Knitwears Private Limited (2012) 345 ITR 135(Delhi), held that the Assessing Officer is both an Investigator and an Adjudicator and as an Investigator, the Assessing Officer should investigate the facts, he is required to examine and verify to compute the taxable income and, if he fails to conduct the said investigation, he commits an error and the word erroneous include failure to make the enquiry . The Hon ble High Court held that in such cases the order becomes erroneous because the enquiry or verification has not been made and not because wrong order has been passed on the merits. Similarly, Hon ble Delhi High Court in the case of Gee V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irecting a fresh assessment. [Explanation 1.]- [Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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