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TMI Blog2018 (6) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... cted for scrutiny through CASS. After issuing statutory notices by the AO, and after the Ld. AR of the assessee appeared before the AO and produced the details, accounts etc. the AO assessed income at Rs. 44,980/- u/s. 143(3) of the Act dated 13.06.2014. This order of the AO had been interfered by the Ld. CIT exercising his revisional jurisdiction u/s. 263 of the Act on the sole ground that AO has failed to carry out necessary inquiries or verification in respect of receipt of Rs. 52,55,960/- which the assessee received from M/s. Balaji Developers against the surrender of booking of an office space. According to Ld. CIT, this receipt ought to have been characterized as "Income from Capital Gain" and not as shown by assessee as under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that AO failed to make relevant enquiry when it is apparent that AO inquired in his notice u/s. 142(1) and assessee's AR has appeared several times before AO and answered the queries to the satisfaction of AO. Further, according to Ld. AR, the assessee had intended to use the office space to be purchased as a "Stock-in-trade" so any income arising from it would be qualified as "Business Income" and so AO cannot be faulted in accepting assessee's stand. Further, according to Ld. AR even if for argument sake the said receipt is taken as "Income from Capital Gains" still there will nothing prejudicial to the interest of Revenue because the assessee had shown the receipt under the head "Business Income", which attracts the highest marginal ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions which needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 is erroneous as well as prejudicial to the interest of the revenue. We note that the main fault attributed by Ld. Pr. CIT to invoke his revisional jurisdiction was the failure of AO to carry out necessary inquiries or verifications in respect of Rs. 52,55,960/- which the assessee received from M/s. Balaji Developers against the surrender of booking of an office space and according to him, (Ld. Pr. CIT in para 5 of the impugned order) in his own words "no questionnaire issued in this matter by her." This finding of Ld. Pr. CIT cannot be countenanced by us for the simple reason that in fact the AO in her Sec. 142(1) notice dated 20.12.2013 to the assessee company directed it's Principal Officer to produce, inter alia, details of profit on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Pr. CIT invoking revisional jurisdiction u/s. 263 of the Act in the given facts and circumstances of the case as discussed above. Therefore, the said decision of the AO cannot be treated as erroneous and prejudicial to the interest of revenue as held by the Hon'ble Supreme Court in Malabar Industries Ltd. (supra). Therefore, in the facts and circumstances narrated above, usurpation of jurisdiction by Ld. Pr. CIT exercising his revisional jurisdiction is 'null' in the eyes of law and, therefore, we are inclined to quash the assumption of jurisdiction to invoke revisional jurisdiction u/s. 263 of the Act by the Pr. CIT. Therefore, we quash the order of the Principal CIT passed u/s. 263 of the Act. Appeal of the assessee is allowed. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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