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TMI Blog2019 (5) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order is neither erroneous nor prejudicial to the interest of the Revenue. The facts demonstrate that necessary enquiry have been conducted by the Assessing Officer and relevant documents regarding the issue was received by the Assessing Officer still the Ld. CIT may be of the opinion that it is erroneous but in no way it can be prejudicial to the interest of the Revenue since there is always a difference between any enquiry conducted or no enquiry conducted. Therefore, section 263 gets triggered only when the order is erroneous and also prejudicial to the interest of the Revenue. On the basis of binding principles as laid down by the Hon ble Supreme Court of India in CIT Tax Vs. Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] and MALABAR INDUSTRIAL CO. LTD. VERSUS CIT [ 2000 (2) TMI 10 - SUPREME COURT] , we set aside the order of the Ld. Pr. CIT passed u/s.263 and allow the appeal of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... er u/s 147 r.w.s. 143(3) was passed on 29.03.2016. In this assessment order the AO accepted the assessee‟s documentary evidence and did not make any addition with regard to the issue under consideration. On perusal of records it is seen that the AO accepted the assessee‟s documentary evidence without making any enquiries/verification. 5. At the time of hearing the Ld. AR of the assessee submitted that the only reason for passing order u/s.263 of the Act is with regard to L.B. India Holding Mauritius-II Limited. The Ld. AR further submitted that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue since all the enquiries with respect to L.B. India Holding Mauritius-II Limited has been conducted by the Assessing Officer. The Ld. AR of the assessee invites our attention to Page 42 of the paper book wherein the copy of questionnaire along with notice u/s.142(1) of the Act is placed therein and point No.3 states that "please submit documentary evidence in respect of share application received from M/s. L.B. India Holding Mauritius-II Limited and also state why provision of Section 68 of the Income Tax Act, 1961 should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Commissioner of Income Tax, Central Circle-1, Raipur (C.G.)" 6. That with regard to this enquiry, the assesse filed reply. The first reply which is placed at page 44 of the paper book and it states that "All the details about the applicant (M/s. L.B. India Holding Mauritius-II Limited) along with documentary evidence were provided to the Income Tax Investigation team in the course of search and file related to the applicant, seized vide ID mark LPS-41 containing page No.1 to 74 from the Corporate office situated at Vanijya Bhawan, Raipur. Just because the applicant was a non-resident based out of Mauritius and money had come from a foreign country the transaction was suspected as not genuine, without any enquiry/investigation.". The Ld. AR further submitted that regarding point No.3 for documentary evidence in respect of share application money received and shares allotted to M/s. L.B. India Holding Mauritius-II Limited, they are enclosing herewith following documents which is placed at Page 45 of the paper book and the same is made part of this order: Annexure-2 OP Singhania & Co. Chartered Accounts "2. Regarding Point No.2, we are enclosing herewith copy of audited fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground the reopening is void ab initio", we would like to further request to your honour to before going for assessment proceeding first decide the validity of Notice issued u/s 147 of the Income Tax Act, 1961 by a speaking order and oblige. Further to our submission dated 22.02.2016 we would submit as follows: Submission: 1 The settled position in law is that reassessment proceedings can commence only after the reasons for re-opening are communicated to the assessee and the objections of the assessee, if any, are duly disposed. In this context, the Apex Court in the case of GKN Driveshaft (I) ltd-Vs- ITO (2003); 259 ITR 19 (SC) held that on a request made by the assessee for supply of reasons, the A.O. is bound to furnish the reasons within a reasonable time. Further, on the receipt of reasons, the assessee is entitled to file objections to the issuance of such a notice, and the A.O. is bound to dispose of the same by passing a speaking order before proceeding with the reassessment proceedings." Thereafter, at Page 50 of the paper book, additional documentary evidences with regard to M/s. L.B. India Holding Mauritius-II Limited are also provided by the assessee. 8. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man 66 (SC) wherein it has been held that "a bare reading of section 263(1) makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner suo-motu under it, is that the order of the ITO is erroneous insofar 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 ITO 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). 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 orders passed without applying the principles of natural justice or without application of mind." 11. Per contra, the Ld. DR has placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ITO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be taken to section 263 of the Act. Further, the facts demonstrate that necessary enquiry have been conducted by the Assessing Officer and relevant documents regarding the issue was received by the Assessing Officer still the Ld. Commissioner of the Income Tax may be of the opinion that it is erroneous but in no way it can be prejudicial to the interest of the Revenue since there is always a difference between any enquiry conducted or no enquiry conducted. Therefore, section 263 gets triggered only when the order is erroneous and also prejudicial to the interest of the Revenue. 13. In view of the matter and on the basis of binding principles as laid down by the Hon‟ble Supreme Court of India, we set aside the order of the Ld. Pr. Commissioner of Income Tax passed u/s.263 of the Act and allow the appeal of the assessee. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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