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TMI Blog2019 (8) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 143(3) would not render the same as erroneous and prejudicial to the interest of Revenue, unless the Commissioner exercising power u/s 263 brings on record to show that the order of the AO is erroneous, as the same was passed without application of mind or the AO had made an incorrect assessment of fact or incorrect application of law, but the same not being the case, and the CIT relying upon the reply and the documentary evidence submitted by the assessee granted partial relief, as such the order dated 09.02.2012 passed u/s 263 relegating back the matter to the AO as regards unsecured loans and creditors is unsustainable. Thus it is abundantly clear that the order passed by the AO was neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... as concerned but, as regards unsecured loans and creditors were concerned, the case of the assessee was relegated back to the Assessing Officer directing him to examine, call for requisite details, confirmations and examine them properly after affording assessee proper and reasonable opportunity to explain its case and verify the details with the help of documentary evidence. 6. The order passed by the Commissioner Income Tax, Meerut under Section 263 of the Act was challenged by the assessee before the Income Tax Appellate Tribunal (hereinafter called 'ITAT'). The ITAT dismissed the appeal of the assessee upholding the order passed by the Commissioner of Income Tax, Meerut. 7. Sri Suyash Agarwal, learned counsel appearing for the assessee/ appellant submitted that the Tribunal failed to consider that the Commissioner Income Tax was not justified in invoking the provisions of Section 263 of the Income Tax Act, as the order passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of the revenue. It was further contended that after the case of the appellant was selected for scrutiny, the Assessing Officer had issued notice under Section 143(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, came to the conclusion that the matter required no interference in the order passed under Section 263 of the Act. He has relied upon the decision in cases of CIT vs. Anand Kumar Jain (2015) 231 Taxman 534 (Allahabad), Malabar Industrial Company vs. CIT (2000) 109 Taxman 66 (SC), Swarup Vegetable Products vs. CIT (1991) 54 Taxman 175 (Allahabad) and CIT vs. Bhagwan Das (2005) 142 Taxman 1 (Allahabad). 13. We have heard counsel for the parties and perused the material on record. 14. As it is undisputed, that Assessing Officer after the case was selected for scrutiny had issued notice under Section 143(2) of the Act and also notice under Section 142(1) with 28 queries to the assessee, which was replied by him along with the documentary evidence, and the Assessing Officer being satisfied passed the order under Section 143(3) of the Act on 15.12.2009. The CIT while exercising power under Section 263 of the Act, partially accepted the reply submitted by the assessee as regards the investment in share capital holding that the outstanding unsecured loans of six persons to be adjusted against the share application money account, but as regards the unsecured loans and creditors, it di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the Order passed by the ITO, which might set a bad trend or pattern for similar assessments, which on abroad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration". In our view, this interpretation is too narrow to merit acceptance. 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 ITO, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 9. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain (supra) while interpreting the language of Section 263 had held that where the Assessing Officer passes an order without application of mind or an incorrect statement of fact or incorrect application of law, then the order so passed would be erroneous. But in the present case, Assessing Officer after issuing notice and raising certain queries to the assessee passed the assessment order which cannot be called as erroneous. 17. Reliance has also been placed on the judgment of Swarup Vegetable Products (supra), wherein this Court while dealing with a case, where assessee received refund of excise duty and placed the said amount in suspense account and not in profit and loss account and claimed that this amount should not be included in his income, and stated before the Assessing Officer that large part of this amount was claimed by one Sugar Mill who had filed a suit and also a writ petition claiming the said amount and as such, this amount should not be included in his taxable income. This claim was accepted by the ITO. However, when the matter came to the notice of Commissioner, he exercising power under Section 263 held that the ITO had not made proper inquiries before accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t wherein any otherwise view has been taken. On the contrary, learned counsel for assessee has placed before us a decision of Bombay High Court in Income Tax Appeal No.296 of 2013 (CIT v. Fine Jewellery (India) Ltd.) [2015] 372 ITR 303/230 Taxman 641/55 taxmann.xom 514 (Bom.) decided on February 3, 2015, wherein also Bombay High Court, following its earlier decision in Idea Cellular Ltd. Vs. Dy. CIT [2008] 301 ITR 407 (Bom.) has taken a similar view and said as under (page 307 of 372 ITR): "…...if a query is raised during assessment proceedings and responded to by the assessee, the mere fact that it is not dealt with in the Assessment Order would not lead to a conclusion that no mind had been applied to it." 20. In case of Mahendra Kumar Bansal (supra), this Court held that merely because the order of the ITO is not lengthy, it would not establish that the assessment order passed under Section 143(3) of the Act is erroneous and prejudicial to the intrest of the revenue. Relevant Para Nos. 11,12 and 14 are extracted hereinasunder:- "11. In the case of Goyal Private Family Specific Trust [1988] 171 ITR 698, this court has held that the order of the Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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