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TMI Blog2020 (12) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... ffairs considering the agricultural income, as source of income to explain any asset / investments. Assessing Officer, in our considered view, taken one of the possible view - once an issue has been examined by the AO during the course of assessment proceedings and called for necessary details from the assesse, it is presumed that the AO has examined the issue and has applied his mind to relevant facts in light of relevant provisions of the Act. Similarly, once the Assessing Officer has taken one of the possible view, which may not be acceptable to PCIT, then also PCIT cannot hold the order to be erroneous, insofar as it is prejudicial to the interests of the revenue, unless the view taken by the Assessing Officer is unsustainable in law. In this case, the view taken by the Assessing Officer, insofar as the claim of agricultural income is one of the possible view and such view may not be acceptable to the PCIT, but the same cannot be a reason for PCIT to revise the assessment order u/s.263 . Unaccounted investments in fixed deposits - AO has discussed the issue of unaccounted investments in fixed deposits in his assessment order and has recorded categorical finding to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order u/s.263 is bad in law and against the facts. 2. The basis of passing the 263 orders to set aside the original assessment orders on the basis of audit objection is also bad in law and unsustainable. 3. Brief facts of the case are that a search under section 132 of the Act was carried out in the case of the assessee on 27.11.2013. As a result of search and post-search enquiries various undisclosed income and investments made by the assessee was found. Consequent to search, notice u/s.153A of the Act was issued requiring the assessee to file return of income for six assessment years immediately preceding the assessment year in which search took place. The assessee initially did not file return in response to notice issued u/s.153A, however, after several reminders and initiation of penalty u/s.271F for not filing the returns, the assessee has filed return of income on 02.01.2016 declaring Nil total income and agricultural income of ₹ 2,70,000/-. Thereafter, the case has been selected for scrutiny and assessment has been completed u/s.143(3) read with section 153A of the Act on 30.03.2016 and determined total income of `Nil. 4. The case has been subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee has filed necessary details before the Assessing Officer and has also offered interest income earned on the said fixed deposits, which is evident from the fact that the Assessing Officer has made additions towards accrued interest on fixed deposits in the assessments wherever the assessee has not considered the said interest income in the return of income filed for relevant assessment year. Therefore, the assessment order passed by the Assessing Officer cannot be considered as erroneous insofar as it is prejudicial to the interests of the revenue. 6. The learned PCIT, after considering the submissions of the assessee and also taken note of various facts came to the conclusion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the revenue because the Assessing Officer has not examined the issue of agricultural income and unaccounted investments in fixed deposits, which he ought to have examined in the light of the various evidences gathered during the search which rendered the assessment order as erroneous, insofar as it is prejudicial to the interests of the revenue. The PCIT further noted that although the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer as erroneous, insofar as it is prejudicial to the interests of the revenue on the ground that Assessing Officer has not examined the claim of agricultural income in right perspective of law and has also not applied his mind to the facts of the case which rendered the assessment order passed by the Assessing Officer as erroneous and prejudicial to the interests of the revenue. But, the fact remains that the Assessing Officer has examined the issue of agricultural income and after considering necessary facts has denied the claim of agricultural income on the ground that assessee has failed to substantiate the claim of agricultural income with solid evidence, however, not made any addition to returned income for the simple reason that assessee has not considered the said agricultural income in the statement of affairs as source of income to explain any investments. The said view taken by the Assessing Officer is one of the possible view. Therefore, even if the view taken by the Assessing Officer is not acceptable to PCIT, the PCIT cannot term the assessment order as erroneous, unless the view taken by the Assessing Officer is unsustainable in law. 8. The learned A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer is erroneous, insofar as it is prejudicial to the interests of the revenue. In order to get jurisdiction u/s.263 of the Act, the PCIT has to prove that the order passed by the Assessing Officer is not only erroneous but also prejudicial to the interests of the revenue, this is because twin conditions embedded u/s.263 should be cumulatively satisfied in order to revise the assessment order u/s.263 of the Act. In case an order is erroneous, but it is not prejudicial to the interests of the revenue or vice-versa, then there is no scope for the PCIT to assume jurisdiction to revise the order. In this legal background, we examined the facts of the present case as to whether the order passed by the Assessing Officer is erroneous, insofar as prejudicial to the interests of the revenue. An order to be considered as erroneous, then it should be patently wrong or the Assessing Officer has not examined the issue in light of the relevant provisions of the Act. In case, the Assessing Officer has examined the issue and taken a possible view, then even though view taken by the Assessing Officer is not acceptable to the PCIT, the PCIT cannot term the assessment order as erroneous. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the PCIT, but the same cannot be a reason for PCIT to revise the assessment order u/s.263 of the Act . 12. Coming to the second issue questioned by the PCIT. The PCIT has revised the assessment order on the ground that although the Assessing Officer has called for certain evidences regarding investments in fixed deposits, but failed to examine source of income for unaccounted investments in fixed deposits. We have gone through the findings of the PCIT in the light of the assessment order passed by the Assessing Officer on the issue of unaccounted investments in fixed deposits and find that the Assessing Officer has discussed the issue of unaccounted investments in fixed deposits in his assessment order and has recorded categorical finding to the effect that the assessee has explained source of income for investments in FDR. The Assessing Officer after accepting the source of income for investments has verified the fixed deposits and consequent interest on said FDR and has made additions towards accrued interest on the said fixed deposits, wherever the assessee has not offered the accrued interest for taxation. From the above, it is very clear that the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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