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TMI Blog2020 (12) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... etting value determined u/s 23 of the Act. Admittedly, the A.O. did not examine any of the issues pointed out by the Ld. Principal CIT. A.R took support of the decision rendered in the case of Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT] - We notice that the said decision was rendered prior to the insertion of Explanation 2 in sec. 263(1) by Finance Act, 2015 w.e.f. 1.6.2015. As per clause (a) of Explanation 2, the order passed without making inquiries or verification which should have been made shall be deemed to be erroneous and prejudicial to the interests of the revenue. Since the A.O. failed to examine these issues, in our view, the Ld. Principal CIT was justified in observing that there is lack of application of mind and hence the order is erroneous and prejudicial to the interest of the revenue, in the facts and circumstances of the case. A.R arguments on the concept of diversion of overriding title are not relevant while examining the validity of revision proceedings and the assessee may take these arguments before the AO, if so advised. Since the A.O. has not examined these issues on merits, we are of the view that the same need not be considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the house property income. However, it is observed that in Me initial period a loan was taken by the assessee for its construction activities. After the completion of project, the finance loan was converted by the Bank to lease rental discounting facilities so that rental collection could be utilized to repay the loan facilities. The AO has not examined the fact whether the payment of ₹ 3,44,17,926/- and claimed as exemption u/s 24 includes the principal as well as interest.) 3. During the course of revision proceedings, the Ld. Principal CIT accepted the explanations furnished by the assessee with regard to the third issue relating to interest expenditure. With regard to the first two issues, the Ld. CIT took the view that the A.O. has not verified the details of house property income offered by the assessee resulting in escapement of income. Accordingly, he set aside the assessment order and directed the A.O. to re-do the assessment bringing to tax the annual value of 1MG Mall . 4. The facts relating to the above said issues are stated in brief. The assessee, along with two other co-owners, owns a shopping Mall named 1MG located at M.G. Road, Bengaluru. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside the assessment order and directed the A.O. to re-do the assessment by bringing to tax the annual value of 1 MG Mall as house property income after giving due opportunity to the assessee. Aggrieved by the order so passed by Ld. Principal CIT, the assessee has filed this appeal before us. 8. The ld. A.R. submitted that the assessee has furnished all the relevant details relating to house property income to the A.O. In this regard, he invited our attention to the various details furnished before the A.O., which are placed at pages 71, 310, 325 371 of the paper book. He further submitted that the A.O. has completed the assessment by duly considering the details so furnished by the assessee. The Ld. A.R. submitted that the A.O. has examined the details and has taken a plausible view and hence the impugned revision order is liable to be quashed. He submitted that the lack of enquiry or inadequate enquiry on the part of the A.O. cannot be a ground for revising the assessment order. In support of this proposition, he placed his reliance on the decision rendered by Hon ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Limited 332 ITR 167. He also placed his relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he queries relates to the two issues raised by Ld. Principal CIT in the revision proceedings. The Ld. A.R. submitted that the assessee has declared rental income under the head Income from house property . As per section 23 of the Act, the annual letting value of the property is liable to be taxed. Further, permissible deductions are given in section 24 of the Act. The annual value of the property is the actual rent receivable by the assessee and hence the Mall owner should have offered 100% of the license fees/rent receipts as annual value instead of 98%. Similarly, other income received through Mall activities shall also form part of Annual letting value and the same should have been included in computation of Annual letting value @ 100%, as against 25% offered by Mall owners. 12. The ld. D.R. further submitted that the A.O. has failed to examine both these issues during the course of assessment proceedings. A perusal of assessment order would show that the A.O. has examined the issues relating to disallowance made u/s 14A of the Act and also disallowance of claim of expenses under the matching principle, meaning thereby, the A.O. did not examine income from house property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : 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 the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. 14. The Hon ble Supreme Court has made it clear in the above said case that the assessment orders passed without application of mind shall fall under the category of erroneous order and if such erroneous order causes prejudice to the revenue, then the Ld. Principal CIT is entitled to invoke his power given u/s 263 of the Act for revising the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new section 263 is easier to fulfill. The reason is that it is not the Income Tax Officer but a superior Officer like the Commissioner who is exercising a revisional jurisdiction suo motu there under. The superior officer could be trusted with a larger power. The only requirement for the exercise of this power is that the Commissioner should consider that the order passed by the. Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. What is the meaning of erroneous in this context? It was argued for the assesseds by Shri G. C. Sharma that the word erroneous means that the order must appear to be wrong on the face of it. In other words, he equated the error with error of law apparent on the face of record which is a well-known ground for the review of a quasijudicial order by this Court under Article 226. We are unable to agree with this interpretation. The intention of the legislature was to give a wide power to the Commissioner. He may consider the order of the Income Tax Officer as erroneous not only because it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties on her investments. Notwithstanding these defects the Income Tax Officer did not investigate into the various sources but assessed the assessed on a total income of ₹ 9037.00 . The inquiries made by the Commissioner revealed that the assessed did not reside or carry on business at the address given in the return. The Commissioner was also of the view that the Income Tax Officer was not justified in according the initial capital, the sale of ornaments, the income from business, the investments, etc.. without any inquiry or evidence whatsoever and that the order of assessment was erroneous and prejudicial to the interests of the Revenue. The High Court held that there were materials to justify the Commissioner's finding that the order of assessment was erroneous insofar as it was prejudicial to the interests of the Revenue. Shri Sharma tried to distinguish this decision on the ground that the address of the assessed in that case was given incorrectly. The decision of the High Court and that of the Supreme Court were not, however, based on that ground at all. On the contrary, the Supreme Court followed their previous decision in Rampyari Devi's (12) case and uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Further, the assessee is entitled to claim only those expense which are listed out in section 24 of the Act from the annual letting value determined u/s 23 of the Act. Admittedly, the A.O. did not examine any of the issues pointed out by the Ld. Principal CIT. 17. The Ld A.R took support of the decision rendered by Hon ble Delhi High Court in the case of Sunbeam Auto Ltd (supra). We notice that the said decision was rendered prior to the insertion of Explanation 2 in sec. 263(1) by Finance Act, 2015 w.e.f. 1.6.2015. As per clause (a) of Explanation 2, the order passed without making inquiries or verification which should have been made shall be deemed to be erroneous and prejudicial to the interests of the revenue. Since the A.O. failed to examine these issues, in our view, the Ld. Principal CIT was justified in observing that there is lack of application of mind and hence the order is erroneous and prejudicial to the interest of the revenue, in the facts and circumstances of the case. 18. The Ld A.R also advanced his arguments on the concept of diversion of overriding title. In our view, these arguments are not relevant while examining the validity of revision proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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