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TMI Blog2021 (1) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. We find the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar [ 2010 (2) TMI 75 - DELHI HIGH COURT] has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. - Decided in favour of assessee. - ITA No. 5815/DEL/2011 [A.Y 2007-08] - - - Dated:- 25-1-2021 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER Assessee by: Shri Ajay Vohra, Sr. Adv, Shri Gaurav Jain, Adv And Shri Deepesh Jain, CA Revenue by: Ms. Nidhi Srivastava, CIT-DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed dividend under that section. 6. Vide reply dated 05.11.2009, the assessee, inter alia, replied as under: Note on ICD from Eicher Ltd Regarding your query as to why the ICD of ₹ 50 lacs received by assessee from its subsidiary company M/s Eicher Limited (EL) during the previous year 2006-2007 should not be treated as deemed dividend in the hands of assessee company, we submit as under: It is submitted that the provisions of section 2(22)(e) are not applicable in the case of the assessee for the following reasons: During the previous year assessee company has received ICD of ₹ 50 lacs from the EL on 14.06.2006 and the same has been repaid on 06.07.2006. This ICD was taken in the normal course of business on interest @ 9% per annum. It is submitted that EL was a listed company till 22.02.2007 in Bombay Stock Exchange and till 13.03.2007 in National Stock Exchange as is evident from Note No. 10 at page no. 19 of audited annual accounts of EL enclosed herewith. The ICD was given by EL to assessee company in the status of a listed company in which public is substantially interested. It is submitted that provisions of section 2(22)(e) are not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed that the assessee filed its return declaring income of ₹ 5,10,62,326/- which was assessed u/s 143(3) on 05.11.2009 at income of ₹ 34,69,17,150/-. During the course of the proceedings, it was found on examination that a sum of ₹ 50 lakhs was received by M/s Eicher Goodearth Ltd. during the year from M/s Eicher Ltd. attracted the provisions of Section 2(22) (e) in the hands of M/s Eicher Goodearth Ltd. It is seen that the Assessing Officer has not made consequential addition u/s 2(22(e) of the I. T. Act. Therefore, there is a consequential loss of revenue on account of non addition of the above amount. Thus it can be seen because of the above factual position there is an error in the assessment because of non application of statutory provision. The order of die AO is prejudicial to the interest of revenue on account of associated loss of revenue. Therefore, the order of the AO is both erroneous as well as prejudicial to the interest of revenue. It is seen from the examination of record that these aspect were never considered while the A.O. framed the assessment order nor there was any application of mind on the issue. As also, no inquiry/investigation seem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 05.11.2009 was not properly considered by the Assessing Officer as the assessment order itself was framed on the same date, does not have much weightage. 13. We do not find any merit in this contention of the ld. DR because in the assessment order, at point No. 7, while making disallowance on account of repair and maintenance amounting to ₹ 90,36,373/-, the Assessing Officer has considered the reply of the assessee dated 05.11.2009. 13. Further, at point No. 8, the Assessing Officer, while making disallowance out of consultancy expenses amounting to ₹ 30,36,319/- has duly considered the reply dated 05.11.2009. Therefore, it cannot be said that the Assessing Officer has not considered the reply dated 05.11.2009 while framing the assessment order. 14. In our understanding of the law, provisions of section 2(22)(e) of the Act apply on the date of taking the loan and as mentioned elsewhere, on the date of acceptance of ICD of ₹ 50 lakhs from Eicher Ltd. Eicher Ltd was a listed company at BSE and NSE. Therefore, it can safely be concluded that on the date of the said loan, the lender company was a company in which public were substantially interested wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles . 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] 71 taxmann.com 272 (Bombay). 20. This view is further supported by the decision of the Hon'ble Gujarat High Court in the case of Shri Prakash Bhagchand Khatri in Tax Appeal No. 177 with Tax Appeal No.178 of 2016, wherein the Hon'ble Gujarat High Court was seized with the following substantial question of law:- Whether the Tribunal is right in law and on facts in upholding the order passed by the CIT under section 263 of the Act on merits and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made such enquiry as he deems necessary. It is only on fulfilment of these twin conditions that the CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interest of the Revenue will not suffice. The assessee must be called, his explanation sought for and examined by the CIT and thereafter if the CIT still feels that the order is erroneous and prejudicial to the interest of the Revenue, the CIT may pass revisional orders. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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