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TMI Blog2018 (12) TMI 1958X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no addition on 9 the issue on which the present proceedings u/s 263 has been initiated, has been made by the AO in the assessment order passed u/s 143(3) for A.Y. 2010-11 and for subsequent assessment orders i.e., A.Y. 2012-13, and 2014-15. Here, it would be relevant to point out that the order for A.Y. 2014-15 was passed u/s 143(3) of the Act on 27.02.2014 which was much after the order passed by PCIT u/s 263 for A.Y. 2011-12. Before us, Revenue has not placed any material on record to demonstrate that the view taken by the AO while framing the assessment u/s 143(3) of the Act was an impermissible view or was upon erroneous application of legal principles necessitating the exercising of revisionary powers u/s 263 - the cases laws relied upon by D.R. are distinguishable on facts and are not applicable to the present facts. We are of the view that in the present case, PCIT was not justified in resorting to revisionary powers u/s 263. - We therefore set aside the order and thus, the ground of the assessee is allowed. - ITA No. 962/PUN/2016 - - - Dated:- 3-12-2018 - SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM For the Assessee : Shri Pramod Shingte. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxability of net interests or that the notional interest from security deposits reduction. The submissions of the assessee were not found acceptable to Ld.PCIT. He thereafter passed order u/s 263 of the Act vide order dt.29.03.2016 wherein he held that the order of AO dt.27.02.2014 passed u/s 143(3) of the Act to be erroneous and prejudicial to the interest of Revenue. He accordingly set aside the assessment order and directed the AO inter-alia to verify whether the security deposits have been utilized to reduce the total loan, examine the rent agreements to ascertain the nature and purpose of the security deposit with regard to the rent for the property and rent for the services. With respect to the assessee s objection that the issuance of notice was based on audit objection, Ld.PCIT observed that audit is meant to find out mistakes of either fact or law and it is an aid for administration and for quality. He was of the view that if a genuine mistake of fact or law is pointed out by audit then there is no reason why it cannot be considered to initiate remedial action. Aggrieved by the order of Ld.PCIT, assessee is now in appeal before us and has raised the following grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pends on possibility or guesswork but it should be an actual error either of facts or of law. He further submitted that when two views are possible and the AO has taken one view with which the CIT does not agree, the order of the AO cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the AO is unsustainable in law. He therefore submitted that the order passed by Ld.PCIT u/s 5 263 of the Act be set aside. He further pointing to the proceedings submitted by JCIT, Nashik to Ld.PCIT for proposal u/s 263 of the Act, the copies of audit observation letter and copy of notice u/s 263 of the Act which are placed at pages 32 to 43 of the paper book submitted that in the present case since the initiation has been based on the basis of audit objection, the revisionary proceedings are bad-in-law and for this proposition, he relied on the decisions in the following cases : i) B A Plantation Industries Ltd., Anr Vs. CIT Ors. Reported in (290) ITR 0395. (Gauhati HC) ii) CIT Vs. Sohan Wollen Mills reported in 296 ITR 0238 (P H). iii) N.K. Roadways Pvt. Ltd., Vs. ITO reported in 362 ITR 0522 (Gujarat HC). iv) Ranka Jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the powers under which CIT has assumed power for revision reads as under : The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. The reading of the above provisions makes it very clear that the power of suo motu revision u/s 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision u/s 263, namely (i) the order is erroneous (ii) by virtue of being erroneous prejudice has been caused to the interests of the Revenue. Hon ble Apex Court in the case of Malabar Industrial Co Ltd (supra) has held that CIT has to be satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon ble Bombay High Court in the case of CIT Vs. J K Investors (Bombay) Ltd., (supra). We further find that no addition on 9 the issue on which the present proceedings u/s 263 of the Act has been initiated, has been made by the AO in the assessment order passed u/s 143(3) of the Act for A.Y. 2010-11 and for subsequent assessment orders i.e., A.Y. 2012-13, and 2014-15. Here, it would be relevant to point out that the order for A.Y. 2014-15 was passed u/s 143(3) of the Act on 27.02.2014 which was much after the order passed by Ld.PCIT u/s 263 of the Act for A.Y. 2011-12. Before us, Revenue has not placed any material on record to demonstrate that the view taken by the AO while framing the assessment u/s 143(3) of the Act was an impermissible view or was upon erroneous application of legal principles necessitating the exercising of revisionary powers u/s 263 of the Act. Further, the cases laws relied upon by Ld.D.R. are distinguishable on facts and are not applicable to the present facts. Considering the totality of the facts, we are of the view that in the present case, Ld.PCIT was not justified in resorting to revisionary powers u/s 263 of the Act. We therefore set aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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