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TMI Blog2018 (6) TMI 1817X X X X Extracts X X X X X X X X Extracts X X X X ..... for by the assessee and the admission of additional income was also examined by him. He also noted that in the revised return, the additional income admitted was included by the assessee. We find that AO has examined the issue and after application of mind has passed the order. Before us no material has been placed by the Revenue to demonstrate that the view taken by the AO while passing the order u/s 143(3) of the Act was unsustainable in law. In the present case, Ld.PCIT was not justified in invoking the provisions of Sec.263 - We, therefore, set aside the order of Ld.PCIT, whereby he has set aside the assessment order passed by the AO u/s 143(3) of the Act. Thus, the grounds of the assessee are allowed. - ITA No.706/PUN/2016 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g survey. The case was taken up for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dt.07.03.2014 and the total income was determined at Rs.1,91,21,662/-. Subsequently, the Ld. PCIT called for the assessment records of the assessee. On examination of the assessment records, he was of the view that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of Revenue. According to the Ld. PCIT, the order passed by the AO u/s 143(3) of the Act was erroneous and prejudicial to the interest of Revenue for two reasons : i. The first reason according to Ld. PCIT was that in A.Y. 2012- 13 the assessee had incorporated the declaration made during the survey proceedings conducted on 02.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .9,59,64,325/- and assessee had made payment interest of Rs.61,92,008/-. He was of the view that the interest free amounts advanced was not for the purpose of business. He was of the view that no proper inquiry has been made by AO regarding nexus of borrowed money and its utilization and therefore the order of AO was erroneous and prejudicial to the interest of Revenue. He accordingly issued notice and called upon the assessee to show cause as to why the order under Section 263 of the Act not be passed. 3. In response to the show cause notice, assessee inter-alia objected to the initiation of proceedings u/s 263 of the Act and on the merits submitted that during the assessment proceedings various questions were raised by the AO for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction and are bad in law. He submitted that u/s 263 of the Act, the Ld. PCIT can revise an order passed by the AO only on the satisfaction of twin conditions namely (i) the order is erroneous and (ii) it is prejudicial to the interest of Revenue. If one of them is absent i.e. if either the order of the Revenue is erroneous but is not prejudicial to the interest of the Revenue or if it is not erroneous but is prejudicial to the interest of Revenue recourse cannot be had to Sec.263(1). He further submitted that the error envisaged by Sec.263 is not one which depends 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or cancelling the assessment and directing a fresh assessment. 6. The reading of the above provision 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. 7. Hon ble Apex Court in the case of Malabar Industrial Co., Ltd., Vs CIT reported in (2000) 243 ITR 83 (SC) has held that CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has observed that the Section does not visualize a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order and when ITO has exercised the quasijudicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. Before us no material has been placed by the Revenue to demonstrate that the view taken by the AO while passing the order u/s 143(3) of the Act was unsustainable in law. In view of the aforesaid facts and the decision cited hereinabove, we are of the view that in the present case, Ld.PCIT was not justified in invoking the provisions of Sec.263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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