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TMI Blog2024 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... thority to reopen concluded assessment cannot be invoked without proper application of mind. Section 263 specifically provides that the Authority will call for and examine the record of the proceedings and upon giving the assessee an opportunity of being heard and after making or causing any such enquiry to be made as it deems necessary, pass such orders as the circumstances of the case may justify. Therefore, it is the mandate of the statute that the Revisional Authority will call for and examine the proceedings of the case and besides giving an opportunity to the assessee of being heard, he may make necessary enquiries or cause any such enquiries to be made, and thereafter pass orders as deemed fit and proper only after his satisfaction. From the impugned order it is apparent that the Revisional Authority has reopened the assessment by setting aside the assessment order passed earlier and directing the AO to cause proper and detailed enquiry and thereafter, make the assessment a fresh. Such power to reopen or order for fresh assessments cannot be de hors the prescription of the statute. Reopening of assessments already concluded cannot be ordered in a casual or whimsical manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany incorporated under the Companies Act, 2013 having it s registered office at 1, Block III CMJ House, Ferndale Complex, Keating Road, Shillong-793001, Meghalaya and is represented in the present proceedings by the authorised signatory, Sri Binit Singhania. 3. For the assessment year 2017-18, the petitioner e-filed its original return under Section 139(1) of the Act on 31.10.2017 declaring a total loss of Rs. 58,74,28,484/-. The case of the petitioner was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS) vide Notice No. ITBA/AST/S/143 (2)/2018-19/1010964997(1) dated 09.08.2018 under Section 143 (2) of the Act. 4. The petitioner responded by its communication dated 20.12.2018 in the said assessment proceedings. The Assessing Officer by order dated 31.12.2018 passed the final assessment order under Section 153A/153D/143 (3) of the Act vide Assessment Order dated 31.12.2018, making an addition of Rs. 87,29,120/-, thereby reducing the total loss to Rs.57,86,99,364/-. The said assessment order was passed by taking into account the records and evidences filed by the writ petitioner. Thereafter, the respondent No.4 forwarded a proposal to the respondent No. 2 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interests of revenue. The Revisional Authority, only upon being satisfied and upon hearing the assessee may pass an order modifying or cancelling the assessment order and directing a fresh assessment if required. 6] Learned Senior Counsel for the petitioner submits that by the impugned order dated 31.03.2021, the Revisional Authority has categorically held that on examination of the matter, it cannot be confirmed accurately as to whether the assessee did not claim the deduction for the earlier years. It was held that although the explanation of the assessee seems plausible, in the opinion of the Revisional Authority, it would be better if the matter was examined at length. Learned Senior Counsel for the petitioner submits that a plain reading of the impugned order reveals that there was no finding by the Revisional Authority that the order of the Assessing Officer was erroneous and that it was also prejudicial to the interests of revenue. 7] Learned Senior Counsel for the petitioner submits that the Revisional Authority came to a finding that whether the benefit was claimed or not by the assessee could not be confirmed accurately. As such, there was no finding that the order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment orders passed on wrong assumption of facts, on incorrect application of law, without due application of mind, or without following the principles of natural justice, were not beyond the scope of Section 263 of the Income Tax Act, 1961. The learned Senior Counsel also refers to the judgment of the Apex Court in Commissioner of Income Tax vs. Amitabh Bachchan reported in (2016) 11 SCC 748 in support of his contentions. 9] It is submitted that a satisfaction has to be arrived at by the Revisional Authority that the order passed by the Assessing Officer is erroneous and also prejudicial to the interest of revenue. It is submitted that the Apex Court has held that these preconditions which are required to be present and once this twin satisfaction is arrived at by the Revisional Authority, they can invoke their jurisdiction to pass orders under Section 263 of the Income Tax Act. Learner Senior Counsel for the petitioner has also referred to the judgment of the Bombay High Court rendered in Commissioner of Income Tax vs. Gabriel India Limited, reported in (1993) SCC Online Bom 526. 10] Referring to the judgments placed above, learned Senior Counsel submits that the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, it is submitted that the finding of the Revisional Authority that the order of the Assessing Officer is erroneous and prejudicial to the interest of revenue must be unjustifiable. He, therefore, submits that the impugned order dated 31.03.2021 be interfered with, set aside and quashed. 11] Per contra, the learned Standing Counsel for the respondents submits that an affidavit-in-opposition has been filed by disputing the contentions raised by the learned Senior Counsel for the petitioner. He submits that it is because the order of the Assessing Officer is found to be erroneous and prejudicial to the revenue that the Revisional Authority has invoked his jurisdiction under Section 263 of the Income Tax Act and has directed the Assessing Officer to make assessment of the assessee afresh by examining all the aspects after making detailed enquiry and affording a reasonable opportunity to the writ petitioner. He submits that the judgments referred to by the learned Senior Counsel for the petitioner are rendered by the Courts in the facts and circumstances of each case. He submits that in the facts of the present case, while there is no quarrel with the principle laid down by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 263 it is seen that the Principal-Chief-Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceedings under the Act and if he considers that any order passed by the Assessing Officer was passed erroneously in so far as it is prejudicial to the interest of revenue, he may, after giving an opportunity of being heard and after making or causing such enquiry as he deems necessary, may pass the order thereon as the circumstances of the case justifies. From the plain reading of the Section, it is seen that the Revisional Authority must examine the record of the case by calling for it and upon due examination, if he considers that the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of revenue, then after giving an opportunity of being heard to the assessee and after making such enquiry or examination, it can pass such orders as the circumstances of the case may justify, including an order modifying or cancelling the assessment and directing a fresh assessment. 17] Since the issue which was examined by the Revisional Authority was as to whether the deduction of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry type of mistake or error committed by the Assessing Officer. It is only when an order is erroneous, then this Section will be attracted and an incorrect assumption of facts or incorrect application of law will satisfy the requirements of the order being erroneous. The phrase prejudicial to the interests of Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning, it is of wide import and is not confined to loss of tax. The phrase prejudicial to the interests of Revenue has to be read in conjunction with the 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 revenue. Further, when two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of Revenue unless the view taken by the ITO is unsustainable in law. Relevant paragraphs of this Judgments are extracted below: 6. A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 10. 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 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. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial to the interest of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions erroneous , erroneous assessment and erroneous judgment have been defined in Black's Law Dictionary. According to definition erroneous means involving error ; deviating from the law . Erroneous assessment refers to an assessment that deviates from the law and is therefore invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the assessing officer in fixing the amount of valuation of the property. Similarly erroneous judgment means : One rendered according to course and practice of court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles . 10. 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 officer acting in accordance with law makes certain assessment and determines the turnover of a dealer, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not in accordance with law. It was held that if an order is passed making certain assessments, the same cannot be branded as erroneous by higher authority, namely, the Commissioner herein, simply because according to him, the order should have been written more elaborately. Therefore, what can be understood from the findings of the Apex Court as well as the High Court is that for an order to be erroneous, it must be contrary to the provisions of law and only then it can be held to be an erroneous assessment. Further referring again to the judgment of the Apex Court in Amitabh Bachchan (supra), it has to be held that for invoking a jurisdiction under the provisions of Section 263 of the Income Tax Act, the parameters required to be maintained by the Revisional Authority are that the assessment order must be erroneous and that it must also be found to be prejudicial to the interests of the revenue. Unless these two conditions are simultaneously satisfied, the jurisdiction under Section 263 of the Income Tax Act cannot be invoked. 24] From the impugned order dated 31.03.2021 it is clear that there is no specific finding by the Revisional Authority that the benefit claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der reveals that the matter requires examination. The order of the Revisional Authority under section 263 of the Income Tax Act was issued, remanding the matter to the Assessing Officer to cause a proper enquiry and verification and thereafter, pass fresh assessment order. A finding that the assessee is not entitled to claim the benefits of a prior period has not been arrived at by the Revisional Authority while passing the impugned order. There is no finding as to whether the records were called for and examined by the Revisional Authority. The Revisional Authority merely concluded that it could not be confirmed accurately as to whether the assessee had not claimed the deduction in the earlier years. Further, the assesse would not be disentitle to claim any benefit which may have accrued to the assessee for the earlier period at a later stage when any enforceable demand is made, unless the same is specifically prohibited in the statue as had been held in CIT vs. Nathmal Tolaram reported in 88 ITR 234 . Under such circumstances, if any benefit had accrued to the assessee for the earlier period which by oversight or other bonafide reasons was not claimed by the assessee, then the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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