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TMI Blog2024 (12) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... r she invoked the explanation (2) of provision of section 263 of the Act thereby she was not sure as to whether the order falls any of the criteria given vide explanation 2 of the provision of section 263 of the Act. Thus, we do not agree with the view of the ld. PCIT that without establishing that how the order is erroneous or prejudicial the law does not permit such action. - Dr. S. Seethalakshmi, Judicial Member And Shri Rathod Kamlesh Jayantbhai, Accountant Member For the Appellant : Sh. Mahendra Gargieya, Adv. For the Respondent : Sh. Rajesh Ojha, CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Because the assessee aggrieved from the order of Pr. Commissioner of Income Tax (Central), Jaipur [ for short PCIT] for the assessment year 2017-18 dated 14.03.2024 the present appeal is preferred by the assessee. The ld. PCIT passed that order under challenge as per provisions of section 263 of the Income Tax Act, 1961 (for short Act ) while examining the assessment record of the abovenamed assessee. That order of assessment was passed by the DCIT/ACIT, Central Circle, Bikaner dated 04.09.2021 as per provisions of section 143(3) of the Income Tax Act. 2. In this appeal, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eserves to be quashed. 5. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 3. The brief facts related to the case are that there was a search and seizure action in Gawar Group of Hisar, a survery proceeding u/s. 133A of the Act was carried out at site office of the assessee firm temporarily located at Camping site Raison, Near Morpheus Valley Resort, NH-21, Kullu-Manali Highway Kullu on 08.11.2017 by the revenue. For the year under consideration the assessee e-filed return of income on 30.10.2017 declaring total income of Rs. 37,97,980/- in the return of income filed u/s. 139(1) of the Act. In compliance to the parameters mentioned in para no. 1(ii) of instruction dated 20.08.2018 issued by the CBDT the case of the assessee was compulsorily selected for complete scrutiny under manual selection. Consequently notice u/s. 143(2) of the Act was issued and the proceeding were conducted electronically though the E-proceeding facility. The assessee is a partnership firm and engaged as civil contractor mainly having business of construction and maintenance of roads and runways. The assessee has mainly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind. Thus, she peruse the reply carefully but the same was not found tenable and accordingly she observed as under : 7. I have examined the facts at hand and have studied the position of law. The error caused by the Assessing Officer resulting in prejudice to Revenue as has been detailed in the Show Cause Notice issued to the taxpayer as reproduced in this order. In this case survey proceedings u/s 133A of the Act was carried out at business premises of the assessee on 08.11.2017in Gawar Group and As appraisal report, the following annexure were considered for the F.Y. 2017- 18 as mentioned at serial no 89 of appraisal report, which is reproduced is as under:- Annexure F.Y Total Dr. Entries in violation of section 40A(3) of the Income Tax Act Cash receipts other than withdrawal from bank Annexure 3 2017-18 42,39,255/- 32,03,380/- Annexure 23 2017-18 81,81,960/- 48,95,340/- Total 1,24,21,215 80,98,270/- On verification of these annexure's at the time of assessment of A.Y. 2018-19 dated 04.09.2021 it is cleared that these transactions pertain to F.Y. 2016-17 and are escaped from assessment. During the assessment proceedings, vide notice u/s 142(1), dated 24.08.2021, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) on 04.09.2021 at Total Income of Rs. 2,51,20,840/- by making disallowances on accounts of violation of Sec 40A (3) of I.T. Act 1961 of Rs. 99,77,947/- and addition on account of unexplained cash credit u/s 68 of I.T. Act 1961 of Rs. 1,13,44, 912/-. Thereafter, Show Cause Notice u/s 263 dated 20.10.2022 was issued by the CIT, on the following grounds: 4. Upon examination of assessment records, it has come to notice that transactions detail available in annexure 3 23 are pertain to the F.Y. 2016-17. The same have not been verified and have not been satisfactorily examined by the assessing officer as is evident from the fact that no supporting and corroborative evidence has been found/placed on record. 5. Clearly, there is failure on part of the Assessing Officer in carrying out the requisite inquiries/examination(s). In view of the state of affairs as elaborated above, it is clear to me that the assessment order passed by the assessing officer dated 04.09.2021 is erroneous in so far as the same is prejudicial to the interest of revenue. Thus, prima facie a prejudice has been caused to Revenue. Further show cause notices u/s 263 due to change of incumbency, were issued and lastl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case survey proceedings u/s 133A of the Act was carried out at business premises of the assessee on 08.11.2017in Gawar Group and as appraisal report, the following annexure were considered for the F.Y. 2017- 18 as mentioned at serial no 89 of appraisal report, which is reproduced is as under: - X X X On verification of these annexures at the time of assessment of A.Y. 2018-19 dated 04.09.2021 it is cleared that these transactions pertain to F.Y. 2016-17 and are escaped from assessment. During the assessment proceedings, vide notice u/s 142(1), dated 24.08.2021, the assessee was asked to explain the details regarding annexure A-27, A-11 and A-12 only. No query was made to explain annexure A-3 A23. As per office note of assessment order it was stated that all the documents and financial statement found during the course of survey proceedings are recorded/reflected in the regular books of accounts of the assessee and the same is verified during the assessment proceedings. An examination of order of the Assessing Officer makes it clear to me that he did not take a conscious decision relating transactions pertain to F.Y. 2016-17 of annexure A3 and A23. But, this issue is not seen to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial to the interest of the revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC). 1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that: The phrase prejudicial to the interests of the Revenue in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression 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 the Assessing Officer adopts one of two courses permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found during the course of survey proceedings are recorded/reflected in the regular books of accounts of the assessee and the same is verified during the assessment proceedings. 3. AO can t be expected to perform something impossible: 3.1. In para 4 of the SCN, dated 20.01.2022 initially ld. CIT alleged failure of the AO to consider these impounded annexures based on his examination of the assessment record however, such an allegation was factually wrong because there was no indication nor any evidence brought on record to support this allegation. Whereas the correct facts are that on 04.09.2021 when the AO passed the Assessment Order for subjected AY 2017-18, he was not having in his possession the impounded two annexures namely Annexure-3 and Annexure-23. On the contrary, aforesaid discussion made in the assessment order for AY 2018-19 (PB 19-54) has proved that such impounded record came to his possession only after the completion of the assessment for subjected AY 2017-18 hence it is wrong to find any fault of the AO and it is legally unjustified to hold the subjected order to be erroneous. In absence of the related impounded documents, it was impossible for the AO to have sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 40A(3) of the Act. Thus, it is evident that these papers were considered by the AO in AY 2018-19, only when came to his possession after the completion of the order for this year. 3.3. In the impugned order the CIT is completely silent with regard to the factual submissions made before him that the AO was not in possession of the related impounded documents before him during the course of the assessment proceedings. There is no categorical finding recorded by him that these two impounded documents were well available before the AO. The ld. CIT thus, ignored/ citrated a vital contention raised before him relating to a jurisdictional fact. Thus, it can t be contended that such record was available before the AO for examination during assessment proceedings. 3.4. Change of stand by the CIT: Having failed to justify his stand taken in the SCN that upon examination of assessment record it came to his notice that the AO failed to consider these two Annexures surprisingly however, in the impugned order the ld. CIT has now come up with new story /new theory in as much as at page 4 he has referred to the appraisal report and finding fault of the AR that he has forgotten that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made a ground in the Show Cause Notice: 4.1. It is further submitted that the ignorance/ non-consideration of the appraisal report was never made a part of the various SCN S issued u/s 263 and therefore, the CIT could not have adapted such reasoning/ basis in the impugned order for the first time which was not earlier confronted to the assessee. On the contrary, in the present case on sole basis while holding the assessment order erroneous is the appraisal report. However, such document was never confronted to the assessee nor the assessee was ever show-caused w.r.t the appraisal report. On the contrary, the assessee specifically requested the ld. CIT that such report may be made available to him however, the same was completely ignored without paying any attention there to. 4.2. Reliance is placed on PCIT vs . Shreeji Prints (P.) Ltd. 2021] 130 taxmann.com 294 (SC) Surat-2 (DC 47-51) held as under: 5 The Tribunal has found that in the order passed by the PCIT, Explanation 2 of section 263 of the Act, 1961 is made applicable. The Tribunal observed that the PCIT has not mentioned in the show cause notice to invoke the Explanation 2 of section 263 of the Act 1961. Therefore, by invoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26) it was held that when AO was fully aware of matter, he had appraised evidences filed by assessee and then had formed a view to accept same, Commissioner was unjustified in invoking jurisdiction under section 263. Whether if there was an enquiry, even inadequate, that would not, by itself, give occasion to Commissioner to pass order under section 263, merely because he has a different opinion in matter; it is only in case of 'lack of inquiry' that such a cause of action can be open. However, the ld. CIT is completely silent on this aspect. 6. Remedy to be availed under appropriated provision of law: The law is well settled that there are different provisions enacted in the statute which have got their own significance. There are remedial provisions for the department which could be taken u/s 147 by reopening the concluded assessment or u/s 154 by making a rectification or lastly u/s 263 by revising the erroneous order. However, all the provisions operate in their own/respective fields and cannot be used interchangeably or no provision can overlap the other. Therefore, if the facts and circumstance of the case suggest that the AO can get the jurisdiction from a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Explanation to S.263 which is normally interpreted / taken support by the invoking of S.263 in absence of which, the ld. CIT could not have at all complained of lack of inquiry or not making proper inquiries. Otherwise also he has not suggested what further inquiries could and should have been made in the admitted facts and circumstances of the present case. 8. Suspicion is not a good basis for revision: The CIT cannot invoke section 263 merely based on suspicion and exploring the possibility of some income, merely making reference to the impounded document, alleging not considered, unless demonstrated showing some income, cannot be a good basis. This so-called appraisal report is not evidence by itself and a merely internal document making a prima facie opinion on the impounded documents by someone other than the AO and therefore, can't be said to be binding upon AO. The CIT even did not mention the amount of income escaping Kindly refer the case of CIT vs. Trustees of Anupam Charitable Trust [1987] 31 Taxman 335 /167 ITR 129 (Raj.) wherein it was held as under: The error envisaged by section 263 was not one which depended on possibility or the guess work but it should be ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrespective of the conclusions drawn in the appraisal report by the ITA Nos.1282 to 1285/Del/2020 ITA No.1078/Del/2021(By Assessee) ITA No.1867/Del/2021 (By Department) 8 Investigation Wing, both the ld. AO and the ld. Addl.CIT are supposed to independently apply their mind in a judicious way before drawing any conclusions on the contents of the seized documents while framing the search assessments. The law provides only the ld. AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the ld. Addl.CIT to grant judicious approval u/s 153D of the Act to the draft assessment orders placed by the ld. AO. 10. Lastly, the ld. CIT cited a decision in the case of CIT vs. Paville Projects Pvt. Ltd. however, firstly, the citation is not complete nor was made available to the assessee during the course of hearing hence deserves to be ignored. Otherwise also, neither he reproduced the relevant part of the impugned order 263 nor he has demonstrated how the same have the ld. CIT hence also the same deserves to be completely ignored. Hence, it cannot be said that the impugned assessment order was erroneous and therefore prejudicial to the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of assessment proceeding, were duly considered by him rather, he himself admits in the impugned order by referring the office note put by the AO which is self-explanatory that the AO did make enquiry which was within his reach and was humanly possible for the AO. The law is well settled that the Assessment order cannot be held to be erroneous simply on the allegation of inadequate enquiry unless there is an established case of total lack of enquiry. It is further submitted that the ignorance/ non- consideration of the appraisal report was never made a part of the various SCN S issued u/s 263 and therefore, the CIT could not have adapted such reasoning/ basis in the impugned order for the first time which was not earlier confronted to the assessee. On the contrary, in the present case on sole basis while holding the assessment order erroneous is the appraisal report. However, such document was never confronted to the assessee nor the assessee was ever show-caused w.r.t the appraisal report. On the contrary, the assessee specifically requested the ld. CIT that such report may be made available to him however, the same was completely ignored without paying any attention the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and disallowance on accounts of violation u/s 40A(3) of the Act at Rs. 99,77,947/-. While examining the assessment record ld. PCIT noted that ld. AO has called for the details from the assessee only for Annexure A-27, A-11 and A-12 only. She further noted that no query was made to the assessee to explain annexure A-3 A-23 pertain to the F.Y 2016-17. But the same have neither been verified nor any supporting and corroborative evidence are available on the record. So she noted that there is a failure on part of the Assessing Officer in carrying out the requisite inquiries/examination(s) and thereby the action of the AO found erroneous and prejudice to the interest of the revenue. Ld. PCIT thus issued a show cause notice to the assessee on 20.10.2022 and 11.08.2023. The assessee filed the replied online which was considered by the ld. PCIT and she has countered that submission on the point that the Appraisal report is always available with the Commissioner of Income Tax, hence the details of the impounded material were always before the PCIT and on going through the record the error on the part of the Assessing officer which was also prejudicial had been observed. Thus, relying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conjectures. Not only that when the ld. AO has specifically written in the office note that he has verified all the aspect of the matter then ld. PCIT merely based on the assumption and presumption cannot held the assessment order which is either wise has prejudice caused to the revenue, if so ld. PCIT should have placed on record while passing the order if not while issuing the show cause notice. Without pinpointing specific error on the part of the ld. AO or proving the prejudiced to the revenue the assessment order which is passed after hearing the assessee on the as much 10 dates of hearing starting from 20.08.2018 to 27.08.2021. The observation of the ld. PCIT as stated herein above she merely invoked the provision only on the reasons that ld. AO has not raised question and assessee has not filed any reply. On the other hand when the ld. AO has categorically mentioned in the office note that all documents and financial statement found during the course of survey proceeding are recorded / reflected in the regular books of accounts of the assessee and the same is verified during the assessment proceedings. Thus, here we note that when the specific observation with that of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT cannot direct the ld. AO to do again and again enquiry the way the PCIT wants, it is the privilege that the ld. AO has whether to call for the details or to verify the same from the details available on record. The ld. AO wherever make up mind to add the same has been mentioned and discussed in the assessment order and thereby AO raised specific queries w.r.t. all the documents impounded, which were made available to him, which fact is evident from the discussion made by him in the subjected assessment order dated 04.09.2021 (PB- 1-18) para 5 pg. 3 showing the list of the Annexures being A-27, A- 11, A-12. Such document has been discussed show at pages 3, 4, 6, 8, 11 and on 13 of the assessment order. Accordingly, huge disallowance of Rs. 99,77,947/- u/s 40A (3) and addition on account of unexplained cash credit u/s 68 of Rs. 1,13,44,912/- were made. Thus, merely non mentioning the annexure and not asking the details merely itself does not hold the order prejudicial or erroneous. This could have been held so if the ld. PCIT by placing on record the relevant material based on which she is making the statement, without doing so the assessment order otherwise only not refer those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no receipts, Annexure A-13 is identical copy of Annexure A-1 and the Annexure A-22 is modified type of pocket ledger to keep handy details payable vis- -vis payments. Original impounded documents are available with department and explanation with regards to A-3, A-23, A-30, A- 13, A-22 may be verified. The reply of the assessee was considered and found to be acceptable in respect d Annexure A-3, A-23 and A-13. In respect of other annexure assessee did no produce any documentary evidence in support of its claim further assessee did no produce books of account to verify its claim this point is noted vide order sheet entry dated 13.04.2022. The reply of the assessee in respect of Annexure A-3, A-23 and A-13 is discussed as under: - x x x x 5.3.2 Annexure related to F.Y. 2016-17: - On verification of annexure A-3 and A23 it was found that these annexure were related to F.Y. 2016-17 therefore these amount are reduced from the disallowance of Rs 4,86,59,393/- for A.Y. 2018-19 under the head violation of section 40A(3) of the Income Tax Act, 1961. Annexure Total Dr Entries in violation of section 40A(3) A-3 Rs. 42,39,255/- A-23 Rs. 81,81,960/- Total Rs. 1,24,21,215/- As such, Rs. 1,24, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows an attempt on his part to held the subjected assessment order to be erroneous in any manner whatsoever. In other words, in one way or the other. 3.5. It is also stands established by his own admission that the appraisal report always remains with the CIT and not with the AO. If that is so, how the AO could have been blamed not to have looked into and applied his mind on the appraisal report. 3.6. Even assuming, such appraisal report was with the AO than too, he could not have been blamed in as much as again by his own admission the CIT says that the transactions emanating from these annexures A3 and A23 were entered and shown in the said report as relating to F.Y. 17-18 (A.Y. 2018-19). Needless to say that the AO while making the assessment for a particular year (that is A.Y. 17-18 here), will focus only and only on that part of the appraisal report (if assuming was available with him) or on other impounded document or report etc. which relate to or pertain to the year before him but not to various other years which may be a part of the said appraisal report/various other impounded document which has got nothing to do with the assessment proceedings for that year (i.e. A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpounded document or other information available before the AO during the course of assessment proceeding, were duly considered by him rather, he himself admits in the impugned Order by referring the above office note put by the AO which is self-explanatory that the AO did make enquiry which was within his reach and was humanly possible for the AO. 5.3. The law is well settled that the Assessment order cannot be held to be erroneous simply on the allegation of inadequate enquiry unless there is an established case of total lack of enquiry. Kindly refer CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del) (DC 1-15) wherein Delhi High Court was considering the aspect, when there is no proper or full verification, and it was held that: One has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under section 263 of the Act, merely because he has a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Act. In this regard, it must be specifically noticed that against an order of assessment, so far as the Revenue is concerned, the power conferred under the Act is to reopen the concluded assessment under Section 147 and/or to revise the assessment order under Section 263 of the Act. The scope of the power/jurisdiction under the different provisions of the Act would naturally be different. The power and jurisdiction of the Revenue to deal with a concluded assessment, therefore, must be understood in the context of the provisions of the relevant Sections noticed above. While doing so it must also be borne in mind that the legislature had not vested in the Revenue any specific power to question an order of assessment by means of an appeal. That just to take an example, the ld. CIT himself used the word escaped in the impugned order which shows (without conceding) that proper course might have been to initiate re-assessment proceeding u/s 147/148 however, it was not done and patently wrong provision of law has been invoked which is completely without jurisdiction in the light of the above submissions, factual position and the judicial guidelines. Thus, the subjected assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DC 45-46) Held: IT : SLP dismissed against High Court's ruling that where assessee raised funds by way of FCCBs and Assessing Officer made detailed enquiries about genuineness and creditworthiness of actual subscribers to such FCCBs in terms of section 68, mere fact that AO did not make any reference to said issue in assessment order, would not entitle Commissioner to pass a revisional order 9.3 In ACIT, Central Circle-20, New Delhi vs. Shiv Kumar Nayyar [ITA No.1867/Del/2021] 8. ..The copy of the appraisal report submitted by the Investigation Wing to the ld. AO and ld. Addl.CIT are merely guidance to the ld. AO and are purely internal correspondences on which the assessee does not have any access. The scheme of the Act mandates due application of mind by the ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the ld. AO as well as the ld. Addl. CIT to even ignore the conclusions drawn in the appraisal report by the Investigation Wing and take a different stand in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Transfer Pricing Officer, as the case may be,] 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, 81b [including, ( i ) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or ( ii ) an order modifying the order under section 92CA; or ( iii ) an order cancelling the order under section 92CA and directing a fresh order under the said section.] Explanation 1. For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, ( a ) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer 82 [or the Transfer Pricing Officer, as the case may be,] shall include ( i ) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; ( ii ) an order made by the Joint Commissioner in exercise of the powers or in the performanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Thus, we do not agree with the view of the ld. PCIT that without establishing that how the order is erroneous or prejudicial the law does not permit such action. We get support of our view from the decision of our Jurisdictional High Court decision in the case of CIT v/s Rajasthan Financial Corporation (1996) 134 CTR 145 (Raj) (DC 27-30) wherein the High Court have held that: Once Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Offer allowed the claim being satisfied with the explanation of assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order not make an elaborate discussion in that regard. Similar view is taken by our High Court in the case of PCIT Vs. Om Rudra Priya Holiday Resort Private Limited [ (2019) 109 Taxmann.com (Rajasthan) wherein the consistent view is taken by holding that ; 5. Having heard learned counsel for the revenue and perused the impugned judgment as also the material on record, we find that the Tribunal has analytically examined all the arguments which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the assets must be as per the actual cost of construction and not on the projected cost of acquisition. In these facts, the Tribunal took the view that if the order passed by the assessing officer is without any investigation or enquiry on an issue, then it would be erroneous so far as it is prejudicial to the interest of the revenue on the ground of lack of enquiry. However, it was not a case of complete lack of enquiry on the part of the assessing officer rather the assessing officer has conducted a detailed enquiry on this issue and called for all the relevant records from the bank for the purpose of examining the cost of construction of the hotel building. It could be a case of inadequate enquiry so far as not referring the matter to the DVO, however, it was not mandatory for the assessing officer to refer the valuation to the DVO once the assessing officer was satisfied with the cost of construction and cost of fixed assets as recorded in the books of account. The Tribunal further held that even if the Principal Commissioner found that the decision of the assessing officer accepting the cost of construction/cost of fixed assets is contrary to the facts or otherwise n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 High Court of Calcutta in Dawjee Dadabhoy Co. v. S.P. Jain [1957] 31 ITR 872 (Cal), the High Court of Karnataka in CIT v. T. Narayana Pai [1975] 98 ITR 422 (Kant), the High Court of Bombay in CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom), and the High Court of Gujarat in CIT v . Minalben S. Parikh [1995] 215 ITR 81 (Guj) treated loss of tax as prejudicial to the interests of the Revenue. 9. Mr Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Co. v. CIT [1987] 163 ITR 129 (Mad) interpreting prejudicial to the interests of the Revenue . The High Court held: In this context, (it must) be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration . In our view this interpretation is too ..... X X X X Extracts X X X X X X X X Extracts X X X X
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