9911796707
TMI Blog2003 (10) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... " 2. The assessee filed the return showing total income of Rs. 24,96,909. The AO completed the assessment under s. 143(3) of the Act by order dt. 28th March, 2000. 3. Learned CIT issued a notice under s. 263 of the Act, dt. 1st Feb., 2002, stating that assessee had interest income of Rs. 51.20 lakhs and dividend income of Rs. 22.48 lakhs. The assessee set off share trading loss of Rs. 47.88 lakhs against interest income and after claiming deduction under s. 80M against dividend income, it returned net profit of only Rs. 7,57,250. He further stated that the assessee suffered share trading loss of Rs. 38.54 lakhs in asst. yr. 1996-97 and share trading loss of Rs. 42 lakhs in asst. yr. 1998-99. The learned CIT further stated in the said notice that nobody would do share trading to make huge loss every year to lose even fixed income from interest and dividend. The AO vide letter dt. 11th Feb., 2000, asked the assessee to substantiate the loss and the assessee vide letter dt. 21st Feb., 2000, filed details of purchase and sale of shares with names of brokers. The AO did not make any enquiries from the brokers. Learned CIT further stated in the said notice that on 28th March, 2000, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e genuineness of the losses incurred therein or for holding that proper enquiry or investigation was not made. The assessee also denied and disputed that the genuineness or otherwise of the share transaction was not looked into by the AO or that the AO did not examine the contract notes or challans regarding delivery of shares or the details regarding date or mode of payment or that he did not verify the transactions with reference to Stock Exchange quotations or that no enquiries were made from the brokers. 5. Learned CIT after considering the reply of the assessee has stated that he was of the opinion that the assessment had been completed without proper enquiry and investigation and to that extent the assessment is erroneous in so far as it is prejudicial to the interest of Revenue. Learned CIT has also stated that the contention of the assessee that the idea of purchasing shares was not to lose the income but to earn more income is not tenable as the assessee is of the habit of booking share losses year after year. Accordingly, learned CIT set aside the assessment with the direction to the AO to complete the assessment de novo after making of the relevant enquiries and investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the decision of the Gujarat High Court in the case of CIT vs. Arvind Jewellers (2002) 177 CTR (Guj) 546 : (2003) 259 ITR 502 (Guj). The learned authorised representative of the assessee relying on the decision of the Kerala High Court in the case of Paul Mathews & Sons vs. CIT (2003) 181 CTR (Ker) 207 : (2003) 263 ITR 101 (Ker), submitted that if the AO takes a view on consideration of the books of account and related facts, such a view of the AO could not be said to be prejudicial to the Revenue nor could it be said to be erroneous merely for the reason that the CIT does not agree with the view taken by the AO. He submitted that their Lordships of the Kerala High Court held in the said case that such an assessment could not be treated as erroneous or prejudicial to the interest of the Revenue unless the view taken by the AO is unsustainable in law. The learned authorised representative of the assessee also relied on the decision of the Bombay High Court in the case of CIT vs. Gabriel India Ltd. (1993) 114 CTR (Bom) 81 : (1993) 203 ITR 108 (Bom) and submitted that CIT could revise the order of the AO only if the AO's order is erroneous and not because CIT disagrees with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Departmental Representative strongly supported the action of the learned CIT. He submitted that the AO has not mentioned in the assessment order an iota of investigation and enquiry made by him. He submitted that the AO passed the assessment order without discussing the purported enquiries made by him. Therefore, the learned CIT is justified to consider the order as erroneous and prejudicial to the interest of Revenue. In support of his submission, the learned Departmental Representative placed reliance on the decision of the Madhya Pradesh High Court in the case of CIT vs. Kohinoor Tobacco Products (P) Ltd. (1998) 148 CTR (MP) 536 : (1998) 234 ITR 557 (MP). He submitted that the learned CIT in his revisional jurisdiction under s. 263 of the Act can direct the AO to make further enquiry and verification to properly examine the genuineness of the transactions. He supported the order of the learned CIT under s. 263 of the Act. 8. We have carefully considered the submissions of the learned representatives of the parties and have also gone through the assessment order as well as the impugned order passed by the learned CIT dt. 18th March, 2002. We have also considered the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts stated in the return, such an order cannot be held erroneous inasmuch as prejudicial to the interest of the Revenue for that reason alone. The Mumbai Bench of the Tribunal has also held in the case of Indian Hotels Co. Ltd. vs. Dy. CIT (1999) 107 Taxman 205 (Mum)(Mag) that mere lack of discussion of an issue by the AO in his order would not render the order to be erroneous and prejudicial to the interest of the Revenue. Further, their Lordships of the Mumbai High Court in the case of Gabriel India Ltd. while considering the power of the learned CIT under s. 263 of the Act have held that the supervisory jurisdiction of the CIT can be exercised only if two circumstances therein exist viz. (i) the order should be erroneous and (ii) by virtue of the order being erroneous, prejudice must have been caused to the interest of the Revenue. Their Lordships have further held that an order cannot be formed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the CIT simply because according to him the order should have been written more elaborately. Their Lordships of the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply because in his order he did not make an elaborate discussion in that regard. Their Lordships have further stated that the learned CIT also simply asked the ITO to re-examine the matter. It was held that such a direction by the learned CIT for making further enquiry and/or fresh determination is not permissible under s. 263 of the Act and accordingly, the learned CIT does not get the power to set aside the assessment. We find that the said decision squarely applies to the facts of the case before us in favour of the assessee as in the instant case also the AO completed the assessment after calling the details and considering the books of accounts produced by the assessee before him but the AO only passed a brief assessment order without making elaborate discussion. Further, the learned CIT while setting aside the assessment has also not given any reason as to whether the loss claimed by the assessee on account of share transaction is bogus or not genuine. He has merely stated that the AO did not examine properly the genuineness of the share transaction which could have been verified by calling for contract notes from the brokers, the challan recording delivery of shares, obtaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be termed as prejudicial to the interest of the Revenue. e.g., when an ITO adopted one of the courses permissible in law and it resulted in loss of revenue, or where two views are possible and the ITO has taken one view to which the CIT does not agree, it cannot be treated as erroneous or prejudicial to the interest of the Revenue unless the view taken by the ITO is unsustainable in law. 12. In the case before us, CIT has considered the assessment order as erroneous and prejudicial to the interest of Revenue merely because the AO has not recorded the specific findings by elaborating the details. Delhi Bench of Tribunal held in the case of Sunil Lamba that if the AO does not deal with an issue or record specific findings in the assessment order it could not be said that there was no application of mind by the AO to the facts and details before him. It was held that order of CIT under s. 263 of the Act in that case has to be cancelled. Further, the Delhi Bench of Tribunal has also held in the case of Triveni Engineering Works Ltd. that CIT cannot invok ..... X X X X Extracts X X X X X X X X Extracts X X X X
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