2015 (4) TMI 479 - CALCUTTA HIGH COURT

Appeal against cancellation of order passed under Section 263 of the Income Tax Act, 1961 - Relevant enquiry was not undertaken - Held that:- The power under section 263 of the Act can be exercised where the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue. When an order is erroneous, then the order is also deficient and in order to remedy the situation, power under section 263 of the Act has been given. Therefore, the view that the power could not have been exercised to allow the Assessing Officer to make up the deficiency is altogether an incorrect impression of the law.

It is not the law that the assessing officer occupying the position of an investigator and adjudicator can discharge his function by perfunctory or inadequate investigation. Such a course is bound to result in erroneous and prejudicial orders. Where the relevant enquiry was not undertaken, as in this case, the order is erroneous and prejudicial too and therefore revisable. Investigation should always be faithful and fruitful. Unless all fruitful areas of enquiry are pursued the enquiry cannot be said to have been faithfully conducted. In a different context the Apex Court observed "contra veritatem lex nunquam aliquid permittit: implies a duty on the Court to accept and accord its approval only to a report which is the result of faithful and fruitful investigation". - Decided in favour of appellant.