TMI Blog2014 (8) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... hi,(DR) ORDER Per Rajpal Yadav, J.M. The present appeal is directed at the instance of the assessee against the order of the learned Commissioner dated 30.03.2012 passed u/s 263 of the I.T. Act, 1961. Though the assessee has taken nine grounds of appeal, but its grievance revolves around a single issue, whereby it has pleaded that the learned CIT has erred in taking action u/s 263 by setting aside the assessment order passed u/s 143(3) and directing the Assessing Officer to reframe the assessment order on the issues taken in 263 proceedings. 2. The brief facts of the case are that the assessee is a firm engaged in the busienss of real estate development. It has filed its return of income for the assessment year 2007-08 on 13.11.2007 declaring total income at ₹ 82,15,770/-. The case was selected for scrutiny assessment and notices u/s 143(2) and 142(1) were issued and served upon the assessee. The learned Assessing Officer has passed the assessment order u/s 143(3) on 4/12/2009. The learned Commissioner after going through the record arrived at a conclusion that the assessment order for A.Y 2007-08 is erroneous order which has caused prejudice to the revenue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other conditions for recognition of revenue as specified in paragraphs 10 and 11 of AS 9 are satisfied, any further acts on the real estate performed by the seller are, in substance, performed on behalf of the buyer in the manner similar to a contractor. Accordingly, in case the seller is obliged to perform any substantial acts after the transfer of all significant risks and rewards of ownership, the revenue is to be recognized applying the percentage of completion method in the manner specified in AS-7. I have gone through the relevant governing principles. It is pertinent to mention that the issue here is not applying AS 7 or AS 9. It is the allowability of the inclusion of the cost of club house in the estimated cost for purposes of arriving at the estimated Gross Profits as per percentage of completion method of revenue recognition. Since the fact finding authrity i.e. the Assessing Officer, who, in my opinion, has failed in ascertaining the above issues correctly and arrive at a logical conclusion while framing the assessment order, which undoubtedly has made the order thus passed, erroneous and prejudicial to the interests of revenue. Such being the case, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered in the case of Gabriel India Ltd. and has propounded the following broader principle to judge the action of CIT taken under section 263. The fundamental principle which emerge from the above cases may be summarized below (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, 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 Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open . 8. The Hon'ble Delhi High Court in the case of Gee Vee Enterprises Vs. Addl. CIT Ors. (1975) 99 ITR 375 (Del.) has propounded the role required to be played by the Assessing Officer. The reason is obvious. The position and function of the Income Tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may he accepted by a civil court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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