TMI Blog2016 (11) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... t the exercise of power under section 263 by the Commissioner while passing order on December 31, 2012 was not warranted we have to dismiss this appeal and the other questions, i.e. question No. 2 formulated need not to be gone into. - I. T. A. No. 51 of 2015 - - - Dated:- 3-11-2016 - Rajendra Menon (ACJ) And Anjuli Palo, JJ. For the Appellant : Sanjay Lal For the Respondent : Mukesh Agrawal with Sumit Nema JUDGMENT 1. This is the Revenue's appeal under section 260A of the Income-tax Act, 1961, challenging the order passed by the Income-tax Appellate Tribunal, Indore Bench, Indore on November 25, 2014. 2. While admitting the appeal on February 10, 2016 the following three questions were formulated for consideration. 1. The purport of section 263 of the Income-tax Act. 2. Whether there is perceptible distinction between the head 'unaccounted income' and 'unaccounted investment', in accounting matters ; and, if yes, whether the decision followed by the Appellate Tribunal applicable to head 'unaccounted investment' can be the basis to hold that the Commissioner could not have exercised power under section 263 of the Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Commissioner of Income-tax (Appeals) and the appellate authority vide order dated December 12, 2012 allowed the appeal, finding there to be an error in the order of assessment and by a detailed order held that the addition made are unsustainable. After the assessment was so finalised under section 143(3) of the Income-tax Act, the Commissioner of Income-tax, Bhopal found that the Assessing Officer in his order has found receipt of income by the assessee to the tune of ₹ 10,50,00,000 from M/s. Simplex Infrastructure Ltd., but only made an addition of ₹ 1,53,41,000 instead of the entire amount of ₹ 10,50,00,000. Similarly, the Commissioner found that in the matter of assessment of income said to have been received from M/s. Nagarjuna Constructions Company Ltd. against a receipt of ₹ 16.02 crores an addition of only ₹ 14,24,60,600 was made. Holding that this amounts to erroneous assessment, prejudicial to the interests of the Revenue, notice under section 263(1) was issued. Reply of the assessee being found to be unsatisfactory, orders were passed by the Commissioner of Income-tax on December 31, 2012, vide annexure A-3 and challenging this exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The appellate authority in its order dated December 12, 2012 found that this may refer to any class of persons, i.e., any Minister or Politician and there is no legal or admissible evidence to confirm that they refer to the assessee. Inference drawn by the Assessing Officer has been held to be based on the assumption that Shri Mukesh Sharma enjoyed substantial influence in the Urban Development Department. Various aspects have been examined by the appellate authority while dealing with the matter on December 12, 2012 and it was found that conclusion and inference drawn are not based on proper appreciation of the evidence, but are based on surmises, suspicion and conjecture. It was held by the appellate authority in its order passed on December 12, 2012 that the loose papers that were found from the premises of Shri Mukesh Sharma were not in the handwriting of the appellant-assessee, the intermediaries in whose account the money was transferred did not belong to the appellant and an inference has been drawn that the appellant is a recipient of the income only because the persons in whose account the amount was transferred were residents of Dabra , the constituency of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation. Side by side there should be a limit for a reasonable investigation. Otherwise also, the line of investigation depends upon the investigating authority and it may differ from officer to officer. There is no particular standard or line of direction prescribed for an investigation, therefore ; if the investigation is reasonable through which a proper result can be achieved, then such an investigation can be termed as a reasonable or a thorough investigation. From the contents of the order passed under section 263, relevant portion already reproduced (supra), it appears that the learned Commissioner of Income-tax wants reinvestigation of the entire matter. But such a fishing or roving inquiries have never been encouraged by the hon'ble courts. In the likewise manner, we are also of the view that the learned Commissioner of Income-tax was not correct in asking the Assessing Officer to conduct inquiries afresh on the basis of those from seized documents which were already appreciated during the assessment proceedings. Even this is not the case of learned Commissioner of Income-tax that certain evidences were overlooked which were very much on record or in the knowledge o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer sought to be reviewed is erroneous and (ii) it is prejudicial to the interests of the Revenue must exists together. If one of them is absent, i.e. if the order of the Income-tax Officer is erroneous, but not prejudicial to the interests of the Revenue or if it is not erroneous but only prejudicial to the interests of the Revenue, recourse cannot be held to section 263(1). It has been held in the aforesaid case by the Supreme Court that there can be no doubt that the provisions cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer. It is only when an order is erroneous that the section will be attracted and an incorrect assumption of fact or an incorrect application of law will satisfy the requirement of the order being erroneous. Various aspects of the matter has been considered, the phrase prejudicial to the interests of the Revenue is also considered and finally it has been held by the Supreme Court in the aforesaid case, that (page 88 of 243 ITR) : 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (emphasis supplied) 9. A Division Bench of this court has followed the principle laid down in the case of Malabar Industrial (supra) and followed this principle in the case of CIT v. Shalimar Housing and Finance Ltd. [2010] 320 ITR 157 (MP) and the Tribunal after taking note of all these factors has found that exercise of power under section 263 was not warranted in the present case and, therefore, the Commissioner of Income-tax's revision order was quashed, we find no error in the same warranting reconsideration as we are also of the considered view that the exercise of power by the Commissioner under section 263 was not proper. 10. In this case, if we go through a detailed order passed by the Commissioner exercising its power of revision on December 31, 2012 we find that the only reason given to hold the order of the Assessing Officer to be erroneous and prejudicial to the interests of the Revenue is that once the amount of proceed received from M/s. Nagarjuna Constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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