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2008 (6) TMI 595 - HC - Income TaxPowers conferred on CIT u/s 263 - sundry credits not proved to be genuine - Whether the Tribunal has erred in law in quashing the order passed by CIT u/s 263 and is there any illegality in the order of the CIT directing the AO to make assessment de novo after giving the opportunity to the assessee? - HELD THAT:- In our opinion the word ‘erroneous’ used in the section includes the expression ‘erroneous in law’ as well as ‘erroneous in fact’. When the CIT was satisfied that the sundry credits were not duly verified, it rightly found that the AO has erred in accepting the huge sundry credits. As far as the requirement of ‘prejudicial to the interest of revenue’ is concerned if the amount shown on sundry credits is not found verified and becomes part of the taxable income, the interest of the revenue is certainly prejudicially affected. As such, in our opinion, both the conditions were fulfilled in the present case and the CIT had committed no error of law in passing the order. We do not agree with the reasons given by the ITAT for quashing the order passed by CIT that heavens would have not fallen if one more opportunity was given to the assessee before passing the order. The question of giving further opportunity would have arisen only when the assessee would have sought further date to give the reply. In a casual manner ITAT has mentioned that loans were confirmed by the AO, but it has not given any details as a court of fact that what amount was got confirmed by which document. Therefore, we are of the view that the ITAT has erred in law in quashing the order passed by CIT u/s 263, and we find that there is no illegality in the order passed by CIT directing the AO to make de novo assessment. Accordingly the question of law stands answered in favour of revenue and the appeal is allowed. The impugned judgment and order passed by ITAT, is hereby set aside.
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