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2015 (4) TMI 902 - AT - Income TaxValidity of Revision of assessment order - Both conditions i.e. Erroneous & prejudicial to the interest of revenue need to be fulfilled for order of revision - Dis-allowance of various expenses - Held that:- It is a settled law that for invoking the provisions of section 263 the CIT must satisfy both the conditions that the order passed by the Assessing Officer is erroneous and also that it is prejudicial to the interest of the revenue. If one of the conditions is absent, the order passed by the CIT by invoking the provisions of section 263 will not be legal. The term ‘erroneous’ has not been defined under the Income-tax Act but it is well settled that each and every type of mistake or error committed by the Assessing Officer cannot be said to be an error. An order can be said to be erroneous if there is an incorrect assumption of fact or incorrect application of law in the order passed by the Assessing Officer. If the Assessing Officer after making the enquiries and examining the records, taken one of the possible views, it cannot be said that the order passed by the Assessing Officer is erroneous. Jurisdiction u/s 263 has been exercised on the basis that all expenses charged to the profit and loss account is attributable to the investment in shares. Once the assessing officer has examined the nature of all the expenses and given the finding that the expenses relates to the business. It cannot be said that the order passed by the assessing officer is erroneous. It is not a case of lack of inquiry and also not a case where the assessing officer has taken a view which is unsustainable in law. Even we noted in the order passed u/s 263, the CIT has not given specific finding that the order passed is erroneous but stated that the order passed is prima facie found to be erroneous.Even we may mention that where there are two views possible as to the interpretation of any transaction and the Assessing Officer has taken one of the view favourable to the assessee, the order cannot be said to be erroneous unless the view taken by the Assessing Officer is unsustainable in law.Same view has been taken by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME Court]. Section 263 does not empower the CIT to thrust upon his view on the Assessing Officer. Revision u/s 263 is possible only if both the conditions i.e. the order passed by the Assessing Officer is erroneous and it is prejudicial to the interest of the Revenue, are satisfied. When the Assessing Officer has taken one of the possible views, the order passed by the Assessing Officer cannot be regarded to be erroneous. Thus, in our opinion, under the facts and circumstances of this case, the CIT has not correctly exercised his jurisdiction and had acted beyond the power as laid down u/s 263 of the Act. - Decided in favour of assessee.
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