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2017 (12) TMI 1816 - AT - Income TaxRevision u/s 263 by CIT - transaction of sale of Iron Ore through E-auction - AO had failed to enquire into the claims of deduction on account of 15% of E-auction sale proceeds and the compensation paid for illegal mining and dumping on the illegal site - HELD THAT:- The appellant had not made any direct sales. The stock is under the control of the Central Empowered Committee. It is only the Central Empowered Committee alone which is empowered to conduct the Eauction in terms of the Hon’ble Supreme Court order. The material factor to be taken into consideration is that the Hon’ble Supreme Court had passed the order after the end of the previous year relevant to assessment year under consideration. In the given facts of the case, it cannot be said that the sale proceeds had accrued to the appellant though it was following mercantile system of accounting as there was no accrual of right to receive payment, having regard to the ratio laid down by the Hon‘ble Apex Court laid down in the cases of CIT vs. Shoorji Vallabhdas & Co [1962 (3) TMI 6 - SUPREME COURT] Thus, it is clear that the sale proceeds had accrued to the appellant only by virtue of the order of the Director of Department of Mines and Geology vide proceedings No.DMG/MONCOM/E-Auction/2012- 13 dated 03.01.2013. The taxability or otherwise of it can be considered only during the period ending on 31.03.2013, whereas the assessment year before us is pertaining to the previous year ending on 31.03.2012. As appellant had offered an income which is not assessable for that year. Even after the deductions, there was income offered to tax which is not otherwise assessable for the assessment year under consideration. It is the duty of the AO to assess the correct income in the right assessment year. However, this failure of the AO had not resulted in any prejudice to the revenue. Therefore, the assessment order passed by the AO, though erroneous, but cannot be termed as prejudicial to the interests of revenue - pre-conditions for invoking the provisions of section 263 of the Act, the twin conditions that order is erroneous and also prejudial to interests of revenue are required to be satisfied simultaneously - Decided in favour of assessee.
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