TMI Blog1998 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... 55,000 3. Smt. Indrawati 4% 3,488 2,000 55,000 4. OmPrakash 4% 3,488 2,000 5,000 5. BhopalSingh 43% 47,496 85,167 5,000 6. Shiv Kumar 43% 37,496 45,934 5,000 3. A scrutiny of the record show that capital investment made by Smt. Devki Devi, Indrawati and Om Prakash was only Rs. 2,000 each with 4 per cent share. All these three partners were also partners in about 10 other firms of this group of liquor contractors. It is seen that Smt. Devki Devi, Smt. Indrawati and Om Prakash earned a profit of Rs. 3,488 each they made gifts as under: Smt. Devki Devi (i) 50,000 Raj Kumar . (ii) 5,000 Mool Raj Singh Smt. Indrawati (i) 50,000 Raj Kumar . (ii) 5,000 Mool Raj Singh OmPrakash (i) 55,000 Raj Kumar . (ii) 5,000 Mool Raj Singh Shiv Kumar earned a profit of Rs. 37,496 and he made gift of Rs. 5,000 to Mool Raj Singh. Gopal Singh also made a gift of Rs. 5,000 to Mool Raj Singh. 4. Mool Raj Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee which was filed on21st Nov., 1986. 3. After receipt of appellate order the assessee was allowed a fresh opportunity vide this office letter dt.25th March, 1987, to prove genuineness of the firm. The assessee filed a written reply dt. 31st March, 1987, stating that the reply filed by it on 21st Nov., 1986, be considered which was filed in reply to this office requirements made vide letter dt. 19th Sept., 1986, and has further stated that the firm was genuinely constituted through a deed of partnership that regular books of accounts were maintained; and the profits of the firm had been divided amongst the partners as per stipulations in the deed. In the circumstances it has been requested that the firm be allowed registration as claimed. 4. The claim of the assessee has been examined in the light of the submissions made by the assessee in the petitions filed on21st Nov., 1986, and31st March, 1987. In view of the replies filed by the assessee and the fact that the deed of partnership drawn on 27th Feb., 1985 was filed within the time prescribed; that the profits have been divided amongst the partners in the share ratio stipulated in the deed and that the order of stipulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment by giving specific finding based on material that the order passed by the AO was not only erroneous but also prejudicial to the interest of Revenue. These two conditions are cumulative. Therefore, the CIT must prove these two conditions before setting aside the order of the AO. In this connection reliance was placed on the following decisions: (i) H.H. Maharaja Raja Pawar Dewas vs. CIT (1982) 138 ITR 518 (MP); (ii) CIT vs. Gabriel India Ltd. (1993) 114 CTR (Bom) 81 : (1993) 203 ITR 108 (Bom); (iii) V.G. Krishnamurthy vs. CIT (1985) 152 ITR 683 (Kar); (iv) Fatechand Rajmal Jain vs. IAC (1997) 60 ITD 47 (Pune); (v) Jagatjit Industries Ltd. vs. Asstt. CIT (1998) 60 TTJ (Del) 544 : (1997) 60 ITD 295 (Del); (vi) Bharat Dairy Farm vs. Dy. CIT (1997) 60 ITD 321 (Pune); (vii) Tajinder S. Makkar vs. Asstt. CIT (1997) 58 TTJ (Bom) (TM) 416 : (1997) 61 ITD 57 (Bom) (TM); (viii) Sanco Trans Ltd. vs. Asstt. CIT (1997) 58 TTJ (Mad) 619 : (1997) 61 ITD 317 (Mad); (ix) J.P. Srivastav Sons (Kanpur) Ltd. vs. CIT (1978) 111 ITR 326 (All); (x) CIT vs. Kashi Nath Co. (1987) 64 CTR (All) 17 : (1988) 170 ITR 28 (All); (xi) CIT vs. Jagadhri Electric Supply Industrial C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly if circumstances specified therein exist. Two circumstances must exist, namely, the order should be erroneous and second, by virtue of the order being erroneous prejudice must have been caused to the interests of Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an AO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by CIT simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the CIT for that of the AO, who passed the order unless the decision is to be held erroneous. The second condition is that it must be prejudicial to the interest of Revenue. But that by itself would not be enough to vest the CIT with the power of suo motu revision because the first requirement, namely, that the order is erroneous is absent. Similarly, if an order is erroneous but not prejudicial to the interest of Revenue, then the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be subject-matter of revision because the second requirement must be fulfilled. There must be some prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal observed that CIT had not given any finding with regard to any entry appearing in the imprest book to show that such expenditure was bogus or inflated expenditure. He simply said that the matter required detailed verification and investigation without applying his mind to the various details and documents submitted before him. The error envisaged under s. 263 could not be the one which was dependant on the possibility or guesswork but it should be actual error either of fact or of law. The existence of any such specific error has not been pointed out by the CIT nor be had pointed out any mistake or discrepancy in the voluminous details. He had not even scrutinised and considered detail submitted before him in response to show-cause notice. In view of this the order passed under s. 263 was held to be invalid. 11. Applying the principles laid down by various High Courts and the Tribunal discussed above, to the facts of the present case, we find that the assessment in this case was firstly completed under s. 143(1), wherein the status of URF was determined, thereby refusing registration. Against that order the assessee filed appeal and the learned first appellate authority set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrective measures were taken in their individual assessments by the AO or by the appellate authority. Secondly, the firm and their partners have been assessed on the income declared by them separately. They have paid taxes on the amount declared by them and this has been accepted by the Department. There the assessments either of the firm or the partners have not been reopened. In these circumstances, when there is no material on record and the AO had gone into aspect of genuineness of the firm in second round of litigation as per directions of the first appellate authority, it cannot be said that no proper enquiries were made by the AO. The CIT on perusal of record may be of the opinion that it appears that no genuine firm came into existence, but for holding this, he had no material on record. Simply because the CIT is of a different opinion, powers given under s. 263 of the Act cannot be invoked simply because a different conclusion can be arrived at in the given facts and circumstances of a particular case. Such a conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with this conclusion. It may be said that in such a case in the opinion of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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