TMI Blog2014 (2) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Act, would lose his independence to pass an independent order of assessment - When a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or revisional order, by no stretch of imagination can a higher authority interfere with the independence which is the basic feature of any statutory scheme involving adjudicatory process – the CIT was not justified in setting aside the assessment order by invoking the provisions of Section 263 of the Act – order set aside and decided in favour of Assessee. - I.T.A. No. 366/JP/2012 - - - Dated:- 31-1-2014 - Shri H. M. Maratha And Shri N. K. Saini,JJ. For the Petitioner : Shri G.G. Mundra For the Respondent : Shri Subhash Chandra , D.R. ORDER Per: N. K. Saini, A. M. This is an appeal by the assessee against the order dated 28/03/2012 of the Ld. Commissioner of Income Tax (Central), Rajasthan. Following grounds have been raised in this appeal. "1. That the invoking of provisions of Section 263 of the I.T. Act, 1961 in case of the appellant by the Ld. CIT was without jurisdiction, wrong and bad in law. 2. That on the facts and in the circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the issue though not mentioned in the assessment order still it cannot be said that the order was erroneous. Reliance is placed on the ITAT judgment in the case of Infosys Technologies Ltd. Vs. JCIT (2006) 286 ITR (AT) 211 (Bang). These very incomes were assessed as income from business in earlier year(s) and, therefore, rule of consistency applies and there is no basis of prejudice under such circumstances. Without prejudice to above, it is submitted that the assessee has rightly declared the (i) interest receipt of Rs. 25,64,156/- and (ii) commission receipts of Rs. 67,60,123/- as income from business and correctly dealt the profit on sale of assets in accordance with section 32 of I.T. Act, 1961 by reducing sale value of asset from WDV of block assets. The income from interest and commission receipts are not taxable under the head income from other sources on following grounds: (i) Interest receipts Rs. 25,64,156/-:- The interest is received from parties to whom advances were made by company out of funds of C.C. Limit of Bank and thus business funds were advanced to reduce burden on interest payable to Bank and so the interest receipts are business income. The said f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . has followed one of the permissible view it cannot be said that the assessment order is erroneous and prejudicial (refer CIT Vs. Green World Corporation (2009) 314 ITR 81 (SC). 5. The Ld. CIT did not find merit in the submissions of the assessee. He also did not accept this contention of the assessee that the incomes shown from interest, commission and profit on sale of assets would fall under the head "Income from Business" and profession for the following reasons:- (a) The main source of the assessee's business is the business of manufacturing and trading of Copper Wires/Cables and Electric Items and money lending or commission agency was not the part of assessee's main objectives. Thus the income earned from any activity other than manufacturing or trading of Copper wires, cables and Elecric items cannot be termed as income from business or profession. (b) The A.O. has not ascertained whether own funds of the assessee company or borrowed funds were given on interest. (c) The assessee company was having share capital of Rs. 3.89 Crore and the company alongwith reserves of Rs. 7.49 crores as on 31/3/2007. Therefore, it can safely be presumed that the advances were made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is set aside in respect of the issue of under assessment of wrongly set off of brought forward business loss against the income of Rs. 97,15,587/- treated as income from other sources and such income of Rs. 97,15,587/- is to be taxed under separate head 'Income from Other Sources and Capital Gains as discussed above. The A.O. is directed to complete the assessment de novo on the lines indicated above after giving an opportunity to the assessee of being heard. Now the assessee is in appeal. 7. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the incomes of the assessee, which were alleged to be assessed as income from other sources and not from income by business was as follows:- Interest Rs. 25,64,156/- Commission Rs. 67,60,123/- Profit on sale of assets Rs. 3,91,308/- Rs. 97,15,587/- It was stated that the assessment order was neither erroneous nor prejudicial to the interest of revenue and the assessee during the course of assessment proceedings, filed all the details in respect of the said incomes and the Assessing Officer after considering the said details and nature of receipts and its nexus with b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interest of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view -with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under the law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the CIT, while exercising his power under s. 263, is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrives at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263, must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision should be discussed and should be rendered by the higher authority, who is a supervisory authority. It is one thing to say that while making the orders of assessment the Assessing Officer should be bound by the statutory circulars issued by the CBDT but it is another thing to say that the assessing authority exercising quasi-judicial functions, keeping in view the scheme contained in the Act, would lose his independence to pass an independent order of assessment. When a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or revisional order, by no stretch of imagination can a higher authority interfere with the independence which is the basic feature of any statutory scheme involving adjudicatory process. Considering the totality of the facts as discussed hereinabove and keeping in view the ratio laid down by the Hon'ble Supreme Court in the aforesaid referred to case, we are of the view that the Ld. CIT was not justified in setting aside the assessment order dated 30/11/2009 by invoking the provisions of Section 263 of the Act. Accordingly, the impugned order is set aside and the assessment order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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