TMI Blog2014 (6) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... as in section 263 - an order can be treated as ‘erroneous’ if it was passed in utter ignorance or in violation of any law, or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts - The ‘prejudice’ that is contemplated u/s 263 is the prejudice to the Income Tax administration as a whole. Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted - 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was given to Smt. Gulab Gupta. From these advances, no interest has been charged by the assessee whereas in the profit and loss account, the assessee has debited interest amounting to Rs. 20,30,490/-. No enquiry by the A.O. was made as per the ld. CIT to ascertain as to why no interest has been charged from advances given. He has observed that the advances were given out of interest bearing fund or borrowed fund on which interest has been claimed in the profit and loss account. The ld. CIT(A) has invoked provisions of section 36(1)(iii) of the Act. As per section 36(1)(iii) if the funds borrowed by the assessee has not been utilized for the purpose of business then no interest is allowable. Thus, as per the ld. CIT(A), no such enquiry has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not made enquires and has also not applied correct provisions of the Act, particularly section 36(1)(iii) of the Act, section 29 r.w.s 37 of the Act and 10BA of the Act. Therefore, the assessment order passed by the A.O. on 28.12.2011 is to be considered as erroneous in so far as it is prejudicial to the interest of the Revenue. Therefore, he has set aside the assessment order and has restored it to the file of the A.O. to pass fresh order after giving opportunity of being heard to the assessee. Aggrieved, the assessee has come in appeal and has raised the following grounds: (1) That on the fact and circumstances of the case the learned CIT-1, Jodhpur Shri K.R. Meena has seriously erred in considering that the assessment order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appreciated time to time replies and details given by the assessee. Even the many relevant facts mentioned in the reply ignored because he was bent upon to reopen the case u/s 263 and to set aside the same, which is absolutely unjustified. (4) THAT the order passed by the learned CIT-1, Jodhpur is bad in law as well as bad in facts also, hence he was unjustified in applying section 263 and to reopen the case by set aside the case. 3. We have heard both sides in detail. It has been argued that not only the A.O. has made full and complete enquiries regarding items mentioned in the show cause notice but also he has made proper enquiry by applying his mind. We have also perused carefully the entire evidences available on record. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red discretion to revise an order. The CIT is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well as in section 263. An order can be treated as erroneous if it was passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts. The prejudice that is contemplated under section 263 is the prejudice to the Income Tax administration as a whole. The revision has to be done for the purpose of setting right distortions and prejudices caused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercise quasijudicial power vested in him and if he exercise such power in accordance with law and arrives as 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 section 263, must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation be a letter in writing and the Assessing Officer allowed the claim on being satisfied with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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