TMI Blog2015 (4) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... m any other head of Income as per provisions of section 71 of the Act. Then also, there is no revenue loss to the department. From this point of view, the order passed by the Assessing Officer cannot be prejudice to the interests of Revenue. Thus Commissioner of Income Tax is not justified in exercising his jurisdiction u/s. 263 of the Act and the order of the Commissioner of Income Tax passed u/s. 263 is quashed. - Decided in favour of assessee. - I.T.A. No. 1647/Mds/2014 - - - Dated:- 27-3-2015 - Chandra Poojari And Challa Nagendra Prasad For the Petitioner : T. Banusekar For the Respondent : G. T. Venkateswara Rao ORDER Chandra Poojari (Accountant Member) This appeal by the assessee is directed against the order of the Commissioner of Income Tax -I, dated 26.03.2014 passed u/s.263 of the Income Tax Act. 2. The facts of the case are that the assessment in this case was completed u/s.143(3) on 30.11.2011. Later on observing all the assessment records, the Commissioner of Income Tax was of the opinion that there was certain errors in the assessment order which are prima facie prejudicial to the interest of the Revenue as such he issued notice u/s. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from the truth in matters of fact, and from the law in matters of judgement 'error' is a fault in judgement, or in the process or proceeding to judgement or in the execution upon the same, in a Court of Record; which in the Civil Law is called a Nullityie (termes de la ley). Something incorrectly done through ignorance or inadvertence S.99 CPC and S.215 Cr.PC. 'Error, Fault, Error respects the act; fault respect the agent, an error may lay in the judgement, or in the conduct, but a fault lies in the will or intention. 3.2 At page 650 of the aforesaid Law Lexicon, the scope of Error, Mistake, Blunder, and Hallucination has been explained thus: An error is any deviation from the standard or course of right, truth, justice or accuracy, which is not intentional. A mistake is an error committed under a misapprehension of misconception of the nature of a case. An error may be from the absence of knowledge, a mistake is from insufficient or false observation. Blunder is a practical error of a peculiarly gross or awkward kind, committed through glaring ignorance, heedlessness, or awkwardness. An error may be overlooked or atoned for, a mistake may be rectifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The scheme of assessment has undergone radical changes in recent years. It deserves to be noted that the present assessment was made under Section 143(3) of the Income-tax Act. In other words, the Assessing Officer was statutorily required to make the assessment under section 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. Bulk of the returns filed by the assessees across the country is accepted by the Department under Section 143(1) without any scrutiny. Only a few cases are picked up for scrutiny. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. He should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is legitimately due from him, and on the other hand, he has a duty to protect the interests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted through revisional jurisdiction of the Commissioner under Section 264 or through appeals and other means of judicial review, the prejudice caused to the State Exchequer can also be corrected by invoking revisional jurisdiction of the Commissioner under Section 263. Arbitrariness in decision-making causing prejudice to either party cannot therefore be allowed to stand and stare at the legal system. It is difficult to countenance such arbitrariness in the actions of the Assessing Officer. It is the duty of the Assessing Officer to adequately protect the interest of both the parties, namely, the assessee as well as the State. If he fails to discharge his duties fairly, his arbitrary actions culminating in erroneous orders can always be corrected either at the instance of the assessee, if the assessee is prejudiced or at the instance of the Commissioner, if the revenue is prejudiced. While making an assessment, the ITO has a varied role to play. He is the investigator, prosecutor as well as adjudicator. As an adjudicator he is an arbitrator between the revenue and the taxpayer and he has to be fair to both. His duty to act fairly requires that when he enquires into a substantial m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subversive of the administration of revenue, must be regarded as erroneous and prejudicial to the interests of the revenue. If the Assessing Officers are allowed to make assessments in an arbitrary manner, the administration of revenue is bound to suffer. If without discussing the nature of the transaction and materials on record, the Assessing Officer had made certain addition to the income of the assessee, the same would have been considered erroneous by any appellate authority as being violative of the principles of natural justice which require that the authority must indicate the reasons for an adverse order. As a matter of fact such orders are prejudicial to the interests of both the parties, because even the assessee is deprived of the benefit of a positive finding in his favour, though he may have sufficiently established his case. 3.7 In view of the foregoing, it can safely be said that an order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the Revenue under Section 263 in the following cases: (i) The order sought to be revised contains error of reasoning or of law or of fact on the face of it. (ii) The order sought to be revise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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