TMI Blog2017 (5) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is loosing tax, lawfully payable by a person, it will certainly be prejudicial to the interest of Revenue. However, every loss of revenue, as a consequence of an order of Assessing Officer, cannot be treated as prejudicial to the interest of Revenue. For example, when Income Tax Officer adopted one of the course permissible in law and it resulted in loss of revenue, or where two views are possible and Income Tax Officer has taken one view with which Commissioner does not agree, it cannot be treated erroneous order, prejudicial to the interest of Revenue, unless view taken by Income Tax Officer is unsustainable in law. Aforesaid view taken in Malabar Industrial Company Ltd. (Supra) has been followed in CIT Vs. Max India Ltd. [2007 (11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthenticating that the Development Fund in which receipts were in the form of Development Fees from the students, and was not the Capitation fees, as the same has not been properly enquired by the then Assessing Officer. 3. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in authenticating the Development Fund as Income as per Income Expenditure Accounts, as the same has not been reflected in Income Expenditure Account instead shown directly in the Balance Sheet. 4. Learned counsel for appellant contends that Tribunal on the one hand has observed that order passed by Assessing Officer was erroneous on certain aspects, but then has proceeded to observe that it was not prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue,, then Section 263 of Act, 1961 will be attracted. An incorrect assumption of fact or an incorrect application of law will satisfy the requirement of order being 'erroneous'. Court further said that orders passed without applying principles of natural justice or without application of mind, would also come within the category of erroneous orders . 9. Coming to the phrase prejudicial to the interest of Revenue , Court said in Malabar Industrial Co. Ltd. (supra) that it is not an expression of art and not defined in Act, 1961. When considered with its ordinary meaning, it is of wide import and not confined to mere loss of tax. Court was of the view that scheme of Act was to levy and collect tax in accordance to the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts one of the courses permissible in law or where two views are possible of which the Assessing Officer has taken one view, the Commissioner cannot exercise jurisdiction under Section 263 merely because he does not agree with the view of the Assessing Officer unless the view which is taken by the Assessing Officer is unsustainable in law. On the other hand, where an order has been passed by the Assessing Officer without application of mind or where the Assessing Officer has made an incorrect assessment of facts or an incorrect application of law, that would satisfy the requirement of the order being erroneous. As regards the words 'prejudicial to the interests of the revenue', the Supreme Court has held that if due to an erroneous o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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