TMI Blog2004 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... passed without application of mind, will also fall under the expression erroneous and prejudicial to the interests of the Revenue – Thus, Tribunal had committed error in holding that the assessment order in so far as it granted exemption to income from agriculture and poultry-farming was not erroneous or prejudicial to the interests of the Revenue - - - - - Dated:- 26-7-2004 - Judge(s) : R. K. AGARWAL., K. N. OJHA. JUDGMENT The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law under section 256(1) of Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the order of the Commissioner of Income-tax wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment made by the Income-tax Officer with a direction to reframe the assessment after making full and proper investigation in the nature, sources and extent of the income earned from these sources and the source of the investment made for earning these incomes. In doing so, the Income-tax Officer will give full and proper opportunity to the assessee to present his side of the respondent. The respondent feeling aggrieved, preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal vide order dated November 27, 1979, had allowed the appeal filed by the respondent-assessee and had set aside the order of the Commissioner of Income-tax passed under section 263. The Tribunal, while doing so had held as follows: "In our v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to whether the income which has been claimed by the respondent-assessee has been earned or whether it is exempted in full or in part. Thus, the order granting exemption to income from agriculture and poultry farming has been without any application of mind. The Commissioner of Income-tax was, therefore, fully justified in taking the recourse to proceedings under section 263 of the Act and after giving an opportunity of hearing to the assessee, had rightly set aside the assessment order as the same was erroneous and prejudicial to the interests of the Revenue. He relied upon the decision of the hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83. Having heard learned counsel for the Revenue, we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind" Thus, an order, which has been passed without application of mind, will also fall under the expression erroneous and prejudicial to the interests of the Revenue. Since the Income-tax Officer has granted exemption to the assessee in respect of income from agriculture and poultry-farming without any discussion and without any application of mind, respectfully following the aforesaid decision, we are of the opinion that the Tribunal had committed error in holding that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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