TMI Blog2019 (5) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. Therefore, in his view, the order passed by the AO U/s 143(3) of the Act on 24/3/2014 was not an erroneous order, which could be said to be prejudicial to the interest of the revenue We are inclined to concur with the view expressed by the ITAT as the order of assessment indicate that the AO has made enquiry on various issues and assessee submitted the details therefor. The enquiry pertained to the remuneration of the partners and the expenses/receipts. The Assessing Officer enhanced the return income of the assessee of ₹ 2,99,820/- to ₹ 4,55,556/- by making additions out of the various expenses. The nature of the assessment order does not bring the case of the revenue within the purview of Section 263 as such order c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper enquiry to determine whether the money was really lended by the third party or it has come out of the sources of the assessee himself. The apparent source of money is relevant enquiry for ascertaining the genuineness of the loan to which Assessing Officer has failed to apply his mind. Such non-application of mind constituted passing of an erroneous order, which is also prejudicial to the interest of revenue. Regarding the genuineness of the capital introduced in the names of the partners, the reply of the assessee was that all details were furnished, but the CIT concluded that as per the order-sheet entries, no inquiry/verification has been made by the Assessing Officer and there was no application of mind on the part of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d limit of the same is also specified. This document was submitted to the Assessing Officer during assessment proceedings. This case was selected for compulsory and complete scrutiny. The assessment for assessment year 2011-12 was made U/s 143(3) of the Act on 24/3/2014. The returned income of ₹ 2,99,820/- was enhanced to ₹ 4,55,556/- and the additions were made out of various expenses. The Assessing Officer made enquiries on various issues and the assessee submitted such details asked for. The enquiry with regard to remuneration to the partners and expenses/receipts were also conducted by the Assessing Officer. Such facts are evident from page Nos.105 to 106 of the paper book which is a letter dated 11/3/2014 submitted before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the various expenses. The nature of the assessment order does not bring the case of the revenue within the purview of Section 263 of the Income Tax Act as such order cannot be said to be prejudicial to the interests of Revenue. We may in this connection refer to the judgement of the Supreme Court in Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax, Kerala State-(2000) 2 SCC 718. The Supreme Court in that case while not approving of the view taken by the Madras High Court in Venkatakrishna Rice Co. vs. CIT-(1987) 163 ITR 129 (Mad.) on the phrase prejudicial to the interests of the Revenue held that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration . In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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