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TMI Blog2019 (7) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order under Section 143(3) of the Income Tax Act, 1961 (for short, 'the IT Act') was passed on 14.03.2016, whereby total income was assessed at Nil. The assessing officer examined the books of accounts randomly. Subsequent to passing of order dated 14.03.2016, it was found by the CIT that the order was erroneous and prejudicial to the interest of the revenue, therefore, a notice dated 22.09.2017 was issued to the assessee under Section 263 of the IT Act, which was duly served on the assessee. The issue was in respect of investment in fixed assets under the head "Income from Business or Profession", which was declared and accepted at Rs. 2,20,03,275/-, whereas the same was valued at Rs. 3.52 crore by the bank's surveyor-cum-valuer vide his valuation certificate dated 02.10.2012. Further, it was noticed that the assessee had shown total investment in fixed assets at Rs. 2,69,26,206/- including land worth Rs. 49,22,931/- as per Note 9 to the Balance Sheet as on 31.03.2013 against the amount of investment excluding land certified by the valuer vide work completion certificate dated 02.10.2012 of Rs. 3.52 crores. The same value including land cost was to be taken as full value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DVO for valuation of construction work and never made any inquiry in respect of amount mentioned in the work completion certificate. It is argued that the Tribunal failed to appreciate that the loan was sanctioned by the bank on 26.07.2011 and at the time of getting loan, a project report dated 28.05.2011 was prepared by the bank valuer and cost of construction was estimated at Rs. 2.26 crores. The Tribunal has failed to appreciate that the assess has produced on record showing different valuation of cost of construction of the hotel building, then the claim of the assessee could not be accepted without proper inquiry. The Tribunal has not considered the judgment of the Calcutta High Court in Binod Kumar Agarwala Vs. CIT - 257 Taxman 58 (Cal.), judgment of Madras High Court in M/s. Coimbatore Spinning & Weaving Co. Ltd. Vs. CIT - 95 ITR 375 (Mad.) and that of Gauhati High Court in Dhansiram Agarwalla Vs. CIT - 201 ITR 192 (Gau.), in true perspective. It is therefore prayed that the appeal be allowed. Having heard learned counsel for the revenue and perused the impugned judgment as also the material on record, we find that the Tribunal has analytically examined all the arguments w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was stated that the assets must be as per the actual cost of construction and not on the projected cost of acquisition. In these facts, the Tribunal took the view that if the order passed by the assessing officer is without any investigation or enquiry on an issue, then it would be erroneous so far as it is prejudicial to the interest of the revenue on the ground of lack of enquiry. However, it was not a case of complete lack of enquiry on the part of the assessing officer rather the assessing officer has conducted a detailed enquiry on this issue and called for all the relevant records from the bank for the purpose of examining the cost of construction of the hotel building. It could be a case of inadequate enquiry so far as not referring the matter to the DVO, however, it was not mandatory for the assessing officer to refer the valuation to the DVO once the assessing officer was satisfied with the cost of construction and cost of fixed assets as recorded in the books of account. The Tribunal further held that even if the Principal Commissioner found that the decision of the assessing officer accepting the cost of construction/cost of fixed assets is contrary to the facts or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain (1957) 31 ITR 872 (Cal), the High Court of Karnataka in CIT v. T. Narayana Pai (1975) 98 ITR 422 (Kant), the High Court of Bombay in CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom), and the High Court of Gujarat in CIT v. Minalben S. Parikh (1995) 215 ITR 81 (Guj) treated loss of tax as prejudicial to the interests of the Revenue. 9. Mr Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Co. v. CIT (1987) 163 ITR 129 (Mad) interpreting "prejudicial to the interests of the Revenue". The High Court held: "In this context, (it must) be regarded as involving a conception of 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 Administratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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