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TMI Blog2016 (3) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... o the interest of the revenue, which is a prime requirement for resorting to sec.263. The CIT also failed to appreciate the contentions and arguments advanced in this behalf as also the settled legal position. 3. The appellant craves leave to add, alter, delete or substitute all or any of the above grounds of appeal. 3. The present appeal is filed by the assessee against invoking jurisdiction by the Commissioner under section 263 of the Act. 4. Briefly, in the facts of the present case, the assessee was partnership firm engaged in the business of metal scrap. The assessment for the year under consideration was completed by the Addl.CIT, Range-2, Kolhapur under section 143(3) of the Act on assessed income of Rs. 63,89,110/- as against returned income of Rs. 39,11,440/-. The Commissioner on subsequent verification of record and information available with the office, noticed that during the previous year relevant to assessment year under consideration, the assessee firm was beneficiary of hawala transactions totaling Rs. 37,79,207/-. The Commissioner further noted that the Assessing Officer had failed to verify the transactions and had accepted the books of account and the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to four listed parties and whether the transactions with them have been verified by the Assessing Officer or not. Our attention was drawn to the assessment order placed at pages 3 to 26 of the Paper Book and it was pointed out that mainly the said assessment order talks of carriage of goods purchased. The assessee was a dealer of metal scrap. The learned Authorized Representative for the assessee further pointed out that a questionnaire was raised by the Assessing Officer during the course of assessment proceedings, which is placed at page 30 of the Paper Book, under which details of monthly purchases and sales, details of inventory stock as on 31.03.2011 were asked for. Further, the assessee claims to have filed the said details date-wise, which are placed at pages 33 to 54 of the Paper Book. Further, the learned Authorized Representative for the assessee referred to the reverse of page 35 of Paper Book and pointed out that the purchases from the parties, who were part of show cause notice issued under section 263 of the Act are enlisted. Thereafter, the learned Authorized Representative fo r the assessee pointed out that confirmation was received from the said parties w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error committed by the Assessing Officer, it is only when an order is erroneous that the section 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. The phrase "prejudicial to the interests 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 and Co. v. S. P. Jain [1957] 31 ITR 872, the High Court of Karnataka in CIT v. T. Narayana Pai [1975] 98 ITR 422, the High Court of Bombay in CIT v. Gabriel India Ltd. [1993] 203 ITR 108 and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81 treated loss of tax as prejudicial to the interests of the Revenue. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT [1987] 163 ITR 129 interpreting "prejudicial to the interests of the Revenue. "The High Court held (page 138) : "I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to^ ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 11. The Hon'ble Bombay High Court in CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) had held as under:- "... From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed . . " 13. It has been held by the Hon'ble Bombay High Court in CIT Vs. Gabriel India Ltd. (supra) that exercise of jurisdiction under section 263 of the Act cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiries ought to have been conducted to find something. In cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessing Officer had made elaborate enquiries in respect of transportation of purchases, where the Assessing Officer had considered all the particulars filed before him and had also noted the various aspects of transactions i.e. the transport of the goods purchased by the assessee and had also enhanced income in the hands of assessee. Merely because elaborate discussion has not been made by the Assessing Officer on this aspect does not make the order passed by the Assessing Officer as being accepting transactions at face value. The case of the Commissioner while invoking jurisdiction under section 263 of the Act is that the Assessing Officer ha d prima facie made an assumption of incorrect computation of income and / or under assessment of income to that extent. As pointed out by the learned Authorized Representative for the assessee and as noted by us, the Assessing Officer had made enquiries in the case and had discussed the aspect of transportation of goods in the assessment order elaborately, but had not discussed the information and details filed by the assessee with regard to purchases, does not make the order passed by the Assessing Officer to be a prima facie cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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