TMI Blog2022 (10) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... scertain the truth of the facts stated and the genuineness of the claims made in the return when the circumstances of the case are such as to provoke inquiry. Arbitrariness in either accepting or rejecting the claim has no place. The order passed by the AO becomes erroneous because an enquiry has not been made or genuineness of the claim has not been examined where the inquiries ought to have been made and the genuineness of the claim ought to have been examined and not because there is anything wrong with his order if all the facts stated or claim made therein are assumed to be correct. In the present case, the AO must have made an enquiry with regard to interest income received during the year and treatment same as income from other sources as no business activity has been carried on by the assessee in this assessment year under consideration. Being so, we do not find any infirmity in the order of the Ld. PCIT in invoking the jurisdiction u/s 263 of the Act and in vacating the assessment order passed by the AO for denovo consideration. Decided against assessee. - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER Appellant by : Shri Rajeev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction to redo the same by assessing the net income earned during the year as per assessment order amounting to Rs.1,52,54,865/- under the head Income from other Sources instead of under income from business and profession as was done in the original assessment and consecidently has disallowed set off of carried forward business loss amounting to Rs.2,04,34,326.Learned PCIT ought to have noted that an appeal filed against the original assessment against disallowance of interest paid during the year amounting to Rs.2,13,77,955 is pending before the Commissioner of Income Tax (A),Tvm and hence revision is not permitted on the same issue / subject as per clause (c) of Explanation I to Section 263 of the IT Act. Ground No.2 The learned PCIT has erred in substituting his view with that of the assessing officer, by holding that assessee has not carried on any business activity during the year as per legal decisions cited in annexure attached. The assessing officer has consciously formed an opinion during the year that business is in continuance by noting that there was no active business operations during the year which demonstrates the opinion formed by him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror has been defined to mean- Error: A mistaken judgement or deviation from the truth in matters of fact, and from the law in matters of judgement error is a fault in judgement, or in the process or proceeding to judgement or in the execution upon the same, in a Court of Record; which in the Civil Law is called a Nullityie (termes de la ley). Something incorrectly done through ignorance or inadvertence S.99 CPC and S.215 Cr.PC. Error, Fault, Error respects the act; fault respect the agent, an error may lay in the judgement, or in the conduct, but a fault lies in the will or intention. 4.1 At page 650 of the aforesaid Law Lexicon, the scope of Error, Mistake, Blunder, and Hallucination has been explained thus: An error is any deviation from the standard or course of right, truth, justice or accuracy, which is not intentional. A mistake is an error committed under a misapprehension of misconception of the nature of a case. An error may be from the absence of knowledge, a mistake is from insufficient or false observation. Blunder is a practical error of a peculiarly gross or awkward kind, committed through glaring ignorance, heedlessness, or awkward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effectively. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The scheme of assessment has undergone radical changes in recent years. It deserves to be noted that the present assessment was made under Section 143(3) of the Income-tax Act. In other words, the Assessing Officer was statutorily required to make the assessment under Section 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. Bulk of the returns filed by the assessees across the country is accepted by the Department under Section 143(1) without any scrutiny. Only a few cases are picked up for scrutiny. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. He should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is legitimately due fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve such prejudice removed. While an assessee can have it corrected through revisional jurisdiction of the Commissioner under Section 264 or through appeals and other means of judicial review, the prejudice caused to the State Exchequer can also be corrected by invoking revisional jurisdiction of the Commissioner under Section 263. Arbitrariness in decision-making causing prejudice to either party cannot therefore be allowed to stand and stare at the legal system. It is difficult to countenance such arbitrariness in the actions of the Assessing Officer. It is the duty of the Assessing Officer to adequately protect the interest of both the parties, namely, the assessee as well as the State. If he fails to discharge his duties fairly, his arbitrary actions culminating in erroneous orders can always be corrected either at the instance of the assessee, if the assessee is prejudiced or at the instance of the Commissioner, if the revenue is prejudiced. While making an assessment, the ITO has a varied role to play. He is the investigator, prosecutor as well as adjudicator. As an adjudicator he is an arbitrator between the revenue and the taxpayer and he has to be fair to both. His duty to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial issue is legally necessary. The judgments on which reliance was placed by the learned Counsel for the assessee also points to the same direction. They have held that orders, which are subversive of the administration of revenue, must be regarded as erroneous and prejudicial to the interests of the revenue. If the Assessing Officers are allowed to make assessments in an arbitrary manner, as has been done in the case before us, the administration of revenue is bound to suffer. If without discussing the nature of the transaction and materials on record, the Assessing Officer had made certain addition to the income of the assessee, the same would have been considered erroneous by any appellate authority as being violative of the principles of natural justice which require that the authority must indicate the reasons for an adverse order. We find no reason why the same view should not be taken when an order is against the interests of the revenue. As a matter of fact such orders are prejudicial to the interests of both the parties, because even the assessee is deprived of the benefit of a positive finding in his favour, though he may have sufficiently established his case 4.6 C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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