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TMI Blog2024 (1) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of revenue even though the AO has not made enquiry which should have been made in respect of the claim of deduction of Rs. 1,32,24,658 in light of proviso (a) (i) to Section 54F of the Income Tax Act rendering the order erroneous in so far as it is prejudicial to the interest of Revenue in terms of Explanation 2(a) to section 263(1) of the Act?" (ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in observing that Ld. PCIT was not empowered and entitled to revise assessment order u/s. 263 of the Act r/w Explanation 2 there by ignoring the fact that the Assessing Officer has passed the assessment order without making inquiry and verification w.r.t exemption claimed u/s 54F of the Act since the Assessee owned more than one house and the Assessing Officer has not enquired into details of properties held by the Assessee and the view taken by the Assessing Officer is unsustainable in law? (iii) Whether on the facts and circumstances of the case and in law, the order of the Hon'ble ITAT is perverse in holding that the order of the Assessing Officer, sought to be revised in the impugned order, was neither erroneous nor prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after inquiry, found that the assessee was eligible for exemption under Section 54F of the Act. It was contended by the assessee that the assessee did not hold more than one residential property and the affidavit was also filed for the same for being eligible for exemption under Section 54F of the Act along with requisite evidence. It was submitted that the property at 701, Pancham Heights flat is used by the office staff as rent free accommodation. Flat DVFF25 is rented and occupied by the tenant. Property 5/1203 is self acquired property and property at 5/1208 is commercial property is used as shop by wife of the assessee and property at 76 Saikutir is open plot. It was, therefore, contended that the assessee has only one residential property. However, the PCIT rejected contentions of the assessee and observed that the Assessing Officer, during the course of assessment proceedings, did not raise any specific query or the assessee did not furnish any information in respect of number of residential properties owned by the assessee during the year under consideration. It was further held by the PCIT that the issue of deduction claimed under Section 54F remained unverified with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme, MSME payment of registration of trade licence with SMC and copy of affidavit dated 19th March 2022. The Assessing Officer, after considering such documents, applied his mind and took a plausible view that the assessee is entitled for exemption under Section 54F of the Act. The Tribunal, therefore, held that the Assessing Officer, as an adjudicator and investigator, has applied his mind and framed the assessment order and thus the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. [6] With regard to the power of the PCIT to invoke the provisions of Section 263 of the Act, the Tribunal has observed as under: "16. We note that Revenue had no right to appeal to the Commissioner (Appeals) against any order passed by the Income-tax Officer. Therefore, this provision, corresponding to Section 33B of the 1922 Act, was enacted to arm the Commissioner with powers of revision whenever there is any erroneous order prejudicial to the revenue. There must be an error in the order and it must be "prejudicial to the revenue". For example, an order of the Assessing Officer in which he merely follows the order of the Tribunal for an earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been obtained, cannot be sufficient to come to a conclusion that the Assessing Officer did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. In the conclusion we are of the view that none of the reasons set out by the Ld. PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the Ld.PCIT has to be quashed for the reason that order of the Assessing Officer sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the Assessing Officer ought to have made in the given facts and circumstances of the case. We accordingly quash the order passed by the Ld.PCIT u/s 263 of the Act and allow the appeal of the assessee." [7] In view of the above findings, the Tribunal allowed the appeal of the assessee and set aside the order passed by the PCIT under Section 263 of the Act. [8] Learned advocate Mr. Karan Sanghani for the appellant - Revenue submitted that the Assessing Officer has never discussed and examined the issues raised by the PCIT as the assessee has submitted the list of properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interests of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi Vs. Commissioner of Income-tax [67 ITR 84] and in Smt. Tara Devi Aggarwal Vs. Commissioner of Income-tax, West Bengal [88 ITR 323]. In the instant case, the Commissioner noted that the Income-tax Officer passed the order of nil assessment without appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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