TMI Blog1997 (12) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessments on this limited issue and directed the AO to frame the assessment de novo after considering the above points and after allowing the assessee a reasonable opportunity of presenting its case. 3. Shri M.M. Patel, the learned counsel for the assessee, submitted that it is pertinent to note that the assessments in the case of the assessee-firm were finalised under s. 143(1) of the Act. As held by the Hon'ble Gujarat High Court in the case of CIT vs. Smt. Maniben S. Parikh (1995) 127 CTR (Guj) 333 : (1995) 215 ITR 81 (Guj), the two conditions which must be satisfied before the CIT can exercise powers under s. 263 of the Act, are that the order of the assessing authority must be found to be erroneous and further that it must also be found to be prejudicial to the interests of the Revenue. It has further been held that unless both conditions are satisfied, the CIT does not get jurisdiction to pass the order under s. 263 revising the assessment order. He submitted that as per the scheme of s. 143(1) as it stood prior to asst. yr. 1989-90, AO was empowered to make an assessment of the total income or loss of the assessee, without requiring the presence of the assessee or the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 ITR 658 (Pat); (3) CIT vs. Smt. Sharda Devi Lath (1989) 175 ITR 566 (Pat); (4) CIT vs. Smt. Krishna Devi (1988) 70 CTR (Pat) 156 : (1989) 175 ITR 591 (Pat) and (5) CIT vs. Smt. Sangeeta Agrawal (1992) 196 ITR 647 (All). The learned Departmental Representative further relied upon the decision of the Ahmedabad Bench of the Tribunal in the case of Shreno Ltd., vs. Dy. CIT (ITA No. 2126/Ahd/1991 decided 13th Dec., 1995) for asst. yr. 1988-89 to which one of us (Accountant Member) was a party. 5. We have considered the rival submissions and perused the facts on record. As held by the Hon'ble Madras High Court in the case of Venkatakrishna Rice Co. vs. CIT, when an order of assessment of the ITO is in accordance with law, it cannot be held to be erroneous in law and consequently it cannot be prejudicial to the interests of the Revenue and hence the action of the CIT in such a case cannot be justified. The following observations of the Hon'ble Madras High Court on pages 156 157 of the said judgment are very significant: "In our judgment, the expression "prejudicial to the interest of the Revenue" is not to be construed in a petty-fogging manner, but must be given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th law or which has been passed by the ITO without making any enquiry in undue haste. The following observations at p 116 of the said judgment are again highly significant: "We, therefore, hold that in order to exercise power under sub-s. (1) of s. 263 of the Act there must be material before the CIT to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with law or which has been passed by the ITO without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the CIT to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well settled that when exercise of statutory power is de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue never came to be decided as such in any of the decisions of any High Court. Merely because in a particular case the assessee has not challenged the CIT's jurisdiction on the ground as raised in the present case, that cannot lay down a judicial precedent. What the High Courts have held is that on the facts of those particular cases that there was no bar at revising the order passed under the summary scheme provided the same are erroneous in the eyes of law and the facts so warrant. Hence, from this point of view all the decisions cited by the learned Departmental Representative are clearly distinguishable. In fact, only two direct decisions on this point are those of the Calcutta Bench and Ahmedabad Bench of this Tribunal as referred to hereinabove. 5.3 As regards the Departmental Representative reliance on unreported decision in the case of Shreno Ltd. vs. Dy. CIT in ITA No. 2126/Ahd/1991 referred to supra, we find that in that case the assessee claimed deduction under s. 32AB of the Act amounting to Rs. 83,000 at Rs. 4,11,612 the income earned by the assessee not from the business or profession for which deduction was allowable and thus the CIT set aside the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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