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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Income Tax Appellate Tribunal Phrase "Prejudicial to the interest of the Revenue" is of wide import and is not confined to loss of taxes only MANU/IK/0105/2024 - (11 Mar 2024) </td> </tr> <tr> <td align="left" valign="top">Sarvottam Caps Pvt. Ltd., Kolkata vs. Principal Commissioner of Income Tax</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">In facts of present case, the assessment was completed under Section 143(3) of the Income Tax Act, 1961 (IT Act). The assessee debited the provision for bad and doubtful debts amounting to Rs. 1,86,29,997 and the disallowance amounting to Rs. 77,08,984 under Section 14A of the Act. During computation of the book profit under Section 115JB of the Act both the amounts are not added with the book profit. Accordingly, during calculation of the MAT credit under Section 115JA of the Act, Assessing Officer had allowed more credit to the assessee which was amounted to Rs. 83,84,295. The Principal Commissioner of Income Tax by invoking sec 263 called the assessment order erroneous for wrong calculation of Section 115JB of the Act and prejudicial to the interest of revenue. The learned Pr. CIT by invoking Section 263 of the Act, issued the notice. The order under Section 263 of IT Act was passed by setting aside the assessment order. Being aggrieved the assessee filed appeal. 
The assessee has failed to completely disclose its true and correct income by non-furnishing of details as required under provisions of I.T. Act. The A.O. has passed the assessment order without making enquiries or verification which should have been made in the instant case. Clause (a) of Explanation - 2 to Section 263(1) is attracted in this case. Accordingly, it is held that the assessment order is erroneous insofar as it is prejudicial to the interest of the revenue. 
Delhi High Court in the case of GEE VEE Enterprise vs. Addl. CIT has held that, the CIT may consider the order of the Assessing Officer to be erroneous not only if it contain some apparent error of reasoning or of law or of fact on the face of it but also because the Assessing Officer has failed to make enquiries which are called for in the circumstances of the case and it is an order which simply accepted what the assessee has stated in his return of income on the said issue. It is not necessary for the CIT to make further enquiries before cancelling the assessment order. The Commissioner can regard the order erroneous on the ground that the Assessing Officer should have made further enquiries. 
Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT held that, the phrase "Prejudicial to the interest of the Revenue" is of wide import and is not confined to only loss of taxes. If the AO has accepted the claim of the assessee and with a wrong calculation of Section 1115JB of the Act there is a genuine loss of revenue which was prejudicial to the interest of the Revenue. Further, during calculation of MAT credit, the learned AO had made wrong and vitiated the entire proceeding. The impugned order of Principal Commissioner of Income Tax is upheld. Appeal dismissed.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Assessment, MAT credit, Calculation</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>