Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to interests of revenue

Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to interests of revenue

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Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to interests of revenue

Here is an interesting case decide by ITAT Hyderabad as under: 
MAMATHA DIVAKAR SHETTY vs. INCOME TAX OFFICER
(2021) 63 CCH 0074 HydTrib
Short overview of the case:
Case pertama to the Revisionary power of CIT
Issue was sheher the Order by AO is erroneous or prejudicial to revenue
Assessee had originally filed his return of income admitting income under head ‘House property’ and ‘other sources’ and after claiming deduction u/s 54F, ‘Capital gain’ as ‘Nil’
Later, it came to notice of AO that during F.Y. 2008-09, assessee along with 3 others had sold immovable property and Market value of property for stamp duty was more than sale consideration stated in conveyance deed
A notice u/s.148 was issued as there was an escapement of LTCG—Reassessment for A.Y. 2009-10 was made u/s 143(3) rws 147 on 29.05.2014 accepting income returned
Pr. CIT exercising powers vested u/s. 263—Pr. CIT held that assessment order u/s 143(3) rws 147 passed is held to be erroneous and prejudicial to interests of revenue
ITAT Held as under:
Once AO has taken a view on issue, on which two views are possible, view which is taken by AO, if Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to interests of revenue unless view taken by Income-tax Officer is unsustainable in la
Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to interests of revenue.
For example, when an Income-tax Officer adopted one of courses permissible in law and it has resulted in loss of revenue; or where two views are possible and Income – tax Officer has taken one view with which Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to interests of revenue unless view taken by Income-tax Officer is unsustainable in law.
View which has been taken by AO is one of courses permissible in law, which cannot be brushed aside by Pr. CIT u/s 263.
Order of Pr. CIT passed u/s 263 is set aside
Assessee’s appeal allowed.
Conclusion :
1. Once the AO has taken a view on the issue, on which two views are possible, the view which is taken by the AO, if Pr. CIT 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.
2. If two views are possible then CIT cannot treat order as erroneous if AO has consciously adopted one view.

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