If two views are possible and AO has adopted one view, CIT cannot presume that “it is prejudicial to the revenue”

If two views are possible and AO has adopted one view, CIT cannot presume that "it is prejudicial to the revenue"

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If two views are possible and AO has adopted one view, CIT cannot presume that “it is prejudicial to the revenue”

MAMATHA DIVAKAR SHETTY vs. INCOME TAX OFFICER
(2021) 63 CCH 0074 HydTrib
Short Overview of the case:
The case pertains to the Re visionary power of the CIT.
The issue inovlved was as to whether the order erroneous or prejudicial to revenue or not?
Assessee had originally filed his return of income admitting income under head ‘House property’ and ‘other sources’ and after claiming deduction u/s 54F,
 As a result of exemption, Capital gain income was considered 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
Thereafter the Pr. CIT exercised its 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
The court held as under:
Once AO has taken a view on an issue, on which two views are possible, a 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 law
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 was set aside by the Court & with this the Asessee’s appeal allowed.

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