The Commissioner Of Income-Tax v. M/S. Rajkumar Dipchand Phade

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Income Tax Appeal NO. 15 of 1999 The Commissioner of Income-tax .... Appellant. vs. M/s. Rajkumar Dipchand Phade . .. ... . ... Respondents Prem Vyas for Appellant None for Respondents. CORAM:S. RADHAKRISHNAN ANDA. S. AGUIAR JJ. Date: 13/6/2005 P,C, 1. Heard learned counsel for the Appellant. None appears for the Respondents though served. 2. By this appeal the appellant is seeking to raise the followingsubstantial question of law:substantial question of law: “Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that since the assessment was framed undersection 143(1) of the I.T. Act, the C.I.T. Was notjustified in invoking the jurisdiction of under section 263 of the I.T. Act, even if theassessment was erroneous and prejudicial to theinterests of the revenue? 2. Learned counsel for the applicant - Revenue brought to our noticethat the Division Bench of this court in Income Tax Appeal Nos. 13and 18 of 199 decided on March 30,2001 while dealing with thesame substantial question of law has decided in favour of theRevenue and answered the question in the negative. 3. We have also perused the decision reported in (2000) 243 ITR 83 (SC) (Malabar Industrial Co. Ltd. V. CIT), wherein the supremecourt has laid down two pre-requisites for exercise of jurisdiction bythe Commissioner suo motu viz., that the order of the AssessingOfficer was erroneous and, secondly , that the order of theAssessing Officer was prejudicial to the interests of the Revenue.Relying upon the said judgment this court found that there was nopower to the Commissioner to invoke section 263 of the Income-tax Act. 4. In the present matter the assessee has claimed deduction in respectof interest amounting to 52,500/- towards the goodwill. The amountwas payable to the incoming partner and therefore no amount waspayable by the firm and as such no claim for deduction in respect ofthe said amount was made. The order of the Assessing Officer isex- facie erroneous as the aforesaid facts have not been properlyexamined. Hence the order is prejudicial to the Revenue. Underthe above circumstances the question is answered in negative infavour of the Revenue and against he assessee. Appeal isaccordingly allowed with costs. S. RADHAKRISHNAN J. A. S. AGUIAR J.