INCOME TAX ACT, 1961

--Revision under section 263--Erroneous and prejudicial orderLack of proper enquiries--A search & seizure operation was conducted on A Group of cases on 08-12-2006 and the assessee is one of the companies belonging to this group. Consequently, a notice under section 153A was issued to the assessee on 10-10-2007 and in response thereto, the assessee filed its return for assessment year 2001-02 declaring total income of Rs. 5,87,600. Assessment order under section 153A/143(3) was passed on 31-12-2008 on the income declared by the assessee. On examination of records, the CIT observed that assessment order under section 153A/143(3) in the case of the assessee was simultaneously passed for assessment year 2002-03, wherein an amount of Rs. 32 lakhs was added under section 68 in respect of share application money received by the assessee, the genuineness of which, according to CIT, was not established. He, therefore, prima facie formed an opinion that the impugned assessment order passed by the assessing officer is erroneous in so far as it is prejudicial to the interest of revenue and issued a show cause notice under section 263 dated 1-11-2010. It is apparent from the chart that these share applications were received by the assessee-company during the financial year 2000-01 and hence, the addition of Rs. 32,00,000 made under section 68 in the assessment year 2002-03 should have been made in the assessment year 2001-02. In view of these facts, it is evident that the assessment for the assessment year 2001-02 was completed without due application of mind which renders it erroneous in so far as it is prejudicial to the interest of revenue. Held: It was after verifying the books of account of the assessee and various other materials gathered from the assessee and/or share applicants during assessment proceeding and after considering the explanation offered by the assessee that the assessing officer had exercised a judicial discretion in the matter while completing the assessment. In such circumstances, the view taken by the assessing officer cannot be said to be prejudicial to the revenue or can it be said to be erroneous. The CIT while exercising his power under section 263was not permitted to substitute his opinion in place that of the assessing officer. In view of above, respectfully following the decision of the Apex Court hold that the CIT was not justified in setting aside the assessment order dated 31-12-2008 for assessment year 2001-02. Therefore, the order passed by the CIT under section 263 is quashed and the assessment oder dated 31-12-2008 for assessment year under appeal is restored.