In case of dual views, view adopted by A.O. is valid & cannot be called erroneous

CIT Vs A.R.Builders & Developers P. Ltd (Madras High Court)

The issue under consideration is that, when two views are possible and A.O. adopt one of the view and passed his order accordingly. But that view is not acceptable by PCIT, in such case can PCIT adopt its one of the other views and call the order of A.O. the erroneous?

In the given case, the PCIT passed an order under Section 263 of the Act holding that there was a lack of application of mind on the part of the Assessing Officer while passing the assessment order and in view of the fact that the assessment order passed was erroneous and prejudicial to the interest of the revenue. Further, in this case the assessee had preferred an appeal before the ITAT and the Tribunal allowed the appeal filed by the assessee on the ground that when two views were possible and the Assessing Officer had taken one such view and the Commissioner of Income Tax did not agree but the same would not be the reason for treating the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue. Holding so, the Tribunal set aside the order of PCIT u/s 263 of the Act. He

As per the facts of the case, even though there is no transfer of property by excluding the sale deed, but at the same time, the property has been revalued in accordance with law and capital gains tax also paid on the revised value. It is not the case of the department that for the purpose of evading the income tax, the assessee company has wrongly calculated the value of the lands which is less than the market value. Therefore, as pointed out by the ITAT and the reliance placed in the case of CIT Vs. Max Inda Ltd., 295 ITR 282, it is very clear that when two views are possible, if the Assessing Officer had taken one of the plausible views, the CIT has no authority to set aside the order of the Assessing Officer and adopt its one of the other views. Therefore, the Principal Commissioner of Income Tax could not substitute a lawful view taken by the Assessing Officer.

Admittedly in this case, the assessing officer has accepted the returns filed by the respondent/assessee company and the respondent/assessee company has also given reason for adopting the revised value and also pointed out that except the said property, the company has no other property for income and also the entire shares has been transferred and also the value of the land were revised and revalued and capital gains tax also paid. Therefore, under these circumstances, High court do not find any valid reason to interfere with the order passed by ITAT. Thus, we find no good reason to admit the Tax Case (Appeal) filed by the Revenue. Consequently, the Tax Case (Appeal) stands dismissed.

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