9911796707
|
Home
Issues Involved:
1. Validity of the Commissioner of Income-tax's invocation of section 263. 2. Whether the Tribunal's decision was based on factual evidence or involved a referable question of law. Issue-wise Detailed Analysis: 1. Validity of the Commissioner of Income-tax's invocation of section 263: The Revenue sought to refer a question to the High Court regarding the Tribunal's decision that the Commissioner of Income-tax was not justified in cancelling the order of the Assessing Officer by invoking section 263. The Commissioner had issued a notice under section 263, stating that the Assessing Officer's order was erroneous and prejudicial to the interests of the Revenue because it allowed benefits under rule 6DD(j) for cash payments exceeding Rs. 10,000, which should have been disallowed under section 40A(3). The Commissioner directed the Assessing Officer to verify the genuineness of these payments and record satisfaction for each transaction exceeding Rs. 10,000. The Tribunal, however, cancelled the Commissioner's order, restoring the original assessment order. The Tribunal observed that the assessment order, although brief, indicated that the Assessing Officer had conducted proper inquiries and test-checked the accounts. The Tribunal noted that the Deputy Commissioner of Income-tax had verified the cash payments during the assessment proceedings, and all material facts were brought on record and discussed, even though the satisfaction was not recorded in the body of the assessment order. 2. Whether the Tribunal's decision was based on factual evidence or involved a referable question of law: The Tribunal concluded that the assessment order was not erroneous or prejudicial to the interests of the Revenue, as it was based on proper inquiries and verification. The Tribunal emphasized that an assessment order cannot be set aside solely because it is non-detailed or cryptic if it is valid in law and does not prejudice the Revenue's interests. The Tribunal's decision was based on the factual evidence available on record, including the sequence of events and the Deputy Commissioner's report. At the reference stage, there was a difference of opinion between the Members of the Tribunal. The Accountant Member held that the Tribunal's decision was based on appreciation of factual evidence and did not involve a referable question of law. He emphasized that human minds might differ on the reliability of evidence, but the decision of the final fact-finding authority is conclusive by law. The Judicial Member, however, believed that a question of law did arise, as the Assessing Officer had not verified the bills and confirmations with the books of account, and some certificates had glaring mistakes. He cited Supreme Court decisions in Rampyari Devi Saroogi v. CIT and Tara Devi Aggarwal (Smt.) v. CIT to support his view. The matter was referred to the President for the opinion of a third Member, who agreed with the Accountant Member. The third Member noted that the Tribunal's decision was based on the facts and evidence on record, and the reference application filed by the Revenue was rightly rejected as the question was one of fact, not law. The third Member emphasized that the Tribunal should be guided by the facts recorded in its order rather than the statement of facts submitted by the Revenue. In conclusion, the Tribunal's decision to cancel the Commissioner's order under section 263 was based on factual evidence, and no referable question of law arose. The reference application filed by the Revenue was dismissed.
|
