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2010 (3) TMI 1127 - HC - Income Tax

Issues involved: Appeal under s. 260A of the IT Act against order under s. 143(3) for asst. yr. 2003-04; Jurisdiction of CIT u/s 263 of the IT Act; Correctness of assessment order; Non-application of mind by assessing authority.

Judgment Summary:

Appeal against Assessment Order:
The appellant, an assessee, appealed under s. 260A of the IT Act against an order dated 25th Sept., 2009 in ITA No. 579/Coch/2008 of the Tribunal. The assessment for the asst. yr. 2003-04 was completed under s. 143(3) of the IT Act on 20th Jan., 2006.

Jurisdiction of CIT u/s 263:
The CIT invoked authority under s. 263 of the IT Act, setting aside the assessment order and remitting the matter for de novo consideration due to the genuineness of credits amounting to &8377; 21,00,000 and &8377; 8,00,000. The appellant's appeal to the Tribunal was dismissed, leading to the present appeal before the High Court.

Legal Principles and Arguments:
The appellant contended that the CIT's exercise of authority under s. 263 was based on a different view from the assessing authority, not on an erroneous order prejudicial to Revenue. Citing Malabar Industrial Co. Ltd. vs. CIT, the Supreme Court held that the provision cannot correct every mistake but only erroneous orders prejudicial to Revenue. The CIT set aside the assessment due to non-application of mind by the assessing authority regarding the genuineness of credits introduced by the appellant.

Court's Decision:
The High Court, considering the facts and legal principles, found that the assessment order lacked proper application of mind and was too cryptic. In line with the Supreme Court's guidance on the jurisdiction under s. 263, the Court dismissed the appeal at the admission stage, as no substantial question of law arose for consideration.

This judgment highlights the importance of proper assessment procedures and the jurisdiction of the CIT under s. 263 of the IT Act to ensure correct application of tax laws and protection of Revenue's interests.

 

 

 

 

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