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Issues involved: The appeal filed against the order of the CIT under s. 263 for the assessment year 2003-04.
Facts of the case: The assessee claimed exemption under s. 10B of the IT Act, 1961, based on approval granted by the Development Commr. SEEPZ Special Economic Zone. The CIT set aside the assessment order, stating that the approval for 100% export oriented undertaking was not granted by the prescribed authority under the IT Act. The CIT relied on a tribunal decision and initiated proceedings under s. 263. Assessee's contentions: The assessee argued that the Development Commr. had the authority to grant approval, and the approval under the automatic route was ratified by the Board. The assessee claimed that the AO's decision was legally plausible and there was no error in allowing the claim. The assessee requested the notice under s. 263 to be dropped or an adjournment of 15 days to be granted. CIT's decision: The CIT found the contentions raised by the assessee to be incorrect and set aside the order for the assessment year 2003-04. The CIT directed the AO to examine the issue afresh and give the assessee an opportunity to prove the approval by the Board of Approval. The CIT held that if no further material is brought on record, exemption under s. 10B would not be available to the assessee. Tribunal's decision: The Tribunal heard arguments from both parties and reviewed the records. The Tribunal analyzed the provisions of s. 263 and emphasized that the power of revision can only be exercised if the order is erroneous and prejudicial to the interests of the Revenue. The Tribunal concluded that the AO's order was not erroneous as he had followed the prescribed procedure and arrived at a legally plausible decision. The Tribunal quashed the CIT's order and restored the AO's order. Conclusion: The Tribunal allowed the appeal of the assessee, stating that the CIT's action under s. 263 was not in accordance with the law, and therefore, the AO's order was restored.
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