2015 (2) TMI 1193 - AT - Income Tax

Revision u/s 263 - validity of notice - Held that - Section 263 of the Act gives power to the ld. CIT to examine the records under the provisions of the Act and if he finds order passed therein by the AO is erroneous or prejudicial to the interests of the revenue, he may after giving the assessee an opportunity of being heard pass an order. Section postulates that assessment order has to be considered and examined by the ld. CIT himself before he considers it erroneous and gives notice to the assessee. In this case we find that notice u/s 263 of the Act has been issued by ITO, Technical-XX, Kolkata. The records of the revenue do not show that there was any examination of records by the ld. CIT himself before issuing of notice u/s 263 of the Act. In absence of valid notice issued u/s 263 of the Act the jurisdiction assumed by the ld. CIT is bad and hence the order passed u/s 263 of the Act is not sustainable. Accordingly in the background of the aforesaid discussion in our considered opinion the jurisdiction assumed by the ld. CIT u/s 263 of the Act in absence of proper notice u/s 263 of the Act is bad. Hence order passed u/s 263 of the Act is liable to be quashed.- Decided in favour of assessee

Summary

Issues: Jurisdiction of CIT to issue notice u/s 263

Detailed Analysis:

Issue 1: Jurisdiction of CIT to issue notice u/s 263
The appeal was against the order of the ld.CIT, Kol-XX, Kolkata, passed u/s 263 of the I.T.Act for Assessment Year 2009-10. The delay in filing the appeal was attributed to the illness of the assessee, which was condoned. The grounds of appeal challenged the initiation of proceedings by the CIT without proper examination of the AO's order, the revision order passed by CIT against the assessment order, and the direction for additions to the total income without considering the revised return. The first ground raised by the assessee questioned the validity of the notice issued u/s 263 by I.T.O., Technical-XX, Kolkata, instead of the CIT. The section 263(1) of the Act empowers the CIT to examine records and pass orders if the AO's order is erroneous or prejudicial to revenue. However, in this case, the notice u/s 263 was issued by ITO, Technical-XX, Kolkata, without proper examination by the CIT. As a result, the jurisdiction assumed by the CIT was deemed invalid, and the order passed u/s 263 was quashed, leading to the allowance of the appeal.

This judgment highlights the importance of proper jurisdiction and examination by the CIT before issuing notices u/s 263 and emphasizes the necessity of adherence to procedural requirements for maintaining the validity of orders passed under the Income Tax Act.