2016 (6) TMI 1219 - AT - Income Tax

Revision u/s 263 - order of AO to be erroneous and prejudicial to the interest of the revenue - imperfect inquiry - Held that - CIT has made a reference to the written submission filed by the assessee he has neither discussed the same nor given any finding thereon so as to point out as to what exactly are the errors in the order of the Assessing officer which were prejudicial to the interest of the Revenue. He simply brushed aside the submission made by the assessee and held the order of the Assessing Officer to be erroneous and prejudicial to the interest of the revenue on the ground that proper and sufficient enquiry on the issues raised by him in the notice issued under section 263 was not conducted by the assessee. He even did not point out as to how the enquiry made by the Assessing Officer was not sufficient and proper and even failed to point out as to what further enquiry the Assessing Officer was expected to do on the relevant issues. Thus we set aside the impugned order passed by the ld. CIT under section 263 and restore that the Assessing Officer passed under section 143(3). See Leisure Wear Exports Limited case 2010 (9) TMI 351 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Revision under section 263 of the Income Tax Act, 1961 regarding errors in assessment order.
2. Proper and sufficient enquiry conducted by the Assessing Officer.
3. Justification of revision by the ld. CIT under section 263.
4. Appeal against the order of the ld. CIT under section 263.

Analysis:
1. The appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax, Asansol under section 263 of the Income Tax Act, 1961. The ld. CIT pointed out errors in the assessment order passed by the Assessing Officer related to unabsorbed depreciation and additional depreciation claimed by the assessee. The ld. CIT issued a notice under section 263 highlighting the discrepancies in the assessment, leading to the revision of the order.

2. The assessee responded to the notice by submitting a written explanation, contesting the errors pointed out by the ld. CIT. However, the ld. CIT found the enquiry conducted by the Assessing Officer insufficient and set aside the order under section 263, directing a fresh assessment after proper investigation. The assessee challenged this decision, arguing that the ld. CIT did not provide specific findings on the errors in the assessment order before revising it.

3. The ld. counsel for the assessee contended that the approach of the ld. CIT was not legally permissible as he did not specify the further enquiry required from the Assessing Officer. The ld. CIT's revision was based on the lack of proper investigation by the assessee, without detailed findings on the errors identified. The ld. D.R. supported the ld. CIT's decision, emphasizing the prejudicial impact of the errors on revenue.

4. Upon review, the Tribunal noted that the ld. CIT did not adequately address the written submission by the assessee or provide explicit findings on the errors in the assessment order. Citing a relevant case, the Tribunal found that the ld. CIT failed to justify the exercise of power under section 263 due to the lack of detailed reasoning for revising the order. Consequently, the Tribunal set aside the ld. CIT's order under section 263 and reinstated the original assessment order passed by the Assessing Officer under section 143(3).

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of proper justification and detailed findings in revision orders under section 263 of the Income Tax Act, 1961.