2013 (5) TMI 969 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the order passed u/s 263 by the Commissioner.
2. Adequacy of the enquiry conducted by the Assessing Officer.
3. Whether the assessment order was erroneous and prejudicial to the interest of revenue.

Summary:

1. Validity of the order passed u/s 263 by the Commissioner:
The assessee challenged the revision order passed u/s 263 of the IT Act for the Assessment Year 2007-08, arguing that the Commissioner failed to provide proper reasons for deeming the assessment order erroneous and prejudicial to the interest of revenue. The Commissioner invoked u/s 263 based on a perceived discrepancy between the assessed income and undisclosed income, supported by the statement of Shri Deepak Vasant and seized documents.

2. Adequacy of the enquiry conducted by the Assessing Officer:
The assessee contended that the Assessing Officer had conducted a thorough enquiry regarding the documents at pages 36, 38, and 39 of bundle no.1, which were related to the alleged on-money transactions. The Assessing Officer issued a show-cause notice and received detailed explanations from the assessee, which included corroborative evidence from the cash book. The Tribunal noted that the Assessing Officer had indeed conducted an enquiry and was satisfied with the explanations provided by the assessee.

3. Whether the assessment order was erroneous and prejudicial to the interest of revenue:
The Tribunal emphasized that for an order to be revised u/s 263, it must be both erroneous and prejudicial to the interest of revenue. The Commissioner failed to provide a definitive finding that the assessment order was erroneous. The Tribunal highlighted that the Commissioner cannot direct further enquiry without establishing that the original order was unsustainable in law. The Tribunal referenced several judicial precedents, including CIT vs Vikash Polymers and CIT vs Development Credit Bank Ltd, to support its conclusion that the order passed by the Assessing Officer was a possible view and not erroneous.

Conclusion:
The Tribunal set aside the revision order passed u/s 263, holding that the Commissioner did not demonstrate that the assessment order was erroneous and prejudicial to the interest of revenue. The appeal of the assessee was allowed.