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2011 (3) TMI 850 - AT - Income TaxRevision under section 263 - in the absence of a positive finding of application of twin conditions that the order sought to be revised is erroneous and it is prejudicial to the interests of the revenue, it was not open for the ld. CIT to assume jurisdiction - Further, the ld. CIT while setting aside the assessment ought not to have given specific directions to the Assessing Officer to complete the assessment in a particular manner - Furthermore even after the setting aside assessment, the Assessing Officer having followed all the directions has completed the assessment at the same original amount i.e. Rs. 1,05,970 - Held that the order passed by the ld. CIT under section 263 squarely falls outside the purview of section 263 of the Act and accordingly the same is cancelled - Decided in favour of assessee.
Issues involved:
Appeal against order under section 263 of the Income-tax Act for assessment year 2006-07. Analysis: The appeal was filed against an order passed by the ld. CIT under section 263 of the Income-tax Act, 1961 for the assessment year 2006-07. The ld. CIT observed that the Assessing Officer completed the assessment without obtaining and verifying details of payments received from a foundation in respect of various projects. The ld. CIT initiated proceedings under section 263, which led to the appeal by the assessee challenging the initiation of proceedings and setting aside of the assessment. The assessee contended that the assessment was completed after reasonable enquiry, but the ld. CIT disagreed and set aside the assessment with certain directions. During the hearing, the counsel for the assessee argued that the assessment was completed by the Assessing Officer as per the ld. CIT's directions, maintaining the same income amount. The ld. D.R. supported the ld. CIT's order under section 263. The Tribunal analyzed the case and referred to relevant legal precedents. Citing the case of Jewel of India v. Asstt. CIT, it was emphasized that for the ld. CIT to exercise jurisdiction under section 263, it must be established that the order of the Assessing Officer is both erroneous and prejudicial to the revenue. The Tribunal highlighted that in the absence of a positive finding on both conditions, the ld. CIT exceeded his jurisdiction. Additionally, it was noted that the ld. CIT should not have directed the Assessing Officer on how to complete the assessment. By applying the principles from legal precedents, the Tribunal concluded that the ld. CIT's order under section 263 did not meet the requirements of the law. As the ld. CIT did not establish that the original order was both erroneous and prejudicial to revenue, the Tribunal canceled the ld. CIT's order. The Tribunal held that the ld. CIT's directions were not justified, especially since the Assessing Officer had followed all directions and completed the assessment at the same original amount. Consequently, the Tribunal allowed the assessee's appeal, overturning the ld. CIT's order under section 263. In summary, the Tribunal's detailed analysis focused on the legal requirements for invoking section 263 of the Income-tax Act, emphasizing the necessity of establishing both error and prejudice to revenue in the original assessment order. The Tribunal's decision highlighted the importance of adhering to legal principles and ensuring that jurisdiction is exercised appropriately in matters of tax assessment.
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