2013 (3) TMI 12 - HC - Income Tax

Jurisdiction u/s 263 used by CIT(A) - true income of paddy husk was not disclosed and the AO has not examined the issue - ITAT set aside the order of CIT(A) - Held that - No substantial question of law is involved in the appeal as Sri Chopra, learned counsel for the department could not point out as to how the finding recorded by the Tribunal is in any manner perverse or against the law. The Assessing Officer had conducted the proper inquiry and preferred to accept the explanation that paddy husk was utilized in the boiler, the Tribunal has committed no error in setting aside the order passed by the Commissioner of Income Tax.

Summary

Issues:
1. Validity of the assessment order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act.
2. Justification of the Income Tax Appellate Tribunal's decision to set aside the order of the Commissioner of Income Tax.
3. Examination of substantial questions of law proposed in the memo of appeal.

Analysis:

1. The High Court reviewed an appeal against the order passed by the Income Tax Appellate Tribunal for the assessment year 2005-06. The case involved an assessee who was a rice miller and utilized paddy husk as fuel in the boiler. The Commissioner of Income Tax set aside the assessment order under Section 143(3) of the Act, citing errors and lack of proper inquiry. However, the Tribunal overturned this decision, stating that the Assessing Officer had conducted a necessary and proper inquiry and accepted the explanation provided by the assessee regarding the use of paddy husk.

2. The Tribunal's decision to set aside the order of the Commissioner of Income Tax was challenged on the grounds that the true income was not disclosed, no sale or closing stock of husk was shown, and there was no examination of the issue of purchasing husk from the market. However, the High Court found that the Tribunal's decision was not erroneous. The Assessing Officer had conducted a proper inquiry and accepted the explanation regarding the use of paddy husk, leading to the dismissal of the appeal.

3. The substantial questions of law raised in the memo of appeal were examined by the High Court. These questions pertained to the disclosure of true income, the absence of husk purchase records, and the failure of the Assessing Officer to inquire into these aspects. The Court concluded that no substantial question of law was involved in the appeal. The Tribunal's findings were upheld as not being perverse or against the law, as the Assessing Officer had conducted a proper inquiry and the explanation provided by the assessee was accepted.

In conclusion, the High Court dismissed the appeal summarily, finding no merit in challenging the Tribunal's decision to set aside the Commissioner of Income Tax's order under Section 263 of the Income Tax Act.