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2013 (6) TMI 476 - AT - Income TaxJurisdiction power u/s 263 by CIT(A) - Commuted value of pension paid directly to the retired Employees paid by direct debit to the P&L A/c have been disallowed on account of the fact that it was not allowable as an expenses u/s. 37 (General Clause), Contribution to Pension Fund of Rs. 25 crores was made in violation to Rule 3 of Part 8 of IVth Schedule and Provision for gratuity payment was made being in violation of 40A(7)(a) - Held that - As it was not shown that the AO did examine the issues pointed out by CIT and has taken a plausible view on them. Referring to the decision of Toyoto Motor Corporation (2008 (4) TMI 231 - DELHI HIGH COURT) wherein held that the proceedings before the AO are quasi judicial proceedings and a decision taken by the AO in this regard must be supported by reasons also being approved by the Hon ble Supreme Court in(2008 (8) TMI 56 - SUPREME COURT) with the observation that AO should pass a reasoned order. These decisions clearly bring out that the assessment order should be passed with or contain proper reasons on various issues. In the instant case, admittedly, no discussion in the assessment order on the issues pointed out by CIT. Thus no infirmity in the revision order passed by CIT and accordingly upheld. Against assessee.
Issues:
Challenging revision order u/s. 263 for AY 2007-08. Analysis: The appeal challenged a revision order dated 24-03-2011 by the Ld. CIT Thrissur u/s. 263 of the Income Tax Act for the assessment year 2007-08. The key issues highlighted by the Ld. CIT were the commuted value of pension, contribution to the pension fund, and provision for gratuity payment. The Ld. CIT initiated revision proceedings based on the lack of inquiry by the Assessing Officer on these critical issues, leading to the assessment order being considered erroneous and prejudicial to the revenue's interests. The Tribunal referred to the decision in the case of Malabar Industrial Co. and the scope of section 263 as discussed in the case of Grasim Industries Ltd. v CIT. The Tribunal emphasized the necessity of the assessing officer to make inquiries on vital issues determining the total income. Quoting the Supreme Court, the Tribunal highlighted that an order would be considered erroneous if there is an incorrect assumption of fact or an incorrect application of law, or if the order is passed without the application of mind. The Tribunal also referenced the decision in the case of Toyoto Motor Corporation, emphasizing the importance of the assessing officer passing reasoned orders in quasi-judicial proceedings. In the absence of any evidence showing that the assessing officer examined the issues raised by the Ld. CIT and took a plausible view, the Tribunal upheld the revision order. The Tribunal noted that the lack of discussion in the assessment order on the issues pointed out by the Ld. CIT indicated a lack of proper reasoning. The Tribunal concluded that the issues highlighted by the Ld. CIT could impact tax computation and, if decided against the assessee, would render the assessment order prejudicial to the revenue's interests. Consequently, the Tribunal found no infirmity in the revision order and dismissed the appeal filed by the assessee. In summary, the judgment focused on the importance of the assessing officer conducting thorough inquiries on critical issues, the necessity of passing reasoned orders in quasi-judicial proceedings, and the implications of failing to address key issues in the assessment order. The decision upheld the revision order under section 263, emphasizing the significance of proper reasoning and examination of issues affecting tax computation.
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