9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (10) TMI 874 - AT - Income TaxRevision of Order prejudicial to Revenue as per Section 263 Disallowance u/s 14A r.w. Rule 8D of I.T. Rules - Held that - It cannot be said that assessing officer has taken a possible view in the matter as the same has been done without making any inquiry as to how figure of disallowance has been worked out by the assessee - The law is settled that if AO had passed an order without properly conducting the inquiry, the same can be held to be erroneous and prejudicial to the interest of revenue - AO has accepted the suo moto disallowance u/s. 14A of the Act without going into the details as to how this figure was worked out by the assessee and no query being raised by the AO during the assessment proceedings in this regard, CIT has rightly invoked the provision of Section 263 of the Act - the order passed by Ld. CIT u/s. 263 upheld Decided against Assessee.
Issues Involved:
1. Legality of invoking Section 263 of the Income Tax Act, 1961. 2. Adequacy of Assessing Officer's inquiry regarding disallowance under Section 14A read with Rule 8D. Issue-wise Detailed Analysis: 1. Legality of Invoking Section 263 of the Income Tax Act, 1961: The core issue revolved around whether the Commissioner of Income Tax (CIT) was justified in invoking Section 263 of the Income Tax Act, 1961, which empowers the CIT to revise any order passed by the Assessing Officer (AO) if it is considered erroneous and prejudicial to the interests of the Revenue. The CIT issued a show cause notice under Section 263, highlighting that the AO's assessment order dated 29/10/2010 was erroneous because it did not properly disallow expenses under Section 14A read with Rule 8D, leading to an underassessment of income by Rs. 1,12,79,434/-. The assessee argued that the AO had considered all relevant details and made a proper assessment, and that the CIT was merely substituting his judgment for that of the AO, which is not permissible under Section 263. 2. Adequacy of Assessing Officer's Inquiry Regarding Disallowance under Section 14A read with Rule 8D: The assessee contended that the AO had made adequate inquiries regarding the disallowance under Section 14A, as evidenced by the detailed questionnaire issued during the assessment proceedings and the subsequent replies and workings provided by the assessee. The AO had accepted the assessee's suo moto disallowance of Rs. 9,45,960/- under Section 14A. However, the CIT found that the AO did not make any further inquiry into the correctness of this disallowance and concluded that the disallowance should have been Rs. 1,22,25,994/- as per Rule 8D. The Tribunal noted that the AO had indeed issued a notice and received a reply from the assessee regarding the disallowance under Section 14A, but no further inquiry was conducted to verify the correctness of the disallowance. The Tribunal upheld the CIT's invocation of Section 263, stating that the AO's failure to properly inquire into the disallowance made the assessment order erroneous and prejudicial to the interests of the Revenue. The Tribunal emphasized that the law is settled on the point that an order passed without proper inquiry can be revised under Section 263. Conclusion: The Tribunal dismissed the assessee's appeal, affirming the CIT's order under Section 263. It was concluded that the AO had not conducted a proper inquiry into the disallowance under Section 14A, and therefore, the CIT was justified in revising the assessment order to protect the interests of the Revenue. The Tribunal held that the CIT had rightly invoked the provisions of Section 263, and the AO's order was indeed erroneous and prejudicial to the interests of the Revenue.
|
