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2014 (7) TMI 1034 - AT - Income TaxJurisdiction u/s 263 Claim of set off of loss - Held that - AO has not discussed anything about the set off of loss claimed by the assessee and the difference in TDS certificate - When the order of the AO is appealable before the CIT(A) and subjected to revision u/s 263 before the Administrative Commissioner, the AO has all the more reasons to disclose the reasons for allowing or disallowing a claim of the assessee - the application of mind shall be reflected in the assessment order as also the reasons for conclusion available in the order itself AO cannot strengthen his order by filing an affidavit or by supplementing by any other document before the appellate or revisional proceedings - The assessment order has to stand on its own leg on the reasons stated in the order itself. Relying upon Commissioner of Income-tax vs Sunil Kumar Goel 2005 (1) TMI 34 - PUNJAB AND HARYANA High Court - this Tribunal is of the considered opinion that the assessing officer has not conducted any proper enquiry with regard to set off of loss claimed by the assessee even though he disallowed the claim of loss in the earlier assessment year. The assessment order does not reflect the application of mind nor does it contain any reason for allowing the claim of the assessee - the Administrative Commissioner has rightly exercised his jurisdiction since the order is not only erroneous but also prejudicial to the interest of the revenue there was no infirmity in the order of the lower authority Decided against Assessee.
Issues Involved:
1. Legitimacy of the Administrative Commissioner's exercise of jurisdiction under Section 263 of the Income-tax Act. 2. Validity of the assessing officer's order allowing the set-off of loss claimed by the assessee. 3. Requirement for the assessing officer to provide a reasoned and speaking order. Detailed Analysis: 1. Legitimacy of the Administrative Commissioner's Exercise of Jurisdiction under Section 263 of the Income-tax Act: The appeal by the assessee contests the Administrative Commissioner's order under Section 263 of the Income-tax Act, which allows the Commissioner to revise any order deemed erroneous and prejudicial to the interest of the revenue. The assessee's representative argued that the assessing officer had consciously allowed the set-off of loss after examining the material on record, thus questioning the necessity of the Administrative Commissioner's intervention. 2. Validity of the Assessing Officer's Order Allowing the Set-off of Loss Claimed by the Assessee: The Administrative Commissioner found discrepancies in the assessee's claims. Specifically, the loss claimed for the assessment year 2008-09 was converted into positive income by the CIT(A) under Section 250, a fact not considered by the assessing officer. Additionally, there was a discrepancy in the brokerage commission receipts reported by the assessee and those shown in Form 16A. The assessing officer's failure to address these issues in the assessment order was deemed erroneous and prejudicial to the revenue's interest. 3. Requirement for the Assessing Officer to Provide a Reasoned and Speaking Order: The Tribunal emphasized that the assessing officer's order should reflect the application of mind and provide reasons for conclusions reached. Citing various judicial precedents, including decisions from the Punjab & Haryana High Court and the Supreme Court, the Tribunal underscored the necessity for administrative authorities exercising quasi-judicial functions to record reasons for their decisions. This requirement ensures transparency, minimizes arbitrariness, and facilitates effective appellate or supervisory review. The Tribunal noted that the assessing officer's order lacked discussion on the set-off of loss and the TDS certificate discrepancy, thereby failing to meet these standards. The Tribunal referenced multiple cases to support its conclusion: - In *Commissioner of Income-tax vs Sunil Kumar Goel*, the necessity of recording reasons for decisions by administrative authorities was highlighted. - In *Toyota Motor Corporation vs Commissioner of Income-tax*, the Supreme Court emphasized the need for the assessing officer to pass a reasoned order, especially when the decision is subject to appeal or revision. - The Allahabad High Court in an unreported judgment expressed shock at the lack of enquiry and reasoning in assessment orders, stressing that failure to provide reasons amounts to a denial of justice. Conclusion: The Tribunal concluded that the assessing officer did not conduct a proper enquiry regarding the set-off of loss claimed by the assessee and failed to provide reasons for allowing the claim. This rendered the assessment order erroneous and prejudicial to the revenue's interest. Consequently, the Tribunal upheld the Administrative Commissioner's exercise of jurisdiction under Section 263 and dismissed the assessee's appeal, confirming the lower authority's order. Result: The appeal of the assessee stands dismissed. The order was pronounced in the open court on 04th July, 2014.
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