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2014 (9) TMI 53 - HC - Income TaxRevision of order u/s 263 Prejudicial to the interest of revenue Held that - CIT has merely observed in its order passed u/s 263 that the AO did not make inquiry as per the direction of CIT(A) but without mentioning any reason - the AO while making de-novo assessment, as per the order of the CIT(A), has made the necessary inquiry pertaining to the sale of agricultural produce by M/s Shiva Bhandar - the assessee has taken land on lease and earned fixed income by selling agricultural produce to M/s Shiva Bhandar who further sold to M/s Food Department - the AO has made necessary inquiry while passing the fresh assessment order in pursuance to the direction issued by the CIT (A) - there was no occasion for the CIT to pass an order u/s 263 of the Act there was no reason to interfere with the order passed by the Tribunal Decided against revenue.
Issues:
1. Appeal against the impugned order passed by the Income Tax Appellate Tribunal. 2. Justification of the Tribunal in setting aside the order of the CIT under Section 263 of the Act. 3. Annulling the Assessment Order passed by the Assessing Officer. 4. Validity of subsequent orders post cancellation of the CIT's order under Section 263. 5. Genuineness of agricultural income shown by the assessee. 6. Compliance with the direction of the CIT by the Assessing Officer. 7. Competency of the CIT to pass an order under Section 263. 8. Interference with the impugned order passed by the Tribunal. 9. Cancellation of the revisional order passed by the CIT under Section 263. 10. Relevance of the order passed by the CIT(A) in the first round. 11. Dismissal of the appeal filed by the Department to cancel the order of the CIT(A). Analysis: The High Court heard appeals filed by the Department against the orders of the Income Tax Appellate Tribunal. The first substantial question of law was whether the Tribunal was justified in setting aside the order of the CIT under Section 263. The second substantial question of law was related to annulling the Assessment Order by the Assessing Officer and the subsequent validity of orders post cancellation of the CIT's order under Section 263. The Court noted that the Assessing Officer accepted the genuineness of the agricultural income shown by the assessee after necessary inquiries. The CIT later set aside the assessment order, citing lack of inquiry. However, the Court found that the Assessing Officer did conduct the required inquiry, and any ambiguity should have led to additions in the hands of the relevant party. The Court held that the CIT's order under Section 263 was not justified, as the necessary inquiries were made by the Assessing Officer as per directions. The Court also addressed the cancellation of the revisional order passed by the CIT under Section 263, upholding the Tribunal's decision. It was noted that the order passed by the CIT(A) in the first round was not relevant to the current proceedings. The Court dismissed the appeal filed by the Department, stating it had academic value and need not be adjudicated on merits. Ultimately, the Court ruled in favor of the assessee and against the Department, leading to the dismissal of both appeals filed by the Department.
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