9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (12) TMI 426 - AT - Income TaxRevision of order u/s 263 by CIT Grant of relief u/s 80P - Assessee company is Co-op Bank registered under Karnataka State Co-operative Society Act 1956 Held that - The Commissioner has exercised his power u/s. 263 in respect of order passed by AO u/s. 143(3) The Commissioner was of the view that there was a lack of examination and lack of application of mind by the AO as per provisions of Section 80P(2)(d) in case of specified Co-operative Society - assessee is not entitled for exemption of dividend income u/s. 80P(2)(d) as the assessee is a Co-operative Bank -as per the provisions the assessee is not entitled for such exemption - The Commissioner of Income Tax in his jurisdiction u/s. 263 makes it clear that pre-requisite for exercise of jurisdiction by Commissioner Suo Motu under it, is that the order of Income Tax Officer is erroneous in so far as it is prejudicial to the interest of revenue - action U/s. 263 would be valid though he has not indicated the extent of understatement of income tax act in CIT vs. Assam Tee House 2012 (6) TMI 617 - Punjab and Haryana High Court it has been held that the AO did not undertake verification of closing stock and purchase and did not check the books of accounts - where the assessee is following the mercantile system of accounting took the interest as liability, when there was no evidence that such liability has accrued during the year, but such liability had been allowed by the AO it is a case where the deduction has been wrongly allow the jurisdiction u/s. 263 was justified - the similar issue has been decided in Malabar Industrial Co. Ltd v. CIT 2000 (2) TMI 10 - SUPREME Court - the AO has not made enquiry and he has not applied his mind - Section 22A is similarly to Section 263 of the Income Tax Act - on the ground that the AO has jurisdiction to include the turn over by revising the assessment or reopening the assessment order Decided against assessee.
Issues Involved:
1. Jurisdiction of the Commissioner under Section 263 of the Income Tax Act. 2. Entitlement of the assessee to claim exemption under Section 80P(2)(d) of the Income Tax Act. 3. Validity of the Assessing Officer's order in allowing the exemption of dividend income. Issue-wise Detailed Analysis: 1. Jurisdiction of the Commissioner under Section 263 of the Income Tax Act: The primary issue was whether the Commissioner had the jurisdiction to revise the assessment order under Section 263. The assessee argued that the Commissioner lacked jurisdiction as the assessment order could only be amended under Section 147 for escapement of income. The Commissioner, however, found that the Assessing Officer's order was erroneous and prejudicial to the interest of revenue because it failed to examine the exemption claim of dividend income under Section 80P(2)(d). The Tribunal upheld the Commissioner's jurisdiction, noting that Section 263 allows the Commissioner to revise orders that are erroneous and prejudicial to the revenue. The Tribunal cited the Supreme Court's decision in Malabar Industrial Co. Ltd. v. CIT, which clarified that an order is erroneous if it is based on an incorrect assumption of facts or incorrect application of law, and it is prejudicial if it results in a loss of revenue. 2. Entitlement of the Assessee to Claim Exemption under Section 80P(2)(d): The assessee, a Co-operative Bank, claimed exemption on dividend income received from other co-operative societies under Section 80P(2)(d). The Commissioner contended that Section 80P(4), effective from 1.4.2007, excludes co-operative banks from claiming such exemptions. The Tribunal agreed with the Commissioner, stating that Section 80P(4) explicitly denies the benefits of Section 80P to co-operative banks. Therefore, the assessee, being a co-operative bank, was not entitled to claim exemption on dividend income under Section 80P(2)(d). 3. Validity of the Assessing Officer's Order in Allowing the Exemption of Dividend Income: The Tribunal examined whether the Assessing Officer's order, which allowed the exemption of Rs. 62,18,000 as dividend income, was valid. The Tribunal found that the Assessing Officer did not properly scrutinize the exemption claim and failed to apply the provisions of Section 80P(4). The lack of examination and application of mind by the Assessing Officer rendered the assessment order erroneous and prejudicial to the revenue. The Tribunal upheld the Commissioner's decision to enhance the income by Rs. 62,18,000 and initiate penalty proceedings, emphasizing that the Assessing Officer's failure to make necessary inquiries justified the revision under Section 263. Conclusion: The Tribunal dismissed the appeal filed by the assessee, affirming the Commissioner's jurisdiction under Section 263 to revise the erroneous assessment order. It concluded that the assessee, being a co-operative bank, was not entitled to claim exemption on dividend income under Section 80P(2)(d) due to the overriding provisions of Section 80P(4). The Tribunal found the Assessing Officer's order allowing the exemption invalid due to the lack of proper examination and application of law. The decision was pronounced in open court on 28.11.2014.
|
