2015 (2) TMI 199 - AT - Income Tax

Scope of revision u/s 263 - issues on which the provisions of section 263 were invoked were not involved in the reassessment order passed under section 147 r.w.s. 143(3) - Held that - Since there is no original assessment in the case in hand and the reassessment is the first order of assessment by the Assessing Officer; therefore, the Assessing Officer was expected to apply his mind on all the issues to see whether the income chargeable to tax has escaped assessment. The Assessing Officer ought to have exercised due diligence and minimum enquiry as expected from ordinary prudent person acting as a quasi judicial authority being an Assessing Officer. Once the assessment has been reopened, the Assessing Officer was expected to follow all the relevant general provisions for framing the assessing as in the case of regular assessment and find out whether any income chargeable to tax has escaped assessment or not. In the case in hand, the assessee has not challenged the disallowance as proposed in the revision order by the CIT on merits but has challenged the revision order only on technical/legal grounds. Therefore, when the claim, which was allowed by the Assessing Officer with out any examination and adjudication, but are not allowable, then the question of taking a possible view does not arise in the case in hand. In a case where the Assessing Officer allowed a claim without examining the records but there is possibility of taking a view in favour of the assessee, then it may be said that the Assessing Officer has taken a possible view. But when the claim of the assessee is not allowable and there is no possibility of two views, then allowing the claim by the Assessing Officer without examining and application of mind would definitely render the assessment order erroneous so far as prejudicial to the interest of revenue and Commissioner has the power to exercise the jurisdictional u/s 263. - Decided against assessee. Review application - Held that - The Tribunal has taken a view after considering the various precedents as well as facts and circumstances of the case in particular. Therefore, it may be at the most an error of judgment but cannot be an apparent error from record which can be rectified under section 254(2). The jurisdiction of the Tribunal under section 254(2) is very limited and circumscribed. It is settled proposition of law that only the mistake apparent on record can be rectified and not the point of dispute requires a long drawn reasoning and argument. A decision on merits after considering the facts and relevant law as well as the contentions of parties given by the Tribunal cannot be reviewed or revised in the garb of rectification of error under section 264(2). Therefore, the Tribunal has no jurisdiction to review or revise its own order passed on the merits of the case and based on detailed reasoning. - Decided against assessee.

Issues Involved:
1. Rectification of order under section 254(2) of the Income Tax Act.
2. Limitation for invoking section 263.
3. Whether intimation under section 143(1) can be treated as an order of assessment.
4. Jurisdiction of the Tribunal under section 254(2).
5. Examination of non-allowable claims by the Assessing Officer during reassessment.

Detailed Analysis:

1. Rectification of order under section 254(2) of the Income Tax Act:
The assessee sought rectification of the Tribunal's order dated 20/1/2012, arguing that the Tribunal's decision was contrary to the Hon'ble Jurisdictional High Court's judgment in CIT vs. M/s. Lark Chemical Ltd. The assessee contended that non-consideration of this decision constituted a mistake apparent from the record, rectifiable under section 254(2) of the Act. The Tribunal, however, found that the issue was already considered in the original order and that the decision could not be reviewed or revised under section 254(2).

2. Limitation for invoking section 263:
The Tribunal discussed the limitation period for invoking section 263, which allows the Commissioner to revise an order passed by the Assessing Officer if it is erroneous and prejudicial to the interests of the revenue. The Tribunal emphasized that the limitation for exercising jurisdiction under sub-section (1) of section 263 is reckoned from the end of the financial year in which the order was passed by the Assessing Officer. The Tribunal concluded that since there was no original assessment in this case, the limitation could not be counted from the date the return was processed under section 143(1).

3. Whether intimation under section 143(1) can be treated as an order of assessment:
The Tribunal referred to the Hon'ble Supreme Court's decision in Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers P. Ltd., which clarified that an intimation under section 143(1) cannot be treated as an order of assessment. Consequently, the return processed under section 143(1) does not constitute an order as stipulated under section 263. The Tribunal also noted that the Hon'ble Jurisdictional High Court's decision in CIT vs. Anderson Marine & Sons P. Ltd. was prior to the Supreme Court's ruling in Rajesh Jhaveri Stock Brokers P. Ltd.

4. Jurisdiction of the Tribunal under section 254(2):
The Tribunal highlighted that its jurisdiction under section 254(2) is limited to rectifying mistakes apparent from the record and does not extend to reviewing or revising its own order based on detailed reasoning. The Tribunal concluded that the contentions raised in the miscellaneous application had already been considered and that the facts could not be reappreciated under section 254(2).

5. Examination of non-allowable claims by the Assessing Officer during reassessment:
The Tribunal noted that the Assessing Officer had failed to examine and adjudicate the issues that were the subject matter of the revision order, rendering the reassessment order erroneous and prejudicial to the interest of revenue. The Tribunal emphasized that once an assessment is reopened, the Assessing Officer is expected to apply due diligence and conduct a thorough examination of all issues. The Tribunal cited the Full Bench decision of the Hon'ble Kerala High Court in CIT vs. Best Wood Industries & Saw Mill, which stated that there is no difference between income escaping assessment and regular assessment in terms of the procedure to be followed by the Assessing Officer.

Conclusion:
The Tribunal dismissed the miscellaneous application, concluding that there was no apparent error on record that could be rectified under section 254(2). The Tribunal reiterated that its jurisdiction under section 254(2) is limited and does not allow for a review or revision of its own order based on detailed reasoning. The order was pronounced in the open court on 30/01/2015.

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