2015 (7) TMI 654 - AT - Income Tax

Revision u/s 263 by CIT(A) - Held that - From the para from the order of learned CIT u/s 263 of the Act, it is seen that no categorical finding is given by learned CIT as to what is the error in the assessment order and how the assessment order is prejudicial to the interest of Revenue. He has simply stated that the Assessing Officer has over looked certain facts/expenses/sources of income/transaction of income in bank account which should have been examined properly. Apart from this, we find that for all the points raised by learned CIT in his notice u/s 263, reply has been furnished by the assessee before learned CIT and when we consider the same, we find that the assessment order is neither erroneous nor prejudicial to the interest of Revenue and therefore, we hold that the order passed by learned CIT u/s 263 is not maintainable. We, therefore, quash the order passed by learned CIT. - Decided in favour of assessee.

Summary

Issues involved:
1. Assessment order challenged under section 263 by the assessee.
2. Allegations of overlooking facts, expenses, and income transactions by the Assessing Officer.
3. Discrepancies in TDS deductions and payments to contractors.
4. Alleged differences in bank balances and income calculations.
5. Failure to examine payable expenses and reconciling bank receipts.
6. Lack of proper opportunity provided during assessment proceedings.

Issue 1: Assessment order challenged under section 263 by the assessee
The appeal was directed against the order passed by the Principal Commissioner of Income Tax, challenging the assessment for the year 2010-2011 under section 263 of the Income Tax Act. The grounds raised by the assessee included contentions that the order was passed without valid reasons and that the assessing officer had duly verified all sources of income, making the order void-ab-initio.

Issue 2: Allegations of overlooking facts, expenses, and income transactions
The assessee argued that the assessing officer had not overlooked any facts, expenses, or sources of income during the assessment proceedings. Detailed explanations, submissions, and documentary proof were provided to support this claim. The contention was that the order under section 263 was devoid of merit and based on conjectures and surmises, lacking any valid grounds for additions.

Issue 3: Discrepancies in TDS deductions and payments to contractors
Regarding TDS deductions and payments to contractors, the assessee clarified that certain payments made were for the purchase of materials and not subject to TDS deductions under section 194C. The argument was that the assessing officer had erred in alleging discrepancies in TDS amounts and payments to contractors, which were duly explained and supported with relevant details.

Issue 4: Alleged differences in bank balances and income calculations
The contention was that discrepancies in bank balances and income calculations were unfounded. The assessee provided evidence to show that the bank statement and certificates reflected accurate balances, contrary to the claims made by the Principal Commissioner. It was argued that the order was biased and based on irrelevant considerations.

Issue 5: Failure to examine payable expenses and reconciling bank receipts
The assessing officer was accused of not examining payable expenses adequately and failing to reconcile bank receipts properly. The assessee maintained that all payable expenses, including amounts to labor, professional charges, and salaries, were duly accounted for. The discrepancies highlighted by the Principal Commissioner were refuted with detailed explanations and supporting evidence.

Issue 6: Lack of proper opportunity provided during assessment proceedings
The assessee contended that adequate opportunities were not provided during the assessment proceedings to address the reasons relied upon by the assessing officer for making additions. It was argued that the assessment was conducted without affording the appellant a fair chance to comply with the reasons cited, leading to a challenge against the assessment process.

In the final judgment, the Appellate Tribunal found that the order passed by the Principal Commissioner under section 263 was not maintainable. The Tribunal noted that the assessing officer had not erred in the assessment order, and the contentions raised by the Principal Commissioner lacked merit. As a result, the order under section 263 was quashed, and the appeal of the assessee was allowed.