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2015 (9) TMI 505 - HC - Income TaxRevision u/s 263 - whether Tribunal holding that the order of the CIT(A) under section 263 satisfies the precondition of prejudice to the revenue is proper and correct? - Held that - Commissioner held that the Assessing Officer has passed Annexure A order without any application of mind and without conducting any enquiry and also without even calling for or verifying the records. The Commissioner has also found that hire charges were paid but no tax has been deducted. Admittedly, the assessment order does not reflect any reason for the conclusions of the Assessing Officer. These findings of the Commissioner fully justified his conclusion that Annexure A order was erroneous in as much as it is prejudicial to the Revenue. In our view, the findings of the Commissioner satisfies the requirements of section 263 of the IT Act and therefore, the order of the Tribunal confirming Annexure A order of the Commissioner passed under section 263 does not merit interference. - Decided in favour of revenue.
Issues Involved:
Appeal against Income Tax Appellate Tribunal order under section 263 of the Income Tax Act. Analysis: 1. Background: The appeal was filed by the assessee challenging the order passed by the Income Tax Appellate Tribunal, Cochin Bench in ITA.No.342/Coch/2011. The assessment for the year 2006-07 was initially completed accepting the loss returned by the assessee. Subsequently, the Commissioner of Income Tax initiated proceedings under section 263, setting aside the assessment order for detailed examination. 2. Main Question of Law: The main issue raised in the appeal under section 260A of the IT Act was whether the decision of the Tribunal holding that the order of the Commissioner under section 263 satisfies the precondition of prejudice to the revenue was proper and correct. 3. Arguments: The appellant's senior counsel argued that the conditions for invoking section 263 were not met, citing the requirement that the order of the Assessing Officer must be both erroneous and prejudicial to the interests of the Revenue. On the other hand, the Revenue's senior standing counsel contended that the Commissioner correctly concluded that the assessment order was erroneous and prejudicial to Revenue's interests. 4. Legal Provisions: Section 263(1) of the IT Act empowers the Principal Commissioner or Commissioner to revise an order if it is found to be erroneous and prejudicial to the interests of the revenue. The Supreme Court's judgment in Malabar Industrial Co. Ltd. case laid down the conditions for invoking this section, emphasizing the need for both error and prejudice to Revenue. 5. Court's Analysis: The Court analyzed the Commissioner's order under section 263, where it was found that the Assessing Officer had not applied his mind while allowing certain expenses, leading to a high quantum of loss to be carried forward. The Commissioner's findings indicated errors in the assessment order, justifying the exercise of jurisdiction under section 263. 6. Decision: Based on the analysis of the legal provisions and the Commissioner's findings, the Court dismissed the appeal, upholding the Tribunal's decision confirming the Commissioner's order under section 263. The Court concluded that the order was erroneous and prejudicial to the Revenue's interests, justifying the revision under section 263. In conclusion, the Court's judgment upheld the Commissioner's order under section 263, emphasizing the importance of meeting the twin conditions of error and prejudice to Revenue for invoking such provisions.
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