2016 (1) TMI 176 - AT - Income Tax

Revision u/s 263 - Held that - Except for some cosmetic charges, the reasons are adopted verbatim by the CIT. In these circumstances, we find that the decision of Jaipur Bench of the Tribunal in the case of Dharmendra Kumar Bansal vs. CIT (2014 (2) TMI 1210 - ITAT JAIPUR), is squarely applicable to the facts before us. Respectfully following the same, we hold that the revision orders passed by the Ld. CIT are not maintainable for want of valid initiation of the proceedings under section 263 of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the initiation of revision proceedings under section 263 of the I.T. Act based on the recommendations of the A.O.
2. Whether the CIT applied his mind independently before initiating proceedings under section 263.

Detailed Analysis:

1. Legality of the initiation of revision proceedings under section 263 of the I.T. Act based on the recommendations of the A.O.:

The assessee contended that the initiation of revision proceedings under section 263 based on the recommendations of the A.O. was "bad in law." The assessee relied on the judgment in the case of Dharmendra Kumar Bansal vs. CIT (2014) 48 taxman.com 53 (Jaipur), where it was held that the CIT must independently apply his mind before initiating proceedings under section 263. The Tribunal admitted this additional ground of appeal, following the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC), which allows raising legal issues that do not require fresh verification of facts.

2. Whether the CIT applied his mind independently before initiating proceedings under section 263:

To verify the independent application of mind by the CIT, the Tribunal directed the Ld. D.R. to produce the records of the Ld. CIT under section 263. Upon reviewing the records, it was found that the A.O. recommended the initiation of revision proceedings under section 263 on 14.03.2014, and the Ld. CIT issued the notice on the same day. This simultaneous action indicated a lack of independent application of mind by the CIT.

The Tribunal referred to the case of Dharmendra Kumar Bansal vs. CIT, where it was held that the CIT must independently examine the records and apply his mind before initiating proceedings under section 263. In the present case, the CIT's actions mirrored the A.O.'s recommendations without further scrutiny, demonstrating non-application of mind.

The Tribunal found that the CIT had not independently verified the assessment records before issuing the notice under section 263, as the reasons for initiating the proceedings were merely adopted from the A.O.'s recommendations. This lack of independent application of mind rendered the revision orders invalid.

Conclusion:

The Tribunal concluded that the revision orders passed by the Ld. CIT were not maintainable due to the invalid initiation of proceedings under section 263. Consequently, the assessee's appeals for all the assessment years were allowed, and the regular grounds on the merits of the revision became academic and were not adjudicated.

Order:

The assessee's appeals for all the assessment years were allowed, and the order was pronounced in the open Court on 13.11.2015.