2017 (9) TMI 1780 - AT - Income Tax

Revision u/s 263 - Not conducting the proper enquiries or inadequate enquiry - revision with respect to the postal deposit agricultural loans and construction of building in the name of Syamala a/c - Pr.CIT has given direction to the assessing officer to complete the assessment after examination of the details - Held that - From the assessment order it is established that the assessing officer has examined the taxability of interest on postal deposits agricultural loans and construction of building account and taken a conscious decision in respect of agricultural loans and the cost of construction of building that no addition is warranted and the transactions were genuine. With regard to the agricultural loan AO stated that all the evidences were filed and examined. With respect to the construction account the assessing officer examined the details and also obtained the Govt. valuer s report and accepted the cost of construction. Prima facie the assessing officer has conducted the necessary enquires verified the information and taken the conscious decision before completing the assessment. However Pr.CIT was of the view that the assessing officer has not conducted proper enquiries and there was apparent error of reasoning and law but not specified the error committed by the AO and how it was prejudicial to the interest of revenue. Not conducting the proper enquiries or inadequate enquiry does not give jurisdiction to the CIT for taking up the case for revision u/s 263. Pr.CIT should make out case that the assessment order passed by the AO was erroneous and prejudicial to the interest of revenue. There should be an income which is not brought to tax by AO for revision. Pr.CIT except stating that proper enquiries were not conducted by the AO did not specify how the order is erroneous and prejudicial to the interest of the revenue and what was the income understated or under assessed by the AO. Since the assessing officer has conducted the enquiries and taken the decision on all the above issues there is no case of revision. - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing appeal.
2. Revision order u/s 263 regarding postal deposit, Syamala a/c, and agricultural loans.
3. Proper conduct of enquiries by assessing officer.
4. Jurisdiction of Pr.CIT for revision u/s 263.
5. Assessment order validity and restoration.

Condonation of Delay:
The appellant filed an appeal against the Pr.Commissioner of Income Tax's order for the assessment year 2009-10, citing a delay of 18 days due to the sudden demise of the appellant's father. The Tribunal considered the reason for delay and condoned it, admitting the appeal.

Revision Order u/s 263:
The CIT's revision order directed the assessing officer to examine issues related to postal deposit, Syamala a/c, and agricultural loans. The assessing officer passed a reassessment order, adding interest on postal deposit but dropping the other issues. The Pr.CIT found faults in the assessment, stating that proper enquiries were not conducted. The Tribunal observed that the assessing officer had examined the details, conducted necessary enquiries, and made conscious decisions, concluding that the Pr.CIT failed to establish the assessment order's error or prejudice to revenue.

Proper Conduct of Enquiries:
The assessing officer thoroughly examined the taxability of interest on postal deposits, agricultural loans, and construction of the building, finding no addition warranted for agricultural loans and construction costs. The Pr.CIT alleged inadequate enquiries, but the Tribunal noted that the assessing officer had verified information, obtained valuer's reports, and made informed decisions, leading to the appeal's allowance.

Jurisdiction of Pr.CIT for Revision u/s 263:
The Tribunal highlighted that the Pr.CIT's assertion of inadequate enquiries did not grant jurisdiction for revision u/s 263. The Pr.CIT failed to specify errors in the assessment order or how they prejudiced revenue, emphasizing the necessity for unassessed income to justify revision. As the assessing officer had conducted proper enquiries and made informed decisions, the Tribunal set aside the Pr.CIT's order and restored the original assessment order.

Assessment Order Validity and Restoration:
Ultimately, the Tribunal allowed the appellant's appeal, emphasizing that the assessing officer's conduct of enquiries and decision-making process were appropriate, leading to the restoration of the original assessment order. The judgment was pronounced on 13th Sep 2017.