2018 (7) TMI 2110 - AT - Income Tax

Revision u/s 263 - assessment orders framed u/s 153C - HELD THAT - It is a settled law that provisions of Sec.263 cannot be invoked to each and every type of mistake or error committed by the AO. Where two views are possible and AO has taken one view with which CIT does not agree, then the order passed by the AO cannot be treated as erroneous and prejudicial to the interest of Revenue unless the view taken by the AO is unsustainable. In the present case, we find that no addition has been made in the case of M/s. Vijay Constructions and Shri Pavan Vijay Jadav in the assessment orders framed u/s 153C - order of Ld.CIT directing to make addition in the hands of the assessee is uncalled for. No material has been placed by the Revenue to demonstrate that the view taken by the AO while passing the order u/s 143(3) r.w.s. 147 was unsustainable in law. In the present case, Ld.CIT was not justified in invoking the provisions of Sec.263 - set aside the order of Ld.CIT, whereby he has set aside the assessment order passed by the AO u/s 143(3) r.w.s. 147 - Thus, the grounds of the assessee are allowed.

Summary

Issues:
1. Delay in filing the appeal and condonation of delay.
2. Invocation of Section 263 by the Commissioner for revision of the assessment order.

Issue 1: Delay in filing the appeal and condonation of delay:
The appeal filed by the assessee was delayed by 198 days. The assessee attributed the delay to being initially advised against filing an appeal by one consultant, leading to a misunderstanding. The assessee requested the delay to be condoned in the interest of justice. The Departmental Representative objected, citing lack of substantiating evidence for the incorrect advice. The Tribunal, after considering the reasons provided, concluded that the delay was satisfactorily explained, and the assessee was not negligent. Emphasizing substantial justice over technicalities, the Tribunal condoned the delay and admitted the appeal for hearing.

Issue 2: Invocation of Section 263 by the Commissioner for revision of the assessment order:
The Commissioner invoked Section 263, noting that the Assessing Officer (AO) failed to consider the source of advances amounting to ?1.05 crore made by the assessee during the financial year 2008-09. The Commissioner directed the AO to add this amount as undisclosed income. However, in related assessments of other entities, including Vijay Constructions and Pavan Vijay Jadhav, no such addition was made. The Tribunal highlighted that Section 263 can only be invoked if the order is both erroneous and prejudicial to revenue. It noted that differing views between the AO and the Commissioner do not render the AO's decision erroneous unless the AO's view is unsustainable. Since no addition was made in related assessments and no evidence proved the AO's decision was legally flawed, the Tribunal concluded that the Commissioner's direction to add ?1.05 crore was unwarranted. Consequently, the Tribunal set aside the Commissioner's order under Section 263, allowing the assessee's appeal.

In conclusion, the Tribunal allowed the appeal, emphasizing the necessity for the Commissioner to demonstrate both error and prejudice to revenue to invoke Section 263. The Tribunal's decision underscored the importance of justifying revisions based on legal grounds and sustainable reasoning, ultimately setting aside the Commissioner's order in this case.