2018 (11) TMI 1811 - AT - Income Tax

Revision u/s 263 - AO could not receive the verification in respect of the source of receipt from 10 parties from whom the assessee has taken advances - HELD THAT - AO who is empowered by the Act to assess a subject within a prescribed time period has first assessed the assessee and later after passage of time has taken up a proposal with the CIT to exercise his revisional jurisdiction cannot be countenanced for the simple reason that when in the first place the AO noticing that he failed to properly enquire before assessing the assessee within the time limit prescribed by the statute cannot be allowed to get fresh innings to reassess because it was his duty to enquire properly within the time limit prescribed by the statute. The very invocation of revisional jurisdiction on the proposal of the AO itself is bad in law and for coming to such a decision we rely on the decision of the Tribunal in the case of Shantai Exim Ltd. 2016 (2) TMI 1281 - ITAT AHMEDABAD and Ashok Kumar Shivpuri 2014 (11) TMI 1176 - ITAT MUMBAI - we quash the very usurpation of jurisdiction u/s. 263 by CIT - Decided in favour of assessee.

Summary

Issues: Delay in filing appeal, Exercise of revisional jurisdiction under section 263 of the Income-tax Act.

Delay in filing appeal:
The appeal was filed with a delay of 1124 days, and the reasons provided included the dissolution of the partnership firm, partners being separated and unreachable, and wrong advice from a partner. The Tribunal, after perusing the affidavit, decided that the delay should be condoned in the interest of justice and fair play, allowing the appeal for hearing.

Exercise of revisional jurisdiction under section 263 of the Income-tax Act:
The CIT exercised revisional jurisdiction under section 263 based on a proposal from the AO, citing the assessment order as erroneous and prejudicial to the interest of revenue due to lack of verification of advances received from 10 parties. The Tribunal analyzed section 263, emphasizing that the power to revise orders prejudicial to revenue is vested with the Commissioner, not the AO. The Tribunal referred to relevant case laws to support the contention that the AO cannot trigger revisional jurisdiction after failing to properly inquire within the prescribed time limit. Consequently, the Tribunal quashed the usurpation of jurisdiction under section 263 by the CIT, allowing the appeal filed by the assessee.

In conclusion, the Tribunal allowed the appeal by the assessee, highlighting the importance of adhering to the statutory provisions regarding the exercise of revisional jurisdiction and emphasizing the distinct roles of the AO and the Commissioner in the assessment process.