9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 2339 - AT - Income TaxRevision u/s 263 - Scope of phrase prejudicial to the interest of the Revenue u/s. 263 - No or inadequate enquiry - HELD THAT - AO has mentioned declaration total loss and book loss u/s 115JB in its return filed on 29/09/2011, which was processed u/s 143(1). Later on the case of the assessee was selected for scrutiny under CASS, therefore, statutory notice under section 143(2) and thereafter notice u/s 142(1) along with questionnaire were issued to the assessee. The assessee attended the proceedings from time to time and furnished the necessary details and the same were examined and placed on record. AO has also mentioned the nature of activities done by the assessee and has also mentioned disallowance of interest income on FD from Banks and interest on advances given to the contractor assessment order, it has been mentioned that the details furnished by the assessee, during scrutiny proceedings were verified and found that the assessee reduced as sum from WIP and the sources of income etc. AO has also made discussion with respect to various interest income which were transferred to WIP and the assessee was asked to provide justification as to why the same should not be considered as income. The assessee was also asked to provide the working of 80IA of the Act and revised working of deduction u/s 80IA considering the eligibility of interest income and deduction. Subsequently, the assessee was show cause as to why the income from other sources of SEZ unit should not be disallowed for working of profit of SEZ unit and taxed separately. Discussion has also been made about rent from building and lease premium of land located at SEZ and held that it was income from other sources, not eligible for deduction under section 80IAB - Discussion has also been made with respect to disallowance u/s 14A r.w. Rule- 8D of the Rules and thereafter calculation has been made. The assessment was framed after examination/verification of facts and on application of mind, therefore, the contention of the Revenue that due verification was not made is not substantiated from facts. To sum up the issue, admittedly, an incorrect assumption of fact or an incorrect application of law would satisfy the requirement of order being erroneous u/s. 263 of the Act. The phrase prejudicial to the interest of the Revenue u/s. 263 of the Act, has to be read in conjunction with the expression erroneous order by the Assessing Officer. Every loss of Revenue as a consequence of assessment order cannot be termed as prejudicial to the interest of Revenue, meaning thereby, prejudice must be prejudice to the Revenue administration. We set aside the order of the ld. Principal Commissioner invoking of revisional jurisdiction u/s 263 of the Act, being not within the parameters of the law, as the assessment was framed by the AO after considering necessary details filed by the assessee and on examination of the same. It is not the case that the assessment was framed in a hasty manner or without considering the factual matrix/necessary details. The jurisdiction u/s 263 of the Act could not be assumed merely stating that adequate enquiry was not made by the AO - Appeal of the assessee is allowed.
Issues Involved:
1. Validity of invoking revisional jurisdiction under section 263 of the Income Tax Act, 1961. 2. Examination of the assessee's claim for deduction under section 80IAB. 3. Alleged calculation errors in the assessment order. 4. Adequacy of enquiries made by the Assessing Officer during the assessment. Issue-Wise Detailed Analysis: 1. Validity of invoking revisional jurisdiction under section 263 of the Income Tax Act, 1961: The assessee challenged the invocation of revisional jurisdiction under section 263 by the Principal Commissioner of Income Tax (Pr. CIT), arguing that the assessment order was neither erroneous nor prejudicial to the interests of the revenue. The Tribunal analyzed the relevant provision and the amendment made by the Finance Act, 2015, which inserted Explanation 2 to section 263, effective from 01/06/2015. The Tribunal emphasized that revisional jurisdiction can be invoked only when the order is passed without making necessary inquiries or verification, allowing any relief without inquiring into the claim, not in accordance with any order, direction, or instruction issued by the Board under section 119, or not in accordance with any decision prejudicial to the assessee rendered by the jurisdictional High Court or Supreme Court. 2. Examination of the assessee's claim for deduction under section 80IAB: The assessee argued that the deduction under section 80IAB was consistently allowed in previous assessment years and should not be disallowed in the current year. The Tribunal noted that the Assessing Officer (AO) had made due inquiries and examined the details related to the deduction claimed under section 80IAB. The AO had considered the details and explanations provided by the assessee, and the relief was granted after making due inquiries. The Tribunal found no merit in the assertion made on behalf of the Revenue that the assessment was made without making due inquiry. 3. Alleged calculation errors in the assessment order: The assessee contended that any calculation errors could be rectified under section 154 of the Act and should not be a subject matter of section 263. The Tribunal agreed with the assessee, stating that calculation errors do not justify invoking revisional jurisdiction under section 263. The Tribunal emphasized that the AO had examined the details and made necessary calculations, and any errors could be corrected through rectification proceedings. 4. Adequacy of enquiries made by the Assessing Officer during the assessment: The Tribunal analyzed the scope of revision under section 263 and referred to various judicial pronouncements, including the decisions in Malabar Industrial Co. Ltd. vs CIT (243 ITR 83) and CIT vs Sunbeam Auto Ltd. (332 ITR 167). It was held that there is a distinction between "lack of inquiry" and "inadequate inquiry." If there is an inquiry, even if inadequate, it would not give occasion to the CIT to pass an order under section 263 merely because he has a different opinion in the matter. The Tribunal found that the AO had made due inquiries, examined the necessary details, and applied his mind to the facts of the case. Therefore, the assessment order could not be termed as erroneous or prejudicial to the interests of the revenue. Conclusion: The Tribunal concluded that the assessment order was passed after due inquiries and verification, and the AO had applied his mind to the facts of the case. The Tribunal set aside the order of the Pr. CIT invoking revisional jurisdiction under section 263, as it was not within the parameters of the law. The appeal of the assessee was allowed, and the revisional order was quashed.
|
