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2016 (5) TMI 1187 - AT - Income TaxRevision u/s 263 - amount received from the insurance company as well as the clients - Held that - The crux of the issue is that the fact that there was no loss of revenue has to be conclusively demonstrated. In the present case, one cannot come to a conclusion that there was no loss of revenue without verification of the assessment records for the assessment years 2006-07, 2007-08 and 2008-09. The ld.CIT had only set aside the issue to the file of the AO to verify this fact from the assessment records for the years 2006-07, 2007-08 and 2008-09. Hence, the ratio laid down by the Hon ble Karnataka High Court in the case of Infosys Technologies Ltd.(2012 (1) TMI 76 - KARNATAKA HIGH COURT ) is squarely applicable to the facts of the case. Where the issue was not examined by the AO the ld.CIT was justified to remand the issue to the file of the AO for de novo verification. Assessee-company could not demonstrate before us that this issue was examined by the AO during the course of assessment proceedings. Hence, we are of the considered opinion that the order passed by the ld.CIT , in exercise of his power vested under the provisions of sec.263 of the Act, is proper and valid in law and the ld.CIT is justified in assuming jurisdiction u/s 263 of the Act. - Decided against assessee.
Issues:
1. Jurisdiction under section 263 of the Income Tax Act based on the assessment order passed by the Commissioner of Income-tax. 2. Whether the order passed by the Commissioner of Income-tax was erroneous and prejudicial to the interest of revenue. 3. Verification of transactions related to amounts received from insurance companies and clients by the assessee-company. 4. Application of mind by the Assessing Officer during the assessment proceedings. 5. Interpretation of legal principles regarding jurisdiction under section 263 of the Act based on relevant case laws. Analysis: Issue 1: Jurisdiction under section 263 The appeal was filed by the assessee-company against the order passed under section 263 of the Income Tax Act by the Commissioner of Income-tax for the assessment year 2008-09. The primary contention was whether the Commissioner had the jurisdiction to assume authority under section 263 based on the assessment order passed. Issue 2: Erroneous and prejudicial order The grounds of appeal raised by the assessee-company challenged the order passed by the Commissioner under section 263, arguing that the order was bad in law and void ab initio. The company contended that the conditions precedent for exercising jurisdiction under section 263 were not satisfied, and hence, the order should be quashed. Issue 3: Verification of transactions The dispute revolved around the amounts received by the assessee-company from insurance companies and clients, which were not reflected in the financial statements. The Commissioner issued a show cause notice questioning the non-inclusion of these amounts in the financials. The company argued that the transactions were duly reflected in the books of account, and the net effect was shown in the Profit & Loss account over a period of three years. Issue 4: Application of mind by Assessing Officer The contention arose regarding the application of mind by the Assessing Officer during the assessment proceedings. It was observed that the AO did not mention the issue in the assessment order, leading to a lack of verification. The non-application of mind by the AO was considered a basis for the Commissioner to assume jurisdiction under section 263. Issue 5: Legal principles and case laws The Tribunal considered various legal principles and case laws to determine the validity of the Commissioner's order under section 263. Reference was made to the decision of the Supreme Court in the case of Malabar Industrial Co. vs. CIT regarding non-application of mind by the AO conferring jurisdiction under section 263. The Tribunal also analyzed the applicability of relevant High Court decisions in similar contexts to justify the Commissioner's exercise of power under section 263. In conclusion, the Tribunal dismissed the appeal filed by the assessee-company, upholding the validity of the order passed by the Commissioner under section 263 of the Income Tax Act. The decision was based on the findings related to the verification of transactions, application of mind by the Assessing Officer, and the legal principles governing the jurisdiction under section 263.
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