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2009 (11) TMI 55 - HC - Income TaxRevision by Commissioner u/s 263 ITAT quashed the order under Section 263 of the Income Tax Act, 1961 passed by the Chief Commissioner of Income Tax (OSD) by holding that neither any specific defect in the assessment order has been pointed out in detail nor any such finding to this effect has been recorded Tribunal further hold that merely subjective difference in opinion of the Assessing Officer and the Commissioner of Income Tax cannot be termed as erroneous - held that - is well settled that power under Section 263 could be exercised only if the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue. From the finding of the Tribunal, it is clear that the order of the Assessing Officer had not been shown to be erroneous by the Commissioner and in such a situation, the Tribunal rightly quashed the order of the CIT (A). decided in favor of assessee.
Issues:
1. Appeal under Section 260A of Income Tax Act against the order of Income Tax Appellate Tribunal. 2. Validity of the order under Section 263 of the Income Tax Act. 3. Exercise of power under Section 263 based on error and prejudice to revenue. 4. Assessment by Assessing Officer and intervention by CIT (A) and Tribunal. Issue 1: Appeal under Section 260A of Income Tax Act against the order of Income Tax Appellate Tribunal The revenue filed an appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Delhi Bench 'H' New Delhi, for the assessment year 2001-02. The appeal aimed to raise substantial questions of law regarding the justification of quashing the order under Section 263 of the Income Tax Act. The questions focused on the assessment order's alleged errors and prejudice to the revenue's interests. Issue 2: Validity of the order under Section 263 of the Income Tax Act The Commissioner of Income Tax (CIT) exercised power under Section 263 to set aside the assessment made by the Assessing Officer and directed a fresh assessment. However, the Tribunal held that there was no specific defect pointed out by the Commissioner that warranted interference under Section 263. The Tribunal emphasized that the assessee had provided details of the construction account and the source of funds, including bank statements. It was noted that the Commissioner did not identify any discrepancies in these details before initiating further litigation. Issue 3: Exercise of power under Section 263 based on error and prejudice to revenue The High Court reiterated that the power under Section 263 could only be exercised if the Assessing Officer's order was found to be both erroneous and prejudicial to the revenue's interests. In this case, the Tribunal's findings indicated that the Commissioner failed to demonstrate any error in the Assessing Officer's order. As a result, the Tribunal rightly quashed the order of the CIT (A) as it did not meet the criteria of being erroneous and prejudicial to the revenue. Issue 4: Assessment by Assessing Officer and intervention by CIT (A) and Tribunal The assessment under section 143(3) was initially conducted by the Assessing Officer, followed by the intervention of the CIT (A) who set aside the assessment for fresh consideration. However, the Tribunal's decision highlighted the lack of specific defects identified by the Commissioner, leading to the conclusion that the order was not erroneous. The Tribunal's observations emphasized the assessee's submission of construction account details and fund sources, including bank statements, which were not found to be discrepant. Consequently, the High Court dismissed the appeal, stating that no substantial question of law arose for consideration. This comprehensive analysis of the judgment delves into the various issues involved, including the appeal process, validity of the order under Section 263, the exercise of power based on error and prejudice, and the assessment process by different authorities.
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