2019 (1) TMI 1211 - HC - Income Tax

Revision u/s 263 - high share premium as well as the high closing stock - Held that - AO had made necessary inquiry/ verification with regard to both the issues namely high share premium as well as the high closing stock. Moreover, as noted this inquiry was done by the AO after having obtained the necessary approval from the Chief Commissioner of Income Tax. Infact this itself is an evidence of application of mind of the AO, followed by notice to the respondent and verification of the response of the respondent. The aforesaid facts while exercising the powers of revision has been completely ignored the CIT. The impugned order of the Tribunal correctly held following the decision of this Court in Gabrial (I) Ltd.(1993 (4) TMI 55 - BOMBAY HIGH COURT) that the Assessment Order dated 3rd July, 2013 cannot be termed erroneous simply because he may have written the order move elaborately or taken a different view on facts (which is not perverse).

Summary

Issues involved:
Challenge to order under Section 263 of the Income Tax Act for Assessment Year 2010-11.

Detailed Analysis:
1. Issue of Revision under Section 263: The case involves a challenge to the order dated 28th October, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal) under Section 260A of the Income Tax Act, 1961. The respondent-assessee, engaged in share-trading, had its income for Assessment Year 2010-11 assessed at 'Nil' under Section 143(3) of the Act. The Commissioner of Income Tax (CIT) revised the assessment order dated 3rd January, 2013 under Section 263 of the Act on the grounds of lack of inquiry into the genuineness of share capital investors. The CIT set aside the assessment order and directed a fresh assessment by the Assessing Officer.

2. Application of Mind by Assessing Officer: The Tribunal, in its order dated 28th October, 2015, found that the Assessing Officer had conducted necessary inquiries and verifications regarding the high share premium and closing stock issues. The Assessing Officer had sought explanations from the respondent, which were duly provided and verified. The Tribunal noted that the CIT had ignored the evidence of due application of mind by the Assessing Officer, as established through the inquiries and verifications conducted. The Tribunal relied on the decision of the Court in CIT Vs. Gabrial (I) Ltd. 203 ITR 108 to hold that the assessment order dated 3rd January, 2013 was not erroneous.

3. Judicial Review and Legal Interpretation: The appellant, in support of the appeal, argued that the CIT's revision order should be upheld. However, the Tribunal's examination of the records revealed that the Assessing Officer had indeed applied her mind and conducted necessary inquiries, contrary to the CIT's findings. The Tribunal emphasized that the Assessing Officer's actions, including obtaining approval from the Chief Commissioner of Income Tax, demonstrated a thorough examination of the issues at hand. The Tribunal's decision aligned with the legal precedent set by the Court in Gabrial (I) Ltd. (supra), emphasizing that a different view on facts does not render an assessment order erroneous unless it is perverse.

4. Conclusion: The Tribunal, based on the evidence of due application of mind by the Assessing Officer and following legal precedents, dismissed the Tax Appeal, ruling that no substantial question of law arose. The appeal challenging the order under Section 263 of the Income Tax Act for Assessment Year 2010-11 was thus dismissed, with no order as to costs.