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2019 (6) TMI 708 - AT - Income TaxRevision u/s 263 by CIT - AO has not made any inquiry, about the application of provisions of u/s 115JB for computing tax on Book Profit - to invoke the power u/s 263, twin conditions must be satisfied with (i) the order of the assessing officer should be erroneous (ii) It must be prejudicial to the interest of the revenue - HELD THAT - We find that the assessment order has been passed in pursuance to the specific direction given by the Tribunal restoring the issue of examining the genuineness of 5 sundry creditors. AO was bound to follow the direction given by the Tribunal and it was not open for him to ignore the same and further he was also not permitted to deal with any other issue other than the direction given by the Tribunal as it would have resulted in judicial indiscipline. We find that the AO has duly adhered the direction of the Tribunal and tested the genuineness of the five sundry creditors and confirming addition for unexplained four creditors holding them to non-genuine We can therefore, safely conclude that the order framed by the assessing officer u/s 143(3) r.w.s 254 is not erroneous, and thus one of the twin conditions is not fulfilled. Pr. CIT exceeded the jurisdiction by invoking the powers u/s 263 and is therefore, liable to be quashed. - Decided in favour of assessee.
Issues Involved:
1. Whether the order passed by the Pr. CIT under section 263 of the Income Tax Act is barred by limitation. 2. Whether the Pr. CIT was justified in holding that the order passed by the AO is erroneous and prejudicial to the interest of the revenue. 3. Whether the provisions of section 115JB are applicable in the case of the assessee. Detailed Analysis: 1. Limitation of the Order under Section 263: The appellant contended that the order passed by the Pr. CIT under section 263 of the Act is barred by limitation. The original assessment order under section 143(3) was dated 31.12.2009, and according to section 263(2), the time limit to frame the order under section 263 expired on 31.03.2012. The order under section 263 dated 31.07.2018, therefore, exceeds the permissible time frame. The Tribunal agreed with the appellant, noting that the Pr. CIT exceeded her jurisdiction by invoking section 263 after the limitation period had expired. 2. Erroneous and Prejudicial to Revenue: The Pr. CIT invoked section 263 on the grounds that the AO did not make proper inquiries regarding the computation of book profits under section 115JB, leading to a short levy of tax. However, the Tribunal observed that the AO was following specific directions from the Tribunal to verify the genuineness of five creditors. The AO confirmed the addition of ?10,19,818/- pertaining to four creditors as non-genuine. The Tribunal cited the Gujarat High Court's decision in Garden Silk Mills Ltd. v. CIT, emphasizing that the AO is bound to follow the Tribunal's directions and cannot be deemed erroneous for adhering to judicial discipline. The Tribunal concluded that the AO's order was not erroneous and thus did not meet the twin conditions required for invoking section 263. 3. Applicability of Section 115JB: The Pr. CIT argued that the AO failed to consider the MAT provisions under section 115JB, resulting in a short levy of tax. The Tribunal noted that the AO's assessment was limited to verifying the genuineness of the creditors as directed by the Tribunal and had no occasion to examine other aspects, including section 115JB. The Tribunal found that the AO's adherence to the Tribunal's specific directions did not render the assessment order erroneous or prejudicial to the revenue. Conclusion: The Tribunal concluded that the Pr. CIT exceeded her jurisdiction by invoking section 263, as the assessment order was not erroneous. The order under section 263 was quashed, and the assessment order under section 143(3) read with section 254 dated 24.11.2016 was restored. The appellant's appeal was allowed.
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