2020 (8) TMI 72 - AT - Income Tax

Revision u/s 263 by CIT - difference arising in the revised return - justification of mistake committed by the assessee vis- -vis his filing of original as well as revised return of income - HELD THAT - When we peruse the order of assessment, we find there is no discussion at all as rightly pointed out by the Ld. DR on this very fact regarding the difference in figures in the original return and corrected computation. AO has only extracted the submissions of the Ld. AR, extracted the original return and revised computation and finally accepted them without any application of his mind. The case laws relied on by the Ld. AR has been considered by us and in these decisions, the legal principle common is that whenever the Quasi-Judicial Authority is making any decision on the given facts, there must be nexus between the reasons given by the Quasi-Judicial Authority with regard to the documents on record for which finally he arrives at that decision. The decision must reflect the reasoning of the Officer. By plain reading of the decision one should understand how the author has arrived at a particular conclusion. The thought process should be reflected therein. In this case in the assessment order, the entire exercise is missing. Merely extraction of submissions cannot justify that the Assessing Officer has applied his mind. Supreme Court in the case of Rampyari Devi Sarogi vs. CIT 1967 (5) TMI 10 - SUPREME COURT and Tara Devi Aggarwal v. CIT 1972 (11) TMI 2 - SUPREME COURT has been held that where Assessing Officer has accepted a particular contention/issue without any enquiry or evidence whatsoever, the order is erroneous and prejudicial to the interest of the Revenue. AO while accepting the documents submitted by the Ld. AR, has not conducted any specific enquiry as to the facts of the case. There is no iota of evidence brought on record by the Assessing Officer justifying that there was mistake committed by the assessee vis- -vis his filing of original as well as revised return of income. Assessee also argued that the view taken by the AO may not be a proper one as per CIT is concerned nonetheless, it is definitely an appropriate view. We do not agree with the contention of the Ld. AR since taking a view should be backed by reasons and that reasons should be demonstrated in the order itself with evidences brought on record and independent enquiry conducted. In this case, the AO has only done the work of extraction of submissions of the Ld. AR and nothing else and therefore, in fact the AO has not formed any view. - we uphold the order passed u/s.263 - Decided against assessee.

Summary

Issues Involved:
1. Revisionary jurisdiction under section 263 of the Income Tax Act.
2. Examination and acceptance of revised computation of income by the Assessing Officer.
3. Application of mind by the Assessing Officer during the assessment process.
4. Justification of the assessment order being erroneous and prejudicial to the interest of the Revenue.

Detailed Analysis:

1. Revisionary Jurisdiction under Section 263 of the Income Tax Act:
The primary issue revolves around the revisionary jurisdiction assumed by the Principal Commissioner of Income Tax (Pr. CIT) under section 263 of the Income Tax Act. The Pr. CIT observed that the Assessing Officer (AO) had not examined relevant facts and had accepted the submissions of the assessee without any application of mind. The assessment order was set aside as it was deemed erroneous and prejudicial to the interest of the Revenue.

2. Examination and Acceptance of Revised Computation of Income:
The assessee filed a revised computation of income during the assessment proceedings, which showed a significant reduction in income from house property. The AO accepted the revised computation without providing any reasoning or conducting a thorough inquiry. The Pr. CIT noted that the AO failed to examine the drastic fall in returned income and did not provide any explanation for the same.

3. Application of Mind by the Assessing Officer:
The Pr. CIT held that the AO did not apply his mind while finalizing the assessment order. The AO merely extracted the submissions of the assessee and accepted them without any independent verification or reasoning. The Tribunal agreed with the Pr. CIT's observation that there was no discussion or justification in the assessment order regarding the acceptance of the revised computation.

4. Justification of the Assessment Order Being Erroneous and Prejudicial to the Interest of the Revenue:
The Tribunal upheld the Pr. CIT's order, stating that the AO's failure to conduct an inquiry and provide reasoning for accepting the revised computation made the assessment order erroneous and prejudicial to the interest of the Revenue. The Tribunal referenced several judicial pronouncements, including the Supreme Court's decision in Malabar Industrial Co. Ltd. Vs. CIT, which established that an order passed without application of mind and inquiry is erroneous.

Conclusion:
The Tribunal concluded that the AO did not conduct any specific inquiry or provide justification for accepting the revised computation of income. The assessment order lacked reasoning and evidence, making it erroneous and prejudicial to the interest of the Revenue. Therefore, the Tribunal upheld the Pr. CIT's order under section 263 of the Income Tax Act, dismissing the appeal of the assessee.