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2021 (11) TMI 327 - AT - Income TaxRevision u/s 263 by CIT - HELD THAT - Section 263 of the Act confers power on the CIT to revise an assessment order, subject to certain conditions. Instantly, we are confronted with a situation in which the revision was initiated on the basis of the AO sending a proposal to the CIT and not on the CIT suo motu calling for and examining the record of the assessment proceedings and thereafter considering the assessment order erroneous and prejudicial to the interests of the revenue. AO recommending a revision to the CIT has no statutory sanction and is a course of action unknown to the law. If AO, after passing an assessment order, finds something amiss in it to the detriment of the Revenue, he has ample power to either reassess the earlier assessment in terms of section 147 or carry out rectification u/s 154 of the Act. He can t usurp the power of the CIT and recommend a revision. No overlapping of powers of the authorities under the Act can be permitted. As the revision proceedings in this case have triggered with the AO sending a proposal to the ld. CIT and then the latter passing the order u/s 263 of the Act on the basis of such a proposal, we hold that it became a case of jurisdiction deficit resulting into vitiating the impugned order.
Issues:
Jurisdiction of CIT under section 263 of the Income-tax Act, 1961. Analysis: The case involved an appeal against an order passed by the ld. CIT under section 263 of the Income-tax Act, 1961, relating to the assessment year 2012-13. The assessee, a foreign company incorporated in Sweden, had filed a return of Nil income, which was assessed at the same Nil income under section 143(3) of the Act. Subsequently, a proposal for revision was received from the AO, based on which the ld. CIT revised the assessment, treating the amount received from an Indian entity as 'Royalty' chargeable to tax under section 9(1)(vi) of the Act. The assessee contended that the assessment order was not erroneous and prejudicial to the revenue's interest. The Tribunal observed that the power of revision under section 263 can only be exercised by the CIT after examining the record of the proceedings and considering the order erroneous and prejudicial to revenue. The Tribunal held that the revision initiated based on a proposal from the AO, without the CIT suo motu examining the record, was a jurisdictional deficit, vitiating the order. Consequently, the impugned order was quashed on this legal issue alone, without delving into the case's merits. The Tribunal highlighted the importance of the CIT's exclusive power to revise an assessment order under section 263 of the Act. It emphasized that the CIT must independently examine the record of proceedings and form an opinion on the order's erroneous nature to exercise this power. The Tribunal clarified that the initiation of revision based on a proposal from the AO, without the CIT's independent examination, was not in accordance with the statutory provisions. It underscored that the AO recommending a revision to the CIT lacked legal sanction and encroached upon the CIT's exclusive jurisdiction. The Tribunal emphasized that statutory powers vested in specific authorities should not overlap, and the CIT's revisionary powers should be invoked only after fulfilling the conditions stipulated under the Act. In conclusion, the Tribunal allowed the appeal, setting aside the order passed by the ld. CIT under section 263 of the Act. The Tribunal held that the revision initiated on the basis of a proposal from the AO, without the CIT independently examining the record, amounted to a jurisdictional deficit, rendering the impugned order invalid. The Tribunal's decision focused on upholding the statutory framework's integrity by ensuring that revisionary powers under section 263 are exercised in compliance with the Act's provisions, safeguarding the interests of both the assessee and the revenue.
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