2021 (12) TMI 1065 - AT - Income Tax

Revision u/s 263 by CIT - As per CIT AO has decided the matter in favour of the assessee without going deep into the issue regarding seized foreign currency and excess income over total expenditure - HELD THAT - Every loss of revenue as a consequence of an order cannot be termed as prejudicial to the interests of the Revenue. In the case of ITO v. DG Housing Projects Ltd 2012 (3) TMI 227 - DELHI HIGH COURT as held that revisional power under section 263 of the Act is normally exercised in the case of no enquiry and not in the case of inadequate enquiry. The Assessing Officer has passed the assessment order after making enquiries, Commissioner of Income-tax (Exemptions) has wrongly observed that the Assessing Officer has passed the order without making any inquiry on the issues discussed in the revisional order. The documents referred by the learned counsel do not suggest that the Assessing Officer has passed the assessment order without conducting any enquiry. Hence, in our considered view this was not the case where the Assessing Officer has passed the assessment without making enquiry for holding the same as erroneous. In the case of. CIT v. Software Consultants 2012 (2) TMI 18 - DELHI HIGH COURT the hon'ble Delhi High Court has held that where no addition is made on the grounds mentioned in the reasons recorded for reopening of the assessment, the assessment order cannot be said to be erroneous under section 263 of the Act In the present case the Assessing Officer has not made any addition on the ground mentioned in the reasons recorded Hence, the findings of the learned Commissioner of Income-tax (Exemptions) are not in consonance with the ratio laid down in the aforesaid case - we allow the appeal of the assessee and set aside the impugned order passed by the learned Commissioner of Income-tax (Exemptions) under section 263 of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against order under section 263 of the Income-tax Act, 1961 setting aside assessment order passed by Joint Commissioner for assessment year 2011-12.

Analysis:
The assessee, a trust registered under section 12AA(1)(b) of the Act, challenged the order passed by the Commissioner of Income-tax (Exemptions) under section 263. The case was reopened to investigate Indian and foreign currency seized by the police. The Joint Commissioner accepted the nil return filed by the assessee. However, the CIT(E) set aside the assessment order, directing a fresh assessment considering all issues. The assessee contended that the assessment order was not erroneous or prejudicial to revenue, emphasizing proper enquiry was conducted. The Departmental representative supported the CIT(E)'s decision, citing lack of proper enquiry by the Joint Commissioner.

The Tribunal noted that the CIT(E) revised the assessment order due to insufficient investigation on seized foreign currency and excess income. The assessee clarified the currency issue and advance payment for land purchase. The Tribunal observed that the CIT(E) failed to prove the assessment order was erroneous and did not address anonymous donation claims. Referring to legal precedents, the Tribunal highlighted that the power under section 263 must correct errors prejudicial to revenue, emphasizing the need for proper enquiry. The Tribunal found no evidence that the Assessing Officer did not conduct an inquiry, concluding the assessment was not erroneous.

Regarding the reopening of the assessment, the Tribunal noted that the CIT(E) acted beyond the limitation period and addressed issues not related to the initial reassessment. Citing legal cases, the Tribunal emphasized that the period of limitation starts from the original assessment date. The Tribunal found the CIT(E)'s actions unlawful and not in line with legal precedents. Consequently, the Tribunal allowed the appeal, setting aside the CIT(E)'s order under section 263.

In conclusion, the Tribunal found the CIT(E)'s order contrary to the evidence and legal precedents, leading to the allowance of the assessee's appeal against the order under section 263 of the Income-tax Act, 1961 for the assessment year 2011-12.