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2022 (4) TMI 1069 - AT - Income TaxRevision u/s 263 by CIT - As per CIT AO has wrongly adjusted carry forward business loss and unabsorbed depreciation loss while passing the assessment order for A.Y. 2010-11 - HELD THAT - We find that the ld. CIT relied on various judgments holding that when the AO did not make proper enquiry and accepted the return income of the assessee the revision order u/s. 263 is justified. On perusal of assessment order u/s. 143(3) of the Act we observe that there is no discussion in this regard to the points raised by the ld. CIT in the impugned order. We observe that the ld. CIT in the impugned order has categorically held that the AO has not made any enquiry inter alia directed the AO to make fresh assessment When Findings of the ld. CIT was confronted to ld. A.R. of the assessee that whether the AO has conducted any enquiry on the above aspects no satisfactory reply was forthcoming. From the above we observe that the Assessing Officer has not made any enquiry and examination of the matter. We also observe that the CIT has directed the AO to make proper enquiry and pass fresh assessment order after giving due opportunity of hearing to the assessee. Hence we do not find any infirmity in the order of the ld. CIT which is hereby confirmed - Decided against assessee.
Issues:
Appeal against CIT's order u/s. 263 of the Act for AY 2010-2011. Analysis: 1. Issue of Incorrect Adjustment of Business Loss and Depreciation: The CIT observed that the AO wrongly adjusted carry forward business loss and unabsorbed depreciation while determining the total income for the assessment year 2010-2011. The CIT found that the same loss had already been adjusted in the previous assessment year, leading to an erroneous assessment. The CIT directed the AO to conduct a fresh assessment after proper examination of these adjustments. 2. Issue of Share Capital Examination: The CIT noted that the AO did not examine the source and details of funds received by the assessee through share capital during the previous year. The lack of investigation into the source, mode of transaction, and creditworthiness of the investors was deemed prejudicial to the interest of revenue. The CIT directed the AO to investigate these aspects and provide proper findings in the fresh assessment. 3. Issue of Discrepancy in Purchase Figures: The CIT highlighted a discrepancy in the purchase figures reported by the assessee in the audited trading and loss account compared to the VAT return submitted during assessment proceedings. The AO failed to examine the difference in purchase amounts, causing a loss of revenue. The CIT directed the AO to address this discrepancy in the fresh assessment. 4. Judicial Precedents and Legal Justification: The CIT relied on various judicial precedents to support the decision to set aside the assessment order. The CIT emphasized the importance of proper enquiry by the AO, citing cases where lack of investigation was considered prejudicial to the interest of revenue. The CIT justified the revision order u/s. 263 based on the principles established in legal judgments. 5. Confirmation of CIT's Order: Upon review, the ITAT confirmed the CIT's order, noting the failure of the AO to conduct necessary enquiries and examinations. The ITAT upheld the direction for a fresh assessment by the AO, emphasizing the importance of proper investigation and application of law. The appeal of the assessee was dismissed, affirming the CIT's decision. In conclusion, the ITAT upheld the CIT's order to set aside the assessment and directed the AO to conduct a fresh assessment considering the discrepancies in adjustments, share capital examination, and purchase figures. The judgment underscores the significance of thorough examination and proper application of law in assessment proceedings to prevent errors and protect the revenue's interests.
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