2020 (3) TMI 1485 - AT - Income Tax

Revision u/s 263 - Assessee credited a sum in the account of M/s. Nitin Sales Corporation and debited a sum in the same account which the AO failed to examine - HELD THAT - Assessee furnished all the relevant details to CIT by giving elaborate response which has been referred to hereinabove and also reproduced in the impugned order. Not only did the assessee explain the source of payment of Rs.7.00 lakh given to Shri Nitin Bhusare but also gave the Permanent Account Number and other relevant income-tax details of M/s N.K. Developers and also Shri Nitin Bhusare. No infirmity whatsoever was found by the ld. Pr.CIT in such details. Despite that he proceeded with setting aside the assessment order. In our considered opinion if there is an aspect of the assessment which does not find mention in the assessment order the Pr. CIT can rightly invoke his power u/s.263. Having invoked such a power if the assessee furnishes details proving the veracity of that aspect of the assessment which prima facie appear to be correct and are further not faulted with then the Pr. CIT cannot treat the assessment order erroneous and prejudicial to the interest of Revenue on that score and direct the AO to examine it de novo. Assessee did furnish all the relevant details of the receipt from and payment to M/s. Nitin Sales Corporation. The ld. Pr. CIT did not find anything amiss in such details. In that case he could not have set aside the assessment order and directed the AO to re-examine the same. The impugned order being contrary to law cannot be sustained. Decided in favour of assessee.

Summary

The appeal in this case was brought by the assessee against an order passed by the Principal Commissioner of Income Tax under section 263 of the Income-tax Act, 1961, relating to the assessment year 2012-13. The factual background of the case involved the assessee declaring a total income of Rs. 3,60,520, with the assessment being completed at the returned income under section 143(3) of the Act. The Principal Commissioner observed discrepancies in the assessee's account related to transactions with M/s. Nitin Sales Corporation, which the Assessing Officer failed to examine. The assessee explained the transactions, providing details of the amounts involved and their sources. Despite the assessee's detailed explanations and evidence, the Principal Commissioner found the assessment order to be erroneous and prejudicial to the interest of Revenue due to the lack of inquiry by the Assessing Officer.The key issue considered by the Appellate Tribunal was whether the Principal Commissioner was justified in setting aside the assessment order under section 263 despite the assessee providing detailed explanations and evidence regarding the disputed transactions. The Tribunal found that the Principal Commissioner's decision was contrary to law as the assessee had provided all relevant details and explanations, which were not found to be faulty by the Principal Commissioner. Therefore, the Tribunal quashed the impugned order and allowed the appeal.In summary, the Tribunal held that if an aspect of the assessment is not addressed in the assessment order, the Principal Commissioner can invoke the power under section 263. However, if the assessee provides detailed and credible explanations for the disputed aspect, and such explanations are not found to be incorrect, the Principal Commissioner cannot deem the assessment order as erroneous and prejudicial to the interest of Revenue. The Tribunal concluded that since the assessee had provided all necessary details and the Principal Commissioner did not find any fault with them, setting aside the assessment order was unjustified. As a result, the Tribunal allowed the appeal and quashed the impugned order.