2011 (1) TMI 1393 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the appeal against the order passed by the Learned CIT under section 263 of the Act, relating to the assessment year 2007-08, regarding the exemption granted to the assessee under section 10(10C) of the Act on the Ex-gratia amount received.

Summary:
The assessee challenged the direction given by the Learned CIT to revoke the exemption granted under section 10(10C) of the Act on the Ex-gratia amount received. The assessee relied on a previous bench decision and argued that the Assessing Officer had accepted their claim for exemption initially. The Learned CIT directed the Assessing Officer to revoke the exemption granted, citing non-compliance with guidelines. The assessee argued that the assessment order was not erroneous as the Assessing Officer had fully verified the claim. The CBDT's letter post the assessment was also considered. The State Bank of India had modified the scheme, fulfilling the conditions mentioned by the Learned CIT. The Departmental Representative contended that the scheme did not comply with rule 2BA and the Assessing Officer had not properly applied the provisions. The legal position under section 263 was discussed, emphasizing the need for the order to be erroneous and prejudicial to the interests of the Revenue. The Tribunal found that the Assessing Officer had taken a plausible view based on available information and set aside the order of the Learned CIT.

Judgment:
The Tribunal found that the Assessing Officer's decision was reasonable and in accordance with the law. The subsequent letter from CBDT was issued after the assessment order, and the Assessing Officer had compared the facts with a relevant decision before allowing the exemption. The Tribunal concluded that the initiation of proceedings under section 263 was not justified, and hence, the orders of the Learned CIT were set aside. The appeal of the assessee was allowed based on the consistency with a previous decision.

Separate Judgment:
No separate judgment was delivered by the judges in this case.