2012 (11) TMI 578 - AT - Income Tax

Revision of orders prejudicial to Revenue Following the decision of court in case of CIT vs. M/s. Sundeam Auto Ltd 2009 (9) TMI 633 - DELHI HIGH COURT Held that - Once there is any enquiry, may be inadequate inquiry, it cannot give an occasion to the Ld. CIT to pass order under section 263, merely because he has a different opinion in the matter. CIT is not justified in canceling the assessment made by the AO u/s 143(3) of the Act. The order of the Ld. CIT is, therefore, bad in law and is therefore, set aside. Thus, all the grounds of the assessee are allowed. Set off and carry forward of losses Held that - alternative plea taken by the assessee before the Ld. CIT that the assessee is having a carry forward loss and does not have any business income in coming years, is an alternative argument only, which was to claim the loss in the future years in favour of assessee.

Summary

Issues involved:
Appeal against order under section 263 of the Income Tax Act, 1961.

Analysis:
1. The appeal arose from the order of the Ld. Commissioner of Income Tax, Amritsar, under section 263 of the Income Tax Act, 1961. The assessee raised grounds challenging the order, arguing that it was not in accordance with the law and erred in canceling the assessment completed under section 143(3) by the Assessing Officer (AO) and directing a denovo assessment.

2. The assessment under section 143(3) accepted the loss as returned by the assessee, including short-term and long-term capital losses. However, discrepancies were noted regarding withdrawals from the bank account and unexplained credit entries. The Ld. CIT observed that the AO failed to inquire about the source of these entries, leading to a prejudicial assessment. The assessee's explanations were deemed unsatisfactory, resulting in the cancellation of the assessment.

3. The assessee's counsel argued that the AO had conducted a thorough examination during the assessment process, verifying bank transactions and other details. The counsel contended that even if the inquiry was deemed inadequate, it did not warrant the Ld. CIT's intervention under section 263. Case laws were cited to support the argument that a difference in opinion does not justify revising the AO's order.

4. The Ld. CIT's alternative argument regarding carry forward losses was considered an additional plea by the assessee for future benefit, not affecting the current assessment. After considering the contentions of both parties, the Tribunal concluded that the Ld. CIT's decision to cancel the assessment was unjustified and against the law. Therefore, the appeal was allowed, setting aside the Ld. CIT's order.

This detailed analysis provides a comprehensive overview of the issues raised in the appeal, the arguments presented by the parties, and the Tribunal's decision based on legal principles and precedents cited during the proceedings.