2013 (7) TMI 315 - AT - Income Tax

Revision u/s 263 - CIT held that the assessee has made total investment of Rs. 132.03 lakhs in various properties out of his undisclosed income and surrendered Rs. 72 lakhs only and directing the A.O. to make addition of Rs. 60.03 lakhs to the total income of the assessee - Held that - it cannot be said that the A.O. has not applied his mind to this issue. Thus when the A.O. adopts one of the permissible course of law, the ld. CIT does not agree with it, the order cannot be treated as erroneous in so far as it is prejudicial to the interest of the Revenue unless the view taken by the A.O. is unsustainable in law. CIT set aside issue of verification of new cash creditors introduced during the year - Held that - This matter was also properly examined by the A.O. The assessee filed its reply stating all facts in his letter dated 18.8.2011. The A.O. applied his mind and took a decision. The assessee also filed affidavit, which was considered by the A.O. The contents of the affidavit are deemed to be accepted in the absence of cross-examination. CIT set aside the case on account of allowing telescopic by the A.O. of Rs. 2 lakhs surrendered during the course of survey - Held that - Investment in house at 154 G-Block, Sriganganagar, the A.O. made enquiries. The assessee surrendered Rs. 2 lakhs of brokerage receipt, which is mentioned in first para at page 9 of the assessment order. Thus, in view of the aforementioned legal position and the facts the assessment order is neither erroneous and when the twin conditions do not co exist, the order cannot be revised - Decided in favor of assessee.

Summary

Issues involved:
1. Revision under Section 263 of the Income-tax Act, 1961.
2. Assessment proceedings for A.Y. 2007-08.
3. Allegations of errors in the assessment order.

Issue 1: Revision under Section 263 of the Income-tax Act, 1961:
The appellate tribunal considered the appeal against the order of the ld. CIT for the assessment year 2007-08. The ld. CIT set aside the assessment order due to alleged errors prejudicial to the Revenue. The tribunal analyzed the legal framework of Section 263, emphasizing that the CIT's revisional power is limited to correcting erroneous orders causing prejudice to revenue. The tribunal highlighted key principles from various court cases, emphasizing the necessity of recording satisfaction of both error and prejudice for invoking Section 263. It clarified that the CIT's revisional power is not absolute and must be exercised within legal boundaries, ensuring fairness and compliance with the law.

Issue 2: Assessment proceedings for A.Y. 2007-08:
The assessment for the year under consideration was completed under Section 143(3) of the Income-tax Act, 1961. The A.O. issued notices and the assessee responded to queries raised during the assessment. The ld. CIT raised concerns about investments, new creditors, and property transactions. The tribunal noted that the A.O. had examined the relevant aspects, sought explanations from the assessee, and applied his mind before reaching conclusions. It emphasized that the A.O.'s decision-making process was thorough and legally sound, considering all relevant facts and explanations provided by the assessee.

Issue 3: Allegations of errors in the assessment order:
The tribunal scrutinized specific grounds raised by the assessee against the ld. CIT's order under Section 263. It found that the A.O. had adequately addressed the issues related to investments, cash creditors, and property transactions during the assessment proceedings. The tribunal observed that the A.O. had considered explanations provided by the assessee, applied his mind, and made informed decisions based on the available evidence. It concluded that the assessment order was not erroneous, and in the absence of co-existing error and prejudice, the order could not be revised under Section 263. Consequently, the tribunal set aside the ld. CIT's order and allowed the appeal of the assessee for the assessment year 2007-08.

This detailed analysis of the legal judgment highlights the tribunal's thorough examination of the issues involved, ensuring a comprehensive understanding of the decision-making process and legal principles applied in the case.