2015 (8) TMI 1100 - HC - Income Tax

Revision u/s 263 - Assessment Officer has not complied with the directions given by the Tribunal in its judgment & order - ITAT upholding order passed under section 263 by CIT(A) - Held that - Tribunal had remanded the case to the Assessment Officer for statistical purposes. Therefore, it was mandatory for Assessment Officer to examine the statements furnished by Assessee and to verify it with account books in the light of provisions of Section 11 of Income-tax Act, 1961. It is, therefore, apparent that Assessment Officer has not complied with the directions of the Tribunal contained in its above judgment and order dated 30.1.2009 whereby case had been remanded for statistical purposes. In impugned order the Commissioner has rightly observed that the Assessment Officer did not at all examine or verify the contentions raised, did not examine the books of accounts and did not satisfy himself that the contentions for grant of exemption under section 11 were satisfied. Assessment Officer has failed to discharge his legal obligation to ascertain truth of statement furnished by the Assessee by means of verification with account books. The Commissioner has rightly held that assessment order is erroneous and prejudicial to the interest of revenue. There is no illegality or infirmity in the impugned order passed by the Commissioner in exercise of power conferred by Section 263 of Income-tax Act, 1961. Commissioner has rightly vide impugned order remanded the case to the Assessment Officer to pass a fresh order in accordance with law in terms of remand order dated 30.1.2009, passed by the Tribunal in appeal. - Decided against assessee.

Summary

Issues Involved:
1. Whether the Tribunal committed substantial illegality by not considering the ratio of cases referred by the appellant.
2. Whether the Income-tax Appellate Tribunal was justified in upholding the order under section 263 of the Income-tax Act, setting aside the Assessing Authority's order without recording any finding on merit.

Issue-wise Detailed Analysis:

Issue I: Consideration of Ratio of Cases Referred by the Appellant
The appellant contended that the Tribunal did not consider the judicial pronouncements cited during the hearing. These included cases like Bhopal Sugar Industries Ltd. vs. Income Tax Officer, Commissioner of Income Tax vs. Kamla Town Trust, and others. The appellant argued that these cases supported their position that the Commissioner of Income-tax's interference under section 263 was unwarranted. However, the court found that the Tribunal's decision was in line with the legal requirements and that the cited cases did not apply to the specific facts of this case, particularly because the Assessing Officer had failed to comply with the Tribunal's directions for a detailed examination and verification of the assessee's claims.

Issue II: Justification of Tribunal's Order under Section 263
The appellant argued that the Tribunal erred in upholding the Commissioner's order under section 263, which set aside the Assessing Officer's order. The court noted that the Assessing Officer had not complied with the Tribunal's remand order dated 30.1.2009, which required a thorough examination of the statistical details in light of section 11 of the Income Tax Act. The Assessing Officer had accepted the assessee's claims without proper verification of account books. The court emphasized that the Assessing Officer's failure to investigate and verify the claims constituted an error prejudicial to the interests of the revenue, justifying the Commissioner's intervention under section 263.

Additional Judicial Pronouncements:
The court reviewed additional cases cited by the appellant, such as Commissioner of Income-tax vs. Paul Brothers and Prudential Assurance Company Ltd. vs. Director of Income Tax. However, it found that these cases did not support the appellant's position given the specific circumstances, particularly the non-compliance with the Tribunal's remand order.

Conclusion:
The court concluded that the Tribunal's judgment was in accordance with the law, and there was no illegality or infirmity in it. The Tribunal had rightly dismissed the appeals filed by the Assessee-Appellant. The substantial questions of law raised by the appellant were not accepted. The court also noted that fresh assessment orders had already been passed in compliance with the Commissioner's orders under section 263, and the appellant had the right to appeal those orders if aggrieved. Consequently, all five appeals were dismissed.