2015 (10) TMI 1751 - HC - Income Tax

Revision u/s 263 - CIT directed the AO to reframe the assessment denovo after allowing rebate under Section 88E of the Act on more careful examination - ITAT quashed revision orders - Held that - There is no prescribed formula under Section 88E of the Act to determine the quantum of the rebate thereunder. Therefore the same has to be computed on a reasonable and scientific manner by the Assessing Officer. Further the impugned order has placed reliance upon the decision of this Court in CIT Vs. Gabriel India Ltd. 1993 (4) TMI 55 - BOMBAY High Court wherein this Court held that the order cannot be held to be erroneous merely because according to the CIT, the order should have been written more elaborately or for substituting the view of the Assessing Officer with that of the CIT. The Court held that merely because the CIT had a different view from that reached by the Assessing Officer would not by itself make the view of the Assessing Officer erroneous. To be an erroneous order it must be in breach of law. It is axiomatic that jurisdiction under Section 263 of the Act can only be exercised on cumulative satisfaction of the twin conditions viz. of the order being erroneous in law and the order being prejudicial to the interest of the revenue. Thus in this case, one of the two conditions precedent to exercise jurisdiction under Section 263 of the Act viz. Order being erroneous in law is not satisfied. Moreover the CIT in exercise of powers under Section 263 of the Act directed the Assessing Officer to redetermine the rebate allowable under Section 88E of the Act after holding that the same needs more careful examination on the part of the Assessing Officer. This itself indication of the fact that this is not the case of lack of enquiry, but at the highest it can be a case of inadequate enquiry. It is settled position in law that inadequate enquiry by itself would not justify invoking the jurisdiction under Section 263 of the Act unless the order is erroneous. - Decided in favour of assessee.

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act, 1961 regarding quashing of order under Section 263 of the Act without examining the merits of the case.

Detailed Analysis:

1. Background and Appeal by Revenue:
The appeal by the revenue under Section 260A of the Income Tax Act, 1961 challenges the order passed by the Income Tax Appellate Tribunal (the 'Tribunal') dated 6 February 2013 for Assessment Year 2007-08.

2. Question of Law Raised:
The learned Counsel for the appellant-revenue raised the question of law regarding the justification of the Tribunal in quashing the order under Section 263 of the Act without delving into the merits of the case.

3. Assessment and Rectification:
The Assessing Officer determined the respondent-assessee's total income at Rs. 17.13 crores under Section 143(3) of the Act, allowing a rebate of Rs. 4.36 crores under Section 88E. A rectification application later increased the rebate to Rs. 4.80 crores.

4. Order by Commissioner of Income Tax (CIT):
The CIT, under Section 263 of the Act, directed the Assessing Officer to reframe the assessment denovo after a more careful examination regarding the rebate under Section 88E.

5. Tribunal's Decision and Legal Interpretation:
The Tribunal allowed the respondent-assessee's appeal, stating that a different view by the CIT on the rebate claim does not justify invoking jurisdiction under Section 263 unless there is inadequate enquiry or a breach of law.

6. Legal Precedents and Analysis:
The judgment referred to the decision in CIT Vs. Gabriel India Ltd. 203 ITR 108, emphasizing that an order is erroneous only if it breaches the law and is prejudicial to revenue. The Tribunal found no error in law justifying the exercise of jurisdiction under Section 263.

7. Inadequate Enquiry vs. Lack of Enquiry:
The CIT's direction for a more careful examination of the rebate indicates inadequate enquiry rather than a lack of enquiry. Inadequate enquiry alone does not warrant invoking Section 263 unless the order is erroneous.

8. Conclusion and Dismissal of Appeal:
The Tribunal correctly applied legal principles, leading to the dismissal of the appeal without costs as the question raised did not present a substantial legal issue warranting further consideration.

This detailed analysis of the judgment highlights the legal intricacies involved in the challenge to the order under Section 260A of the Income Tax Act, 1961, providing a comprehensive understanding of the issues addressed in the case.