2015 (12) TMI 835 - HC - Income Tax

Revision u/s 263 - CIT(A) directing the Income-tax Officer to make enquiries regarding the sources of investment in purchase of silver bars - Tribunal has held that the Commissioner of Income-tax had no jurisdiction to invoke the provisions of section 263 of the Act in view of the fact that the material obtained from the custom authorities did not form part of the record of the Assessing Officer - Held that - This issue stands concluded by the decision of the Supreme Court in the case of C.I.T. v. Manjunathesware Packing Products (1997 (12) TMI 4 - SUPREME Court ) wherein the court has held that the revisional power conferred on the Commissioner of Income-tax under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act and pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration. Also see COMMISSIONER OF INCOME TAX Versus VALLABHDAS VITHALDAS 2015 (5) TMI 615 - GUJARAT HIGH COURT The reference is, accordingly, answered in the negative, that is, in favour of the revenue and against the assessee. The Appellate Tribunal was not right in law in holding that the Commissioner of Income-tax had no jurisdiction to invoke the powers under section 263 of the Act and direct the Income-tax Officer to make enquiries regarding source of investment in purchase of silver bars - Decided against assessee

Summary

Issues:
Jurisdiction of the Commissioner of Income-Tax under section 263 of the Income-tax Act regarding assessment year 1980-81.

Analysis:
1. The Income-tax Appellate Tribunal referred a question to the court regarding the jurisdiction of the Commissioner of Income-Tax under section 263 of the Income-tax Act for the assessment year 1980-81. The question pertained to the Commissioner's authority in directing the Income-tax Officer to investigate the sources of investment in the purchase of silver bars totaling &8377; 17 lacs and &8377; 16 lacs on specific dates in 1979.

2. The Commissioner invoked jurisdiction under section 263 of the Act based on the seizure of silver bars and non-disclosure of transactions in the assessee's books of accounts. The Commissioner set aside the assessment, directing the Income-tax Officer to investigate the sources of investment in the silver bars. The assessee challenged this decision before the Tribunal.

3. The Tribunal held that the Commissioner's jurisdiction was invalid, as the material from the customs authorities did not form part of the Assessing Officer's record during assessment. However, the Supreme Court decision in C.I.T. v. Manjunathesware Packing Products clarified that the Commissioner's revisional power under section 263 is broad, allowing examination of any proceeding's record under the Act.

4. The court referred to a previous case where it was established that the word "record" in section 263 includes all records related to any proceeding under the Act, not limited to the assessee's records. The court emphasized that the Commissioner could consider new material obtained during an enquiry, even if it was not available to the Income-tax Officer during assessment.

5. The court concluded that the Commissioner had the authority to invoke section 263 and direct the Income-tax Officer to investigate the source of investment in the silver bars. The decision was based on the Supreme Court's interpretation of the broad powers conferred by section 263 and the inclusion of all records related to any proceeding under the Act in the definition of "record."

6. Therefore, the court answered the reference in favor of the revenue and against the assessee, stating that the Tribunal was incorrect in holding that the Commissioner lacked jurisdiction under section 263. The controversy was deemed concluded by previous decisions, establishing the Commissioner's wide-ranging powers under section 263 for assessments.