2016 (3) TMI 747 - AT - Income Tax

Revision u/s 263 - CIT(A) directing the assessing officer to carry out enquiry and investigation on the line suggested in the order u/s. 263 and compute the total income accordingly - Held that - Regarding the issue of survey folder it was the duty the AO to consider the information gathered during the time of survey. Now the question arises whether the information at therein was relevant or not. It was also observed that the order of the ld. CIT is also silent whether the order is erroneous and prejudicial to the interest of Revenue of the revenue. The ld. CIT failed to bring anything concrete on record that the order of the AO is erroneous and prejudicial to the interest of Revenue. We find that the ld. CIT treated the order erroneous on premise regarding the issue of survey. As relying in the decision of CIT v. Sunbeam Auto Ltd. (2009 (9) TMI 633 - Delhi High Court ) and CIT v. Anil Kumar Sharma 2010 (2) TMI 75 - DELHI HIGH COURT held that the fact as to whether the AO has applied his mind or not need not necessarily be determined from what has been stated in the assessment order alone, it has to be examined as to whether any inquiry was at all conducted by the AO. There exists a difference between lack of inquiry and inadequate inquiry. If there were any inquiry, even inadequate that would not give an occasion to exercise jurisdiction u/s 263 of the Act. In view of above facts and circumstances and the decision of Hon ble Delhi High Court above cited case law and from the facts and in the light of various judicial pronouncements the order of the ld. CIT cannot be held to be sustainable in law and the same is accordingly set aside. - Decided in favour of assessee

Summary

Issues:
1. Whether the order of the Commissioner of Income Tax was erroneous and prejudicial to the interest of Revenue.
2. Whether the Assessing Officer failed to consider certain issues at the time of assessment.

Issue 1:
The appeal challenged the order of the Commissioner of Income Tax, alleging errors in directing the Assessing Officer to conduct further inquiry and investigation regarding the total income computation. The Commissioner found certain issues unexamined by the Assessing Officer, including business losses claimed by the assessee, interest income discrepancies, and the impact of a survey conducted at the assessee's premises. The Commissioner deemed the order of the Assessing Officer erroneous and prejudicial to Revenue's interest, directing a re-investigation. The appellant contended that the Assessing Officer adequately addressed all issues, presenting evidence of inquiries made. The Tribunal analyzed Section 263 of the Income Tax Act, emphasizing the necessity for the Commissioner to prove errors and prejudice to Revenue. The Tribunal concluded that the Commissioner's order lacked concrete evidence of errors, thus setting it aside.

Issue 2:
The assessee disputed the Commissioner's assertion that the Assessing Officer failed to consider key issues during assessment. The appellant provided detailed responses to queries raised by the Assessing Officer, including explanations for business losses and interest income discrepancies. The Tribunal highlighted the importance of the Assessing Officer's inquiry, distinguishing between lack of inquiry and inadequate investigation. Citing precedents, the Tribunal emphasized that even if the inquiry was inadequate, it does not warrant intervention under Section 263. Ultimately, the Tribunal found that the Commissioner's order lacked substantial evidence of errors by the Assessing Officer, leading to the allowance of the assessee's appeal.

This detailed analysis of the legal judgment from the Appellate Tribunal ITAT Kolkata highlights the issues raised, the arguments presented by the parties, and the Tribunal's decision based on the provisions of the Income Tax Act and relevant case law.