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2017 (6) TMI 538 - AT - Income TaxRevision u/s 263 - Held that - CIT-A has passed impugned order u/s. 263 by holding the order of AO as erroneous in so far as prejudicial to the interest of revenue on account of inadequate enquiry made by AO while passing order u/s. 143(3) of the Act. However, we find that proper and sufficient enquiries were conducted by the AO at the time of assessment as evident from the order of AO. Therefore it cannot be concluded that no proper enquiry has been conducted by the AO at the time of assessment proceedings. The AO has taken conscious view after considering the facts and circumstances of the case and giving proper opportunity to the assessee. Thus, the view expressed by AO in the form in his assessment order cannot be replaced with the view of Ld. CIT u/s 263 of the Act. Assessee s appeal stands allowed.
Issues Involved:
1. Condonation of Delay in Filing Appeal 2. Jurisdiction of Assessing Officer (AO) in Limited Scrutiny Cases 3. Validity of Order under Section 263 of the Income Tax Act 4. Errors and Omissions in AO's Assessment Order Detailed Analysis: 1. Condonation of Delay in Filing Appeal The appeal by the assessee was delayed by 36 days. The delay was attributed to the old counsel's lack of familiarity with tribunal work, necessitating the hiring of a new counsel. After hearing both parties, the tribunal found sufficient cause for the delay and admitted the appeal. 2. Jurisdiction of Assessing Officer (AO) in Limited Scrutiny Cases The assessee's case was selected for limited scrutiny under the Computer Assisted Scrutiny System (CASS) based on AIR data. The scope of AO's enquiry should have been confined to the specific points from the AIR. However, the AO exceeded this jurisdiction by scrutinizing items not listed in the AIR. The CBDT's instruction mandates that scrutiny in such cases should be limited to AIR information unless expanded with approval from the Administrative Commissioner, which was not evidenced in this case. 3. Validity of Order under Section 263 of the Income Tax Act The CIT invoked Section 263, holding the AO's order as erroneous and prejudicial to the Revenue's interest due to inadequate enquiry. The tribunal examined whether the CIT exceeded jurisdiction by addressing issues not part of the AIR. It was determined that the CIT's order under Section 263 was beyond jurisdiction as it included points not emanating from the AIR. The tribunal cited precedents where orders passed without proper jurisdiction were deemed null and void. 4. Errors and Omissions in AO's Assessment Order The CIT identified several errors in the AO's assessment: - Cash Deposits: The AO added ?4 lakh out of ?17.56 lakh deposited, which the CIT found insufficient. - Bank Account Deposits: The AO added ?5.76 lakh out of ?19.31 lakh deposited, which the CIT found under-assessed. - Credit Card Payments: The AO added ?2.98 lakh out of ?3.76 lakh, which the CIT found under-assessed. - Property Sale: The AO did not verify the sale of property worth ?36 lakh and the claimed exemption under Section 10(38). The tribunal found that the AO had indeed conducted sufficient enquiries and made conscious decisions regarding these issues. The tribunal held that the CIT's view could not replace the AO's view when the latter had exercised due diligence. Conclusion The tribunal concluded that the CIT's order under Section 263 was without jurisdiction and quashed it. The AO had conducted sufficient enquiries, and the assessment order was neither erroneous nor prejudicial to the Revenue's interest. The appeal was allowed in favor of the assessee. Order The appeal by the assessee is allowed. The order was pronounced in the open court on 02/06/2017.
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