2022 (6) TMI 511 - AT - Income Tax

Revision u/s 263 - disallowance of registration expenditure - HELD THAT - AO without following the directions of the CIT in his revision order has passed assessment order u/s. 143(3) r.w.s. 263 by disallowing the expenses of Rs. 9,43,640/-. We have also noted that the Assessing Officer has wrongly mentioned the disallowance as Rs. 9,43,640/- instead of Rs. 9,40,640/- in his assessment order. The Ground raised by the assessee is also not valid because the CIT while passing the order U/s. 263 has provided a reasonable opportunity to the assessee which is evident from the order of CIT. The directions of the CIT is binding on the AO and the AO has no freedom to examine the issue and take appropriate action, in accordance with law. We therefore find that there is no ambiguity in the order of the Ld. CIT(A) in enhancing the assessment in accordance with order passed U/s. 263 instead of Rs. 9,43,640/- disallowed by the Ld. AO. Therefore, we are of the view that there is no infirmity in the order of the Ld. CIT(A) and no interference is required and accordingly, we uphold the order of the Ld. CIT(A) in this regard and the ground raised by the assessee is dismissed.

Issues:
Appeal against order of Ld. CIT(A) - Contrary to law, weight of evidence, and probabilities of the case - Validity of order U/s. 263 - Addition of Rs. 19,00,600 - Disallowance of expenses - Merits of the addition - Denovo assessment - Non-appearance of assessee - Validity of orders - Representation before Tribunal.

Analysis:
The appeal was filed against the order of the Ld. CIT(A) by the assessee, challenging the validity of the order under Sections 263 and 250(6) of the Income Tax Act for the Assessment Year 2010-11. The assessee raised various grounds, including contentions that the order was contrary to law, weight of evidence, and probabilities of the case. The main issue revolved around the addition of Rs. 19,00,600, which was disallowed by the Assessing Officer based on the directions of the CIT in the revision order. The assessee argued that the addition was void-ab-initio as it was not proposed in the pre-revision show cause notice and no opportunity for rebuttal was provided during the revision proceedings. The Ld. CIT(A) upheld the disallowance, stating that the directions of the CIT were binding on the Assessing Officer, and the AO had no discretion to re-examine the issue. The Tribunal noted that the assessee did not appear for the hearing, and based on the material available on record, upheld the order of the Ld. CIT(A) in enhancing the assessment to Rs. 19,00,600, dismissing the grounds raised by the assessee.

The Tribunal found that the Assessing Officer had incorrectly mentioned the disallowance amount in the assessment order but upheld the Ld. CIT(A)'s decision to enhance the disallowance to Rs. 19,00,600 as directed by the CIT in the revision order. Despite the absence of representation from the assessee, the Tribunal concluded that the CIT's directions were binding on the AO, and there was no ambiguity in the Ld. CIT(A)'s decision to implement the revision order. The Tribunal emphasized that the AO had no freedom to examine the issue independently and was required to follow the directions of the CIT. Therefore, the Tribunal upheld the order of the Ld. CIT(A) and dismissed the appeal of the assessee, noting that no interference was necessary in this regard. The additional grounds raised by the assessee were also not allowed due to the lack of representation before the Tribunal.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the order of the Ld. CIT(A) in enhancing the assessment to Rs. 19,00,600 based on the directions of the CIT in the revision order. The Tribunal emphasized the binding nature of the CIT's directions on the Assessing Officer and the requirement for strict adherence to the directions provided in the revision order, even in the absence of representation from the assessee during the proceedings.

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