Tribunals
Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Sunday, 23 August 2015 11:55

Section 263 - Justified when CIT categorically pointed out the shortfall and absence of inquiry done by the AO, Assessee not required to be put to notice on the evidences relied by CIT - Panaji Tribunal

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Gist

1. Invoking of Section 263 is justified when the CIT has categorically pointed out the shortfall, more specifically, the absence of inquiry done by the AO and the area where the AO has specifically not done the inquiry

2. Assessee is not required to be put to notice on the evidences relied by the CIT in invoking Section 263

3. Assessee must be given an opportunity of being heard before invoking Section 263

Facts

1. Assessee is a private limited company and a survey was conducted on the premises of assessee company

2. In the course of survey, managing director of the company surrendered two foreign bank accounts

3. Assessee's locker was opened and cash and jewellery in excess of Rs. 1 Cr. was found

4. Since the valuation of cash and jewellery was more than 1 Cr. survey was converted to search & seizure u/s 32 of the Act in the MD's individual capacity

5. During the course of search no material or documents pertaining to two foreign accounts were found or seized

6. Assessee was issued notice u/s 153A and in response to the notice return was filed declaring difference in price of Iron Ore deposited in the foreign bank accounts

7. Return u/s 153A was accepted after making certain other additions

8. Assessee preferred an appeal before the CIT(A) against the order u/s 153A which was pending

9. In the meantime the Principal Commissioner of Income Tax (Central), Bangalore invoked his powers u/s 263 and issued a show cause notice on the ground that the AO has not considered the percentage of under invoicing by the assessee

10. Ld. Principal CIT did not accept the objections raised by the assessee in reply to the show cause notice and went on to pass an order u/s 263 of the Act

11. Assessee moved to the Tribunal against order u/s 263 passed by the Principal CIT

12. Tribunal upheld the order passed by the principal CIT u/s 263 and the assessee's appeal is dismissed

Adjudication

The ld. Principal Commissioner of Income-tax (Central), Bangalore has categorically pointed out in para 12.2 of his order the shortfall, more specifically, the absence of inquiry done by the AO and the area where the AO has specifically not done the inquiry. The ld. Principal Commissioner of Income-tax (Central), Bangalore in this case has not simply asked the AO to re-examine the matter. It is after detailed examination, after considering the surrender/acceptance of the Assessee in respect of the under-invoicing of part of the transactions the ld. Principal Commissioner of Income-tax (Central), Bangalore has directed the examination of all the transactions which has not been done by the AO. In these circumstances, we are of the view that the Assessee has not been able to point out any error which makes the order passed u/s 263 by the ld. Principal Commissioner of Income-tax (Central), Bangalore unsustainable. In the circumstances, the order passed u/s 263 by the ld. Principal Commissioner of Income-tax (Central), Bangalore stands upheld and the appeals filed by the Assessees stands dismissed

Cases referred to

National Thermal Power Co. Ltd. 229 ITR 383

Gabriel India Ltd. 203 ITR 108 

Additional Info

Read 2551 times Last modified on Saturday, 13 February 2016 16:09
Amit

Amit is a Chartered Accountant and a part of Taxpundit's Support Team. He has experience in various industry sectors including manufacturing, power and utilities, financial services, alternative investments etc. He is a passionate blogger and keep writing articles on Income Tax for various publications.

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2 comments

  • Comment Link Ashok Monday, 24 August 2015 14:53 posted by Ashok

    It has become too complicated for the assessee

  • Comment Link Amit Sunday, 23 August 2015 13:08 posted by Amit

    Finally an order directly in the favour of Revenue after a long wait...

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