Tribunals
Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Wednesday, 17 February 2016 16:55

Section 263 - Fulfillment of twin condition is must i.e. assessment order should be erroneous and it should cause a prejudice to the Revenue. If any one condition is lacking, then action u/s 263 would not be justified - Ahmedabad Tribunal

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Section 263 - Revision by CIT

Gist

1. Certain Expenditure are to be given to the assessee, even if in a particular year no business activity was carried out. If the logic of the ld.Commissioner is accepted that against a miniscule income, expenses of more than Rs.4,16,000/- has been claimed by the assessee, then no assessee would ever suffer loss

2. To invoke Section 263 fulfillment of twin condition is must i.e. assessment order should be erroneous and it should cause a prejudice to the Revenue. If any one condition is lacking, then action u/s 263 would not be justified

3. It is the prerogative of the AO what to discuss in the assessment order and the assessee cannot force the AO to draft the assessment order in a particular manner. The assessment order cannot be termed erroneous as well as prejudicial to the interest of the Revenue on the ground that inquiry was not conducted by the AO.  

Facts

1. Grievance of the assessee is that the ld.Commissioner has erred in taking cognizance under section 263 of the Income Tax Act, and thereby setting aside the assessment order dated 31.10.2012 for re-adjudication of the issues

2. Assessee has filed its return of income on 28.9.2010 declaring total income at Rs.9,100

3. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Income Tax Act was issued upon the assessee on 5.9.2011

4. He passed an assessment order under section 143(3) on 31.10.2012. The ld.AO has accepted the returned income of the assessee

5. On perusal of the record, the ld.commissioner harboured a belief that the AO did not examine the issues properly, and therefore, he took cognizance under section 263 of the Income Tax Act

6. After analysis of the record, the ld.Commissioner has held that the AO failed to carry out adequate inquiry, and therefore, the assessment order is erroneous and prejudicial to the interest of the Revenue. Accordingly, the ld.Commissioner has set aside the assessment order with direction to the AO to pass a fresh assessment order determining the total taxable income of the assessee

7. Honb. ITAT decided the issue in favour of the Assessee 

Adjudication

We find that the assessee has placed on record computation of income, details of expenditure and all other details called for by the AO. The assessee has an income of Rs.906/- under the head “Business Income”. This income was earned by the assessee from renting of weigh-bridge. In our opinion, the ld.Commissioner was of the view that against an income of Rs.906/- from the operation of weigh-bridge, the expenditure of Rs.2,98,212/- towards salary and Rs.1,16,067/- towards depreciation of weigh-bridge are prima facie on the higher side and this aspect has been accepted by the AO without verification. In our opinion, the assessee has placed on record the details. If the logic of the ld.Commissioner is accepted that against a miniscule income, expenses of more than Rs.4,16,000/- has been claimed by the assessee, then no assessee would ever suffer loss. Certain expenditure are to be given to the assessee, even if in a particular year no business activity was carried out. The assessee has shown operation of weighbridge and income therefrom. Therefore, the ld.Commissioner is not justified in taking action under section 263 of the Income Tax Act. We allow this appeal of the assessee also and quash the order passed by the ld.Pr.Commissoner. 

Cases referred to

1. CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)

2. Gee Vee Enterprise vs. Commissioner of Income Tax 99 ITR 375

3. CIT vs. Sun Beam Auto 227 CTR 113

4. Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095

5. Malabar Industries Vs. CIT243 ITR 83

6. CIT Vs. Anil Kumar Sharma, 335 ITR 83

7. CIT Vs. Vikas Polymers, 341 ITR 537 (Delhi)

8. ITO Vs. D.G. Housing projects Ltd., 343 ITR 329 (Delhi)

9. CIT vs. D.G. Gopala Gowda, 354 ITR 501

Additional Info

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