Assessee’s time cannot be taken for granted by Income Tax Department – ITAT

Assessee’s time cannot be taken for granted by Income Tax Department. Assessee can not be made to appear before the tax authorities again and again

ABCAUS Case Law Citation
ABCAUS 3624 (2022) (12) ITAT

Important Case Laws relied upon:
Alkaben B. Patel vs. ITO43 Taxmann.com 333 (Ahm)
Sujatha Ramesh vs. CBDT 87 Taxmann.com 228 (Kar)
Kartick Chandra Mondal vs. PCIT113 Taxmann.com 586 (Kol)

In the instant case, the assessee had challenged the order passed by the CIT(A) assuming revisionary jurisdiction under section 263 of the Income Tax Act, 1961 (the Act) to set-aside the assessment order passed by the Assessing Officer (AO) as erroneous and prejudicial to the interest of Revenue.

The assessee had revised its return of income (ITR) declaring increased income.  The case of the assessee was selected for a limited scrutiny through CASS for the reason of claiming large deduction for investment in REC Bonds against capital gain.

Notice was issued to the assessee u/s 143(2) alongwith further notice u/s 142(1) alongwith questionnaire. The AO accepted the returned income which consisted of income from salary, rental income, capital gain and “income from other sources”. 

However, the assessment order was set aside u/s 263 of the Act by the PCIT after show causing the assessee and considering the reply filed.

The case of the Revenue was the investment in REC bonds had not been made within six months. PCIT had held that the six months period should be interpreted on a day to-day basis instead of British Calendar month i.e. last date of the month. PCIT also held that no proper enquiries were not carried out by the AO.  

The Tribunal observed that the replies on the queries raised based on the documents relied upon the AO had taken a plausible view on the facts. The PCIT, on the other hand, had not taken into consideration the full facts and had failed to bring out the error in the order and had also not cared to address the legal position as  to  why the interpretation given by the AO to the six month period can  be said to be incorrect.

The Tribunal find that the interpretation given by the PCIT on the six months period was unsustainable in view of the legal position.

No Revision merely because there is no discussion on the issues in the assessment order

The Tribunal observed that the mere fact that the assessment order has been passed in a cryptic manner, by itself cannot make the order erroneous or pre-judicial to the interest of Revenue.  If as per record the order is passed after making full and proper enquiries on the issues and after examining of the facts and the view taken is legally sustainable, the assessment order is a valid order in the eyes of law.

The Tribunal further said that merely because there is no discussion on the issues in the assessment order, this fact by itself also cannot lead to the conclusion that the order is an order passed without looking into the relevant facts.

The Tribunal stated that he powers vested u/s 263 of the Act are not to be exercised merely because the powers are so vested The Revisionary Authority necessarily needs to see the records as available to the AO. The order cannot be passed on mere whims and fancies.

Assessee’s time cannot be taken for granted by Income Tax Department

The assessee’s time cannot be taken for granted as the assessee  appearing before the tax authorities cannot be made to run around appearing again and again to justify the claim which anyway was allowable and has been allowed in the first round by the AO. The Authorities functioning under the Income Tax Act as Government Authorities are performing State functions for the benefit of the citizens. They no longer can continue to work with the mind set of administering the law applicable to colonials. This style of functioning may have been prevalent

The attitude that I have the power and I shall exercise it, cannot be accepted

The Tribunal further observed that in order to disturb the vested right of the assessee, the Revisionary authority is  duty  bound  to  look  at  the  records  available  and necessarily needs  to  set out  the  error  and the  prejudice caused by the  order sought  to  be  set  aside, the attitude that I have the power and I shall exercise it requiring the assessee again to support its claim cannot be accepted

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