CIT Revision u/s 263 order not mentioning twin conditions of erroneous and prejudicial to interest of revenue quashed

CIT Revision u/s 263 order not mentioning twin conditions of being erroneous and prejudicial to the interest of revenue quashed

ABCAUS Case Law Citation
ABCAUS 3494 (2021) (04) ITAT

Important case law relied referred:
Malabar Industrial Co. vs. CIT 243 ITR 83 (SC)
CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC)
CIT vs. Kwality  Steel  Suppliers  Complex  (2017)  395  ITR  1  (SC)

In the instant case, the assessee had challenged the order passed by the CIT(A) invoking his revisonal jurisdiction u/s 263 of the Income Tax Act, 1961 (the Act) in directing the Assessing Officer (AO) to make a fresh assessment.

In the instant case, the CIT from the record of the assessment observed that the assessee had paid cash aggregate of/which is exceeding Rs. 20,000/- in a single day for the purchases during the year under consideration.

Therefore, a show cause notice (SCN) u/s 263 of the Act was issued to the assessee calling for assessee’s objections as to why the assessment order u/s 143(3) rws 147 should not be revised u/s 263 of the Act.

The said notice was duly served on the assessee. However, the assessee did not comply to the said show cause notice. Again, an opportunity through was afforded to the assessee requesting to appear before the Commissioner of Income Tax.

However, there was no compliance from the assessee. As there was no compliance from the assessee a final opportunity was afforded to the assessee to file his objections, if any, for revision of his assessment.

In the above circumstances, the CIT(A) concluded that the assessee had no explanation to offer for the discrepancy noticed. The Assessing Officer was directed to cancel the order u/s 143(3) rws 147 and make a fresh assessment.

Before, the Tribunal the assessee, contended that CIT’s impugned order had nowhere held the assessment in question was an erroneous one so far as it causes prejudice to the interest of Revenue as per Section 263 of the Act.   

The Pr.CIT had rather directed the Assessing Officer to cancel his corresponding assessment in issue in other words.

CIT Revision u/s 263 order not mentioning twin conditions of being erroneous and prejudicial to the interest of revenue quashed

The Tribunal observed that the Hon’ble Supreme Court held that an assessment or re-assessment, as the case may be, could only be revised in case it satisfies the twin conditions of erroneous as well as causing prejudice to the interest of revenue; simultaneously. 

The Tribunal pointed out that there was no such indication in the Pr. CIT’s directions. Coupled with this, the Tribunal noted that the CIT had also directed the Assessing officer to cancel the assessment himself which the latter has no jurisdiction to do so as per Sec. 263 of the Act. 

The Tribunal opined that there was no reason to sustain either of the two courses adopted by the Pr. CIT.

Accordingly, the Tribunal quashed the impugned revision order and allowed the appeal in favour of the assessee.

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