Notice u/s 263 issued by AO held valid as it was signed by AO in his ministerial capacity

Notice u/s 263 issued by AO was held valid when notice itself stated that PCIT directed its issuance and AO signed it merely in his ministerial capacity

ABCAUS Case Law Citation:
ABCAUS 3081 (2019) (07) HC

Important Case Laws Cited/relied upon by the parties:
CIT Vs. Amitabh Bachchan, (2016) 384 ITR 200

The assessee was in appeal before the Hon’ble High Court against the order of the Income Tax Appellate Tribunal which upheld the Commissioner’s order under Section 263 of the Income Tax Act, 1961 (the Act).

The Assessing Officer (AO) completed the original scrutiny assessment order under Section 143(3).However, the Commissioner caused a notice to be issued to the assessee on the ground that the order of the AO was erroneous and prejudicial to the interests of the revenue, and after considering the reply, made an order under Section 263.

Before the Tribunal, it was contended that the notice under Section 263 was not issued by the proper authority but by the AO and, secondly that in fact the revisional power could not have been exercised because in the original scrutiny assessment due care and enquries had been made by the AO.

The ITAT however, rejected both the contentions. 

Before the Hon’ble High Court, the assessee contended that the CIT in fact did not issue notice, as was evident from the copy produced on record; instead it was issued by the AO. It was urged that such a course was not only irregular but contrary to the mandate of Section 263.

It was next contended that the AO, as a matter of fact, in the present case, had diligently made enquries on the relevant subject and in fact test checked the veracity of this amount by issuing notice to parties.

The Hon’ble High Court observed that the ITAT had exhaustively dealt with the assessee’s contentions, and referred to the latest decision of the Supreme Court which referred to different shades of powers conferred upon the authorities under the Income Tax Act.

The Hon’ble High Court opined that the defect was curable by the Commissioner, provided the notice under Section 263 was validly exercised.

The Hon’ble High Court opined that the grounds listed in the notice, constituted a reasonable and valid rationale for invoking revisional power.

With respect to the alleged defect in the notice, it was observed that The notice itself stated that the Principal Commissioner had directed its issuance and the AO appeared to have signed it merely in his ministerial capacity.

Accordingly, the Hon’ble High Court dismissed the appeal as not giving rise to any  substantial question of law.  

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