Revision u/s 263 to make additions substantively instead of  protectively not sustainable – itat

Revision u/s 263 to make additions substantively instead of  protectively not sustainable – ITAT

 ABCAUS Case Law Citation
ABCAUS 3631 (2023) (01) ITAT

In the instant case, the assessment was framed pursuant to search action u/s 132. The Assessing Officer (AO) made additions on protective basis in the hands of the appellant assessee.

Subsequently, the Pr. CIT, upon perusal of case records, sought revision u/s 263 of the Income Tax Act 1961 (the Act) of the order on the ground that addition should have been made substantively instead of protectively. 

Accordingly, AO was directed to make the additions substantively instead of protectively by making denovo assessment. 

The Tribunal observed that the additions had already been made protectively and the same were under challenge before first appellate authority whose powers are co-extensive with the powers of AO.

The Tribunal opined that no prejudice could be said to have been caused to the revenue since the addition has already been made in the hands of the assessee protectively.   

According to the ITAT in such a situation, the assessment framed by AO could not be said to be prejudicial to the interest of the revenue and the twin conditions i.e., erroneous and prejudicial to the interest of the revenue to invoke the provisions of Section 263 could not be said to have been fulfilled by the revisional authority.

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

Download Full Judgment Click Here >>

• Object of assessment proceedings is not to find empirically correct solution on every fact issue – HC
• Penalty u/s 270A deleted as assessee filed revised computation during scrutiny
• Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT
• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT