Revision us 263-Use of word “appears” showed CIT was not sure how and in what manner the assessment order passed was without investigation-ITAT

Revision us 263-Use of word appears showed CIT was not sure as to how and in what manner the assessment order passed was without investigation and enquiry-ITAT

ABCAUS Case Law Citation:
ABCAUS 1121 (2017) (02) ITAT

Assessment Year : 2008-09
Date/Month of Pronouncement: February, 2017

The Grievance:
The main grievance of the assessee was related to the proper opportunity of being heard not provided while passing the impugned order u/s 263 of the Income Tax Act, 1961 (“the Act”)

Brief Facts of the Case:
The assessee e-filed its return of income declaring a loss which was processed u/s 143(1) of the Act on Nil income. Later on, the case was selected for scrutiny and the AO framed the assessment u/s 143(3) of the Act by making addition  on account of disallowance of expenses under the head freight & cartage, electricity & generator, wages & incentive, packing material etc.

Thereafter, the CIT, invoked the provisions of section 263 of the Act by observing that the assessment order appears to have been passed without proper investigation and inquiry and thus found to be erroneous and prejudicial to the interest of the revenue. Accordingly CIT directed the AO to examine the issue properly on each aspect and pass the fresh order.

Contentions of the Assessee:
The assessee submitted that a reasonable and proper opportunity of being heard was not provided by the CIT. It was further submitted that the CIT had not given any specific direction to the AO by pointing out that how and in what manner the assessment order u/s 143(3) of the Act passed by him was erroneous and prejudicial to the interest of the revenue.

Observations made by the ITAT:
The Tribunal noted that the CIT in the body of the revision order categorically stated that the assessment order passed by the Assistant Commissioner “appears to” have been passed without proper investigation and inquiry from that observation.

The Tribunal observed that from the said observation of the CIT, it was clear that he was not sure how and in what manner the assessment order passed was without investigation and inquiry done by the AO as he has used the word “it appears” showing that he was not sure.

Also it was observed that the CIT had stated that the counsel had attended on behalf of the assessee with whom the issues were discussed. However, it was nowhere stated that what were the submission of the assessee and why those were not accepted. Furthermore, the CIT had admitted that the assessee had furnished the details relating to admissibility of expenses on foreign tour, repairs & maintenance, account of vehicles but no findings have been given on the said details, neither any remand report was sought, it was also not directed which inquiry was to be made by the AO. The CIT simply directed the AO to examine the issue again and to pass a fresh order.

Held:
The order passed by the CIT was held to be a non-speaking order. Accordingly, it was set aside to the file of the CIT for deciding the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.