INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Assumption of jurisdiction by Pr. CIT - Order of AO allegdly passed without proper enquiry on ground of expenditure incurred on foreign visit of assessee and her family members - False, frivolous and baseless allegation by Senior Officer of IT Department

Assessments for assessment years 2005-06 to 2008-09 were reopened on the conclusion that an income exceeding Rs. 1,00,000 in every assessment year had escaped assessment and the same had, on being challenged before Delhi High Court, been upheld by Order, dt. 19-10-2012. Pr. CIT issued show cause notice and there were contradictions found between the stand taken by employer of assessee's spouse, M/s. NDTV Ltd., about nature of expenditure incurred by that company on assessee's foreign trips with family, assessee's own stand about the same, where assessee herself stated that the expenditure incurred by her spouse was the cost to the company and the stand taken by assessee's spouse, who also travelled abroad with other family members, that it was a personal trip. In view of the contradictions in the stands taken by the assessee and her witnesses, her stand should not have been accepted by the AO without weighing the relative merit of versions of the each of the witnesses examined in the case. AO failed to conduct proper inquiry and failed to apply proper law leading to said assessment orders being erroneous as well as prejudicial to the interest of revenue.Held: Considering the facts of the present case in totality, in the light of judicial decisions discussed supported by a vortex of evidences, examined and analysed by the AO during the course of assessment proceedings, further supported by thorough investigations/enquiries made by the AO during the assessment proceedings, there remains nothing for the Pr. CIT to assume jurisdiction under section 263 to say that the assessment order was not only erroneous but prejudicial to the interest of the revenue. PCIT had wrongly assumed jurisdiction under section 263 hence his combined order for all the assessment years deserve to be set aside by the Tribunal. Accordingly, order of the Pr. CIT was set aside and restore that of the AO restored . Tribunal was constrained to bring on record, to be looked into by the Central Board of Direct Taxes (CBDT) that proceedings under section 263 have been initiated in this case apparently on the basis of false, frivolous and baseless allegations with mala fide intention of the quarter concerned which were also examined and found not sustainable by the Vigilance Directorate of IT Department. No doubt, proceedings under section 263 having been initiated and completed on the allegations leveled by a Senior Officer of the IT Department was an order passed by a quasi-judicial authority but it sans judicious approach required to be exercised by the quasi-judicial authority. Quasi-judicial proceedings initiated apparently on the basis of false, frivolous and baseless allegations have not only prejudiced assessee, rather it had also wasted the valuable time of the Tribunal. Facts and circumstances of the case, available on record as discussed prove, that the Senior Officer of the Revenue Department had not only got the proceedings undr section 263 initiated against the assessee as well as against the Revenue Department by filing frivolous applications one after the other before the High Court of Delhi as well as the Tribunal.

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