INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Condition precedent and scope - No enquiry by CIT on his own

Assessment was completed by AO under section 143(3). Subsequently, CIT(A) after examining the records issued a notice under section 263 to show cause the assessee as to why the assessment so framed should not be set aside. In response to the notice, the assessee filed a reply. The submissions made by the assessee were not found acceptable by the Pr. CIT and therefore, he set aside the assessment order to examine the issue of source of cash deposit by the assessee and for initiating the penalty under section 271D.Held: It was not the case where there was no enquiry at all by the AO. There was no material suggesting that the Pr.CIT had expressed his view about insufficiency of enquiry in the material placed on record. The CIT had to come to the conclusion and himself decide that order was erroneous, by conducting necessary enquiry, if required and necessary before the order under section 263 was passed. The order of the AO may be or may not be wrong. CIT cannot direct reconsideration on this gorund but only when the order was erroneous. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. This is not permissible. An order is erroneous, unless the CIT held and records reason why it was erroneous. CIT must after recording reasons, hold that order was erroneous the jurisdictional pre-condition stipulated is that CIT must come to the conclusion that the order was erroneous and was unsustainable in law. CIT in the present case had not carried out any enquiry of his own and had merely set aside the assessment to the file of the AO to re-examine issue of source of cash deposited by the assessee. Assessee during the assessment proceedings had submitted evidences in support of sale of jewelleries and receipt of gift. Moreover, the issue of examination of source of gift was not subject matter of the scrutiny. Therefore, the decision of the CIT invoking provisions of section 263 was not justified and cannot be sustained under the facts and circumstances of the present case. The impugned order was, therefore, set aside and allow the grounds raised by the assessee.

Followed:D.G. Housing Projects Ltd. (2012) 20 Taxmann.com 587 (Del) : 2012 TaxPub(DT) 1727 (Del-HC).

REFERRED : H.H. Maharaja Raja Pawer Dewas (1983) 15 Taxman 363 (MP) : 1982 TaxPub(DT) 0891 (MP-HC), Manish Kumar (2011) 16 Taxmann.com 212 (Ind) : 2012 TaxPub(DT) 740 (Ind-Trib), Malabar Industrial Co. Ltd. (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Smt. Minalben S. Parikh (1995) 215 ITR 81 (Guj) : 1995 TaxPub(DT) 618 (Guj-HC), V.G. Krishnamurthy (1985) 20 Taxman 65 (Karn) : 1985 TaxPub(DT) 408 (Karn-HC), Krishna Capbox (P) Ltd. (2015) 60 taxmann.com 243 (All) : 2015 TaxPub(DT) 1387 (All-HC), Vikas Polymers (2010) 194 Taxman 57 (Del) : 2010 TaxPub(DT) 2189 (Del-HC), Ashish Rajpal (2009) 320 ITR 674 (Del) : 2010 TaxPub(DT) 505 (Del-HC), Anil Shah (2007) 162 Taxman 39, Narottam Mishra (2015) 25 TTJ 206 (Trib), Metachem Industries (2000) 245 ITR 160 (MP) : 2000 TaxPub(DT) 822 (MP-HC), Ratlam Coal Ash Co. (1987) 34 Taxman 443 (MP) : 1988 TaxPub(DT) 529 (MP-HC), Anil Kumar Sharma (2010) 194 Taxman 504 (Del) : 2010 TaxPub(DT) 1573 (Del-HC), Mehrotra Brothers (2004) 270 ITR 157 (MP) : 2004 TaxPub(DT) 0443 (MP-HC), Malabar Industrial Co. Ltd. (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Sunbeam Auto Limited (2010) 189 Taxman 436 (Del) : 2011 TaxPub(DT) 88 (Del-HC) and Hindustan Marketing & Advertising Co. Ltd. (2011) 196 Taxman 368 (Del) : 2011 TaxPub(DT) 482 (Del-HC), Flexituff International Limited, ITA No. 282/Ind/2017 : 2019 TaxPub(DT) 3734 (Ind-Trib), Reliance Communication Limited (2016) 69 taxmann.com 103 (Bom) : 2016 TaxPub(DT) 1771 (Bom-HC) and Dr. Kodela Siva Prasada Rao (2013) 29 Taxmann.com 18 (AP) : 2013 TaxPub(DT) 374 (AP-HC).

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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