INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry on AO's part -

Pr. CIT invoked jurisdiction under section 263 on the ground that opening values of the year under consideration, i.e., assessment year 2014-15 were entirely different from values certified by auditor under special audit under section 142(2A) and therefore, books of account of assessee did not reflect true and fair state of affairs of its business and therefore, assessment order passed considering those books of account of assessee was erroneous and prejudicial to the interest of revenue. Held: A moot question was whether AO had taken one of the views possible in law ? No doubt he issued a show cause notice, dated 20-12-2017 regarding details considered by Pr. CIT in the proceedings under section 263 and for the sake of argument one could assume that AO had taken cognizance of these details, and was duly aware about discrepancy in the accounts, but he adopted all these things in a peripheral manner. He had no time because notice was issued on 20-12-2017 and order was passed on 30-12-2017. He nowhere assessed impact of special auditor in earlier years coupled with the fact that accounts of assessee were never being completed; they were provisional even in earlier years. Accordingly, AO had not conducted an inquiry which was required after taking into consideration discrepancies in the accounts, and, therefore, Pr. CIT had rightly taken cognizance under section 263 and set aside assessment for conducting fresh inquiry and for passing of fresh assessment order.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2014-15

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