2004 (6) TMI 624 - AT - Income Tax

Tribunal Overturns CIT's Order: Assessment Found Accurate; AO's Examination on Gifts, Losses, Deductions Upheld.

RAM KISHAN DASS Versus INCOME-TAX OFFICER, WARD 20 (4)

The Tribunal quashed the CIT's order under section 263, determining that the assessment order was neither erroneous nor prejudicial to the interests of ... Challenged the order passed by CIT u/s 263 - Erroneous and prejudicial - deduction u/s 80HHC - Genuineness of gifts - loss on account of soyabean and rice - HELD THAT:- It is found that various items in relation to which the CIT has alleged that Assessing Officer has not examined them properly, the assessee had in fact furnished full details and as observed in the assessment order, detailed discussions were made with regard to these items. It may be pointed out that in the computation of income, the assessee claimed exemption allowable under section 80HHC and after examining the details, the Assessing Officer has allowed the rebate only at which shows that the amount was considerably reduced by him. Had he not examined the issue thoroughly, he could not have made the calculation as has been done by him. Hence, the allegation of C.I.T. is not found to be substantiated. It is not the case of the department that the documents placed in the paper book which have been referred to above, were not before the Assessing Officer and the Ld. CIT or that the certificate of the assessee is not correct. Thus, the contention of the Ld. Counsel for the assessee that these documents were considered by the Assessing Officer cannot be rejected. It is a settled legal position that power u/s 263 of the I.T. Act cannot be exercised only to reconsider the material already considered by the Assessing Officer. It is clear from the record, that if it is found that the assessee had placed entire relevant material and the Assessing Officer on examination of such material decided and allowed the claim of the assessee it cannot be said that the order of the Assessing Officer is erroneous or prejudicial to the interest of the Revenue merely because in the order elaborate discussion is not made on certain points. In the case of CIT v. Arvind Jewellers [2002 (7) TMI 50 - GUJARAT HIGH COURT], it was held that since material was there on record and the said material was considered by the ITO, the mere fact that a different view can be taken should not be the basis for an action u/s 263 of the Act. Thus, I am unable to uphold the finding of the learned CIT that the order of assessment passed in this case is erroneous and prejudicial to the interest of the Revenue. Hence, various grounds taken by the assessee to assail the order passed u/s 263 of the Income-tax Act are allowed and consequently, the order is quashed. In the result, the appeal of the assessee is allowed. Issues Involved:1. Legality of the order passed by the Commissioner of Income Tax (CIT) u/s 263.2. Adequacy of opportunity given to the appellant to represent the case.3. Validity of the cancellation of the assessment framed by the Assessing Officer (AO) u/s 263.4. Determination of whether the assessment order was erroneous and prejudicial to the interests of revenue.5. Examination of the CIT's reliance on conjecture and surmise.Summary:1. Legality of the Order Passed by CIT u/s 263:The assessee challenged the order passed by the CIT u/s 263 of the Income-tax Act, claiming it was erroneous and prejudicial to the interests of revenue. The CIT identified several issues, including unverified gifts totaling Rs. 7.14 crores, losses claimed without documentary evidence, and incorrect deductions under section 80HHC. The CIT issued a show-cause notice and, after considering the responses and adjournment requests from the assessee, concluded that the assessment order was erroneous and prejudicial to the revenue. The CIT cited various judicial precedents to support the necessity of action u/s 263.2. Adequacy of Opportunity Given to the Appellant:The assessee argued that the CIT did not provide adequate opportunity to present their case. The CIT, however, noted that multiple adjournments were granted, and further opportunities were denied on the ground that sufficient time had already been provided.3. Validity of the Cancellation of the Assessment Framed by AO u/s 263:The CIT canceled the assessment order, citing lack of verification and examination by the AO on several issues, including the genuineness of gifts, losses in the proprietary business, and incorrect deductions under section 80HHC. The CIT directed the AO to reassess the case after giving due opportunity to the assessee.4. Determination of Whether the Assessment Order was Erroneous and Prejudicial to the Interests of Revenue:The Tribunal examined the details provided by the assessee, including documents related to gifts, losses, and deductions. It was found that the AO had indeed examined these details during the assessment. The Tribunal referred to several judicial decisions, including CIT v. Gabriel India Ltd., which emphasized that an order cannot be termed erroneous unless it is not in accordance with law. It was concluded that the AO had exercised quasi-judicial power and arrived at a conclusion after examining the relevant details.5. Examination of the CIT's Reliance on Conjecture and Surmise:The Tribunal observed that the CIT's order was based on the assumption that the AO had not examined the relevant details, which was not substantiated by the records. The Tribunal noted that the AO had reduced the deduction claimed under section 80HHC after examining the details, indicating that the assessment was thorough. The Tribunal concluded that the CIT's order was not justified as it was based on conjecture and surmise.Conclusion:The Tribunal quashed the CIT's order passed u/s 263, holding that the assessment order was neither erroneous nor prejudicial to the interests of revenue. The appeal of the assessee was allowed.