2011 (4) TMI 1399 - AT - Income Tax

Tribunal overturns Income-tax Commissioner's order, finds assessment not erroneous.

The Tribunal set aside the Commissioner of Income-tax's order u/s.263, finding the assessment order not erroneous and allowed the assessee's appeal. The ... Revisionary jurisdiction under section 263 - prejudicial to the interests of Revenue - erroneous assessment - Minimum Alternate Tax applicability - Explanation clause (vii) to Section 115JB(2) regarding sick industrial companiesRevisionary jurisdiction under section 263 - erroneous assessment - prejudicial to the interests of Revenue - Minimum Alternate Tax applicability - Explanation clause (vii) to Section 115JB(2) regarding sick industrial companies - Validity of the Commissioner's order under section 263 setting aside the assessment and directing reassessment for alleged failure to consider MAT applicability - HELD THAT: - The Tribunal found that the Assessing Officer had considered the assessee's contention regarding non applicability of MAT by reference to the auditor's report and clause (vii) of the Explanation to Section 115JB(2) relating to sick industrial companies, and had recorded that position in the assessment order. Since the assessment was not shown to be erroneous and the AO had examined the MAT issue, one of the essential ingredients for exercise of revisionary jurisdiction under section 263-existence of an erroneous order prejudicial to Revenue-was missing. Applying the principle in Malbar Industrial Co. Ltd. v. CIT, the Tribunal held that the CIT's order amounted to directing a roving enquiry and was not sustainable where the AO had already considered the relevant provision and reached a conclusion. [Paras 6, 7]The Commissioner's order under section 263 is set aside; the reassessment direction is quashed.Final Conclusion: The assessee's appeal is allowed and the order passed by the Commissioner under section 263 is set aside. Issues involved: Appeal against order u/s.263 of the Income-tax Act,1961 for Assessment Year 2005-06.Summary:The assessee, engaged in manufacturing, appealed against the Commissioner of Income-tax's order u/s.263 for not considering MAT liability. The CIT directed re-examination of the assessment due to MAT non-consideration. The assessee challenged the order on various grounds. The AR argued that all relevant documents were provided, including BIFR application. The AR cited the Malbar Industrial Co. Ltd. case to support that the assessment order was not erroneous. Additionally, the AR pointed out that the CIT agreed that Section 115JB was not applicable to the assessee, making the order invalid. The DR supported the CIT's order. Upon analysis, the Tribunal found the assessment order not erroneous as the Assessing Officer had considered the relevant provisions. Citing the Malbar Industrial Co. Ltd. case, the Tribunal set aside the CIT's order, allowing the assessee's appeal.Decision:The Tribunal set aside the CIT's order u/s.263, finding the assessment order not erroneous and allowing the assessee's appeal.