2013 (9) TMI 897 - HC - Income Tax

Tax Court affirms Commissioner's revision powers under Section 263 for erroneous assessment

The Court upheld the Commissioner of Income Tax's exercise of revision powers under Section 263 of the Income Tax Act, finding the original assessment to ... Revision u/s 263 of the Income Tax Act - erroneous nor prejudicial order - non availability of records - Plea of the assessee is that when books of accounts had been impounded on 27.3.2008 (Annexure A-6) during survey proceedings under Section 133-A of the Act, the Assessee was handicapped to put up its case effectively and thus entire exercise by the revenue under Section 263 of the 1961 Act, was a farce. – Held that:- This plea has no merit. Consistent case of the appellant is that computer backup of all the books/accounts whatever the Assessee had, was available with them. In this backdrop, mere impounding of books of accounts vide Annexure A-6 and their retention with the authorities vide Annexure A-12 had caused no prejudice to the appellant in conduct of proceedings under Section 263 of the 1961 Act. Plea of the appellant that contents of show cause notice under Section 263 of the 1961 Act and the findings arrived at by the Commissioner on conclusion of these proceedings are divergent again is mis-founded. Assessing Officer should have rejected the books of accounts under Section 145 of 1961 Act or could have made proper examination and scrutiny of the same, in whatsoever form those had been produced before him. It is evident by now that no books of accounts maintained in regular course of business and prepared in due discharge of their duties by their Accountant or their C.A, had in fact been produced much-less for examination, as recorded in order of the Assessing Officer – Decided against the Assessee. Issues Involved:1. Jurisdiction under Section 263 of the Income Tax Act.2. Variance in reasons for invoking Section 263.3. Legality and perversity of the Income Tax Appellate Tribunal's order.Issue-wise Detailed Analysis:1. Jurisdiction under Section 263 of the Income Tax Act:The appellant challenged the jurisdiction of the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961, arguing that the original assessment order dated 3.9.2007 was neither erroneous nor prejudicial to the revenue. The Court examined the statutory provision of Section 263, which allows the CIT to revise any order if it is erroneous and prejudicial to the interests of the revenue. The Court found that the Assessing Officer (AO) had not properly verified the books of accounts and had disallowed only a nominal sum without detailed scrutiny. The CIT had rightly concluded that the AO's assessment was erroneous and prejudicial to the revenue due to the lack of proper inquiry into the maintenance of books of accounts.2. Variance in Reasons for Invoking Section 263:The appellant argued that the reasons given in the show cause notices dated 13.8.2009 and 29.9.2009 were different from those in the CIT's order. The Court found no substantial variance between the reasons in the show cause notices and the CIT's order. Both the notices and the order focused on the non-maintenance and non-production of proper books of accounts. The Court concluded that the CIT's findings were consistent with the grounds mentioned in the show cause notices.3. Legality and Perversity of the Income Tax Appellate Tribunal's Order:The appellant contended that the ITAT's order was perverse and contrary to the material on record. The Court held that the ITAT had correctly upheld the CIT's order, which found the AO's assessment to be erroneous and prejudicial to the revenue. The Court noted that the appellant had failed to produce proper books of accounts during the assessment and survey proceedings. The ITAT's order was found to be neither perverse nor illegal, as it aligned with the legal requirements and factual findings.Conclusion:The Court dismissed the appeal, affirming that the CIT had exercised the powers of revision under Section 263 of the Income Tax Act within the legal framework. The ITAT's order was upheld, and all substantial questions of law were answered in favor of the Revenue and against the Assessee. The Court emphasized that the CIT's revision powers are supervisory and quasi-judicial, and must be exercised when the assessment order is both erroneous and prejudicial to the revenue.