2015 (12) TMI 1241 - AT - Income Tax

Tribunal Upholds CIT's Power to Revise Assessment Orders under Income-tax Act

The Tribunal upheld all impugned orders, dismissing appeals challenging the correctness of orders passed by CIT u/s 263 of the Income-tax Act, 1961. The ... Revision u/s 263 - Addition u/s 68 - whether insertion of proviso to section 68 is retrospective - Held that:- When the AO chose not to make any addition by exercising his discretion as per the mandate of section 68, then the ld. CIT in the instant cases was not obliged to hold against the assessees. - But in the present case, AO did not make befitting inquiry in the given circumstances and the CIT has held the assessment order to be erroneous and prejudicial to the interest of the revenue We are concerned with a case in which the AO did not discharge the burden cast on him as regards the framing of assessment. In such circumstances, the ld. CIT stepped in to check his action. All the aspects of the assessment are required to be examined by the AO alone and no other authority. But if such an examination has not been done which has rendered the assessment order erroneous and prejudicial to the interest of the Revenue, then it is not only the right but the duty of the CIT to revise such an erroneous assessment, which is prejudicial to the interest of the revenue. This is what has exactly happened in this case. If the contention of the ld. AR is accepted and taken to a logical conclusion, it will amount to rendering the provisions of section 263 otiose. We, therefore, refuse to accept this contention. After making an elaborate analysis of the nature of amendment, memorandum explaining the provisions of the Finance Bill, 2012, and legal position as emanating from various judgments from the Hon'ble Summit Court governing the retrospective or prospective effect of an amendment, it has been held that insertion of proviso to section 68 is retrospective. As such, this argument, being devoid of any merit, deserves to meet the fate of dismissal Issues:- Delay in filing appeal- Correctness of orders passed by CIT u/s 263 of the Income-tax Act, 1961- Similarity in facts and grounds of appeal among different assessees- Power of CIT to revise assessment orders- Discretion of AO under section 68- Satisfaction of AO regarding cash credit explanation- Applicability of judgments on retrospective effect of proviso to section 68Analysis:1. Delay in filing appeal: The appeal in Subhdhan Commodities P. Ltd. VS. CIT was delayed by 43 days, but the delay was condoned as the reasons provided were satisfactory. The appeal was then taken up for hearing on merits.2. Correctness of orders passed by CIT u/s 263: Various assessees challenged separate orders passed by CIT u/s 263. The appeals were consolidated due to similar facts and grounds. The jurisdictional CITs passed orders under section 263, which were contested before the Tribunal.3. Power of CIT to revise assessment orders: The Tribunal heard both sides and acknowledged that previous cases with similar issues had been disposed of. The Tribunal concluded that the CIT had the authority to revise assessment orders if the AO failed to conduct a proper inquiry, rendering the assessment order erroneous and prejudicial to revenue.4. Discretion of AO under section 68: The argument regarding the AO's discretion under section 68 was raised, citing a Supreme Court judgment. However, the Tribunal emphasized that the CIT's role was to ensure proper assessment procedures were followed, and the AO's decision could be revisited if necessary.5. Satisfaction of AO regarding cash credit explanation: Another argument focused on the satisfaction of the AO as per section 68. The Tribunal clarified that if the AO failed to fulfill assessment duties, the CIT had the right and duty to intervene to rectify any erroneous assessments prejudicial to revenue.6. Applicability of judgments on retrospective effect of proviso to section 68: The argument regarding the retrospective effect of the proviso to section 68 was discussed, referencing a Delhi High Court judgment. The Tribunal highlighted that previous discussions in a related case determined the retrospective nature of the proviso, dismissing the argument against its application.7. Final Decision: Following detailed discussions and referencing previous judgments, the Tribunal upheld all impugned orders, ultimately dismissing all appeals. The decision was pronounced in open court on a specified date.This comprehensive analysis covers the issues raised in the judgment, providing a detailed overview of the Tribunal's decision on each matter.