Tax Tribunal upholds Commissioner's order, deems assessment erroneous. Loss set off issue under sec 72A. Appeal dismissed.

The Tribunal upheld the Commissioner of Income Tax's order u/s 263, finding that the original assessment order was erroneous and prejudicial to revenue due to the lack of discussion on the set off of loss u/s 72A. The appellant's arguments regarding the premature show cause notice and validity of the CIT's order were dismissed, leading to the dismissal of the appeal on 11th January 2012.

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Issues involved: Appeal against order u/s 263 of the Income-tax Act for the assessment year 2006-2007.

Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax, Chennai for the assessment year 2006-2007. The main contention raised was regarding the show cause notice issued u/s 263 of the Act, challenging the jurisdiction of the CIT to assume such authority for the said assessment year. The appellant argued that the notice was premature and the proceedings u/s 263 were null and void. The CIT had set aside the original assessment order due to an audit objection related to the set off of unabsorbed depreciation from one company to another, under section 72A of the Act. The appellant contended that the CIT's order was solely based on the audit objection and not valid in the eyes of the law.

The appellant's representative argued that the Assessing Officer had already allowed the set off of loss during the assessment proceedings, and therefore, the CIT's intervention u/s 263 was unwarranted. On the other hand, the Senior DR argued that the Assessing Officer had not properly examined the applicability of section 72A and had accepted the claims made by the assessee without due diligence, making the original assessment order erroneous and prejudicial to revenue.

After considering the submissions, the Tribunal found that the Assessing Officer had not discussed the issue of set off of loss u/s 72A in the assessment order. The appellant failed to provide evidence of any enquiry made by the Assessing Officer on this matter. Consequently, the Tribunal upheld the CIT's order u/s 263, stating that there was no mistake warranting interference. The appeal was dismissed, and the decision was pronounced on 11th January 2012.

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