2017 (6) TMI 1118 - AT - Income Tax

Tribunal restores original assessment order, finding revision lacked justification.

The Tribunal set aside the Principal Commissioner of Income-tax's order under Section 263, restoring the Assessing Officer's original assessment order ... Revision u/s 263 - order erroneous or prejudicial to the interests of the revenue - Held that:- AO himself had conducted enquiry by obtaining requisite information and details with regard to each of the expense enumerated by the Ld CIT in his SCN. We find that in response to requisition u/s 142(1), the assessee had furnished details & explanations and the documents on record disproved the Ld CIT’s charge in the SCN that enquiry was not conducted. We further find that even before the Ld CIT, the assessee had furnished the same explanations and details which have been ignored and/or brushed aside by the Ld CIT by making general observation that no supporting evidences were furnished despite opportunity. We however find that no specific document or evidence was specified by the Ld CIT in his order which he had expected or required the assessee to produce but which the assessee failed to produce at the stage of revision. The assessment has been set aside by the Ld CIT only with a view to give the AO one more opportunity of conducting roving enquiry without establishing in any specific manner as to how AO’s assessment order dated 28.03.2014 was erroneous in so far as prejudicial to the interest of the Revenue. In our considered opinion, by setting aside the assessment and directing the AO to pass fresh order of assessment, the Ld CIT has merely given the AO a second inning which is not the aim and object of Section 263 of the Act. For the reasons discussed in the foregoing therefore, we hold that the order u/s 143(3) passed by the ITO, Ward 12(3), Kolkata was not erroneous in so far as prejudicial to the interests of the revenue for the reasons set out in the CIT’s order u/s 263 of the Act - Decided in favour of assessee. Issues Involved:1. Validity of initiating revision proceedings under Section 263 of the Income-tax Act, 1961.2. Lack of clear findings on the issue for which revision proceedings were initiated.3. Revisiting issues already considered and detailed in assessment proceedings under Section 143(3).4. Submission of complete details during the assessment proceedings.5. Restoration of the matter to the Assessing Officer.6. Reasonable opportunity of being heard to the appellant.Detailed Analysis:1. Validity of Initiating Revision Proceedings Under Section 263:The appellant challenged the validity of the revision order passed by the Principal Commissioner of Income-tax (CIT) under Section 263, arguing that the Assessing Officer's (AO) order under Section 143(3) was neither erroneous nor prejudicial to the interest of the Revenue. The CIT initiated revision proceedings based on the belief that the AO's order was erroneous and prejudicial to the Revenue's interest. However, the Tribunal found that the AO had conducted a detailed inquiry during the assessment proceedings, and the CIT's reasons for considering the order erroneous were not supported by the facts on record.2. Lack of Clear Findings on the Issue for Which Revision Proceedings Were Initiated:The appellant contended that the CIT restored the matter to the AO without giving a clear finding on the issue for which the revision proceedings were initiated. The Tribunal noted that the CIT's order was primarily based on the allegation that the AO did not verify certain agreements and expenses. However, the Tribunal found that the AO had indeed examined these aspects during the assessment proceedings, and the CIT's findings were not substantiated by the evidence on record.3. Revisiting Issues Already Considered and Detailed in Assessment Proceedings Under Section 143(3):The appellant argued that the CIT initiated revision proceedings on issues that were already considered and detailed in the assessment proceedings under Section 143(3). The Tribunal observed that the AO had conducted a thorough examination of the relevant agreements and expenses during the assessment proceedings. The CIT's order did not bring out any new facts or evidence to justify the revision, and it was merely an attempt to revisit the same issues.4. Submission of Complete Details During the Assessment Proceedings:The appellant claimed that complete details related to the matters for which revision proceedings were initiated were submitted before the AO during the assessment proceedings. The Tribunal found that the appellant had indeed furnished detailed information and documents regarding the expenses and agreements in question. The AO had considered these submissions before passing the assessment order, and the CIT's order did not provide any specific instances where the details were found to be inadequate or incorrect.5. Restoration of the Matter to the Assessing Officer:The appellant contended that the CIT erred in restoring the matter to the AO without providing clear reasons. The Tribunal noted that the CIT's order was based on the premise that the AO did not conduct proper inquiries. However, the Tribunal found that the AO had made detailed inquiries and examined the relevant documents. The CIT's order did not establish any specific errors or omissions in the AO's assessment, and restoring the matter to the AO was not justified.6. Reasonable Opportunity of Being Heard to the Appellant:The appellant argued that the CIT did not give a reasonable opportunity of being heard. The Tribunal observed that the CIT's order did not specify any additional documents or evidence that the appellant was required to produce. The appellant had provided detailed explanations and documents during the assessment and revision proceedings. The CIT's general assertion that the appellant did not furnish complete details was not supported by specific instances, and the appellant was not given a fair opportunity to address the CIT's concerns.Conclusion:The Tribunal concluded that the AO had conducted a proper inquiry and examination of the relevant agreements and expenses during the assessment proceedings. The CIT's order under Section 263 was based on incorrect assumptions and did not provide specific reasons to justify the revision. The Tribunal set aside the CIT's order and restored the AO's original assessment order under Section 143(3). The appeal was allowed in favor of the appellant.