2003 (6) TMI 173 - AT - Income Tax

Assessee wins appeal against Income Tax Commissioner's order. Proper enquiry & case law support cited.

The Tribunal allowed the appeal of the assessee, finding that the Commissioner of Income Tax's order under section 263 was not sustainable. The Tribunal ... Revision - Of orders prejudicial to interests of revenue Issues:Appeal against order under section 263 of the Income Tax Act for assessment year 1997-98.Analysis:1. The assessment under section 143(3) was framed on December 31, 1999, after scrutiny. The Assessing Officer (AO) disallowed certain expenses claimed by the assessee, resulting in an assessed income of Rs. 1,26,700.2. The Commissioner of Income Tax (CIT) invoked jurisdiction under section 263, setting aside the assessment for being done de novo after proper enquiry, as he believed the assessment was done without adequate investigation.3. The assessee contended that all details were furnished before the AO, and the assessment was based on the information provided. The counsel cited relevant case laws to support the contention that the AO's actions were justified.4. The Tribunal observed that the AO issued notices under section 142(1) and 143(2), and the assessee responded with detailed submissions. The order of assessment indicated that the AO verified the documents provided by the assessee before passing the assessment order.5. The Tribunal referred to the Supreme Court decision in Malabar Industrial Co. Ltd. case, emphasizing that not every loss of revenue constitutes an error prejudicial to the interests of the Revenue. The Tribunal also cited a judgment of the Calcutta High Court to support the view that an order can only be considered erroneous if an impossible view has been taken.6. The Tribunal concluded that the AO had conducted a proper enquiry by calling for details and verifying the materials provided by the assessee. It held that the AO's actions were justifiable, as he had taken a possible view supported by the jurisdictional High Court's decision.7. The Tribunal distinguished the present case from the Gee Vee Enterprises case, where no enquiry was made by the AO. It held that in the absence of any wrongdoing in the order, the CIT's decision under section 263 could not be upheld.8. Consequently, the Tribunal allowed the appeal of the assessee, finding that the CIT's order under section 263 was not sustainable based on the facts and circumstances of the case.