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The High Court held that the Revisional Authority did not follow the proper procedure prescribed u/s 263 of the Income Tax Act while invoking its revisionary powers. The key points are: The Revisional Authority did not make a specific finding that the benefit claimed by the assessee u/s 37 was wrongly allowed by the Assessing Officer. The order merely stated that it was unclear whether the benefit was allowed after proper inquiry. Section 263 mandates that the Revisional Authority examine the records, provide an opportunity of hearing to the assessee, and make necessary inquiries before passing orders. The Revisional Authority did not arrive at a conclusion that the assessee was not entitled to claim the prior period expenses u/s 37. There was no satisfaction reached by the Revisional Authority that the original assessment order was erroneous and prejudicial to the revenue's interests. The Revisional Authority cannot reopen an assessment in a casual or whimsical manner without satisfying the statutory requirements. The impugned order was issued in contravention of the requirements specified u/s 263, and the Court decided in favor of the assessee.
The High Court held that the Revisional Authority did not follow the proper procedure prescribed u/s 263 of the Income Tax Act while invoking its revisionary powers. The key points are: The Revisional Authority did not make a specific finding that the benefit claimed by the assessee u/s 37 was wrongly allowed by the Assessing Officer. The order merely stated that it was unclear whether the benefit was allowed after proper inquiry. Section 263 mandates that the Revisional Authority examine the records, provide an opportunity of hearing to the assessee, and make necessary inquiries before passing orders. The Revisional Authority did not arrive at a conclusion that the assessee was not entitled to claim the prior period expenses u/s 37. There was no satisfaction reached by the Revisional Authority that the original assessment order was erroneous and prejudicial to the revenue's interests. The Revisional Authority cannot reopen an assessment in a casual or whimsical manner without satisfying the statutory requirements. The impugned order was issued in contravention of the requirements specified u/s 263, and the Court decided in favor of the assessee.
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