2014 (9) TMI 924

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....n 31-01-2011 declaring total income at Rs. Nil. The return was processed u/s. 143(1) of the I.T. Act and refund of Rs. 2,58,570/- was issued to the assessee. Subsequently, scrutiny assessment was completed vide order u/s. 143(3) dated 19.11.2012 accepting the returned income as nil. Thereafter, it was noticed that the assessee had received interest on fixed deposits amounting to Rs. 38,54,595/- under the head Receipts and Payments account. Since the Assessing officer denied the exemption u/s. 11 of the I.T. Act and the Trust was not registered u/s. 12AA of the I.T. Act, the interest income from fixed deposits received by the assessee should have been brought to tax as income from other sources. The Assessing officer rectified the assessment....

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....roceedings u/s. 263 of the I.T. Act, brought the above amount into taxation by canceling the order passed by the Assessing officer u/s. 154 of the I.T. Act. The effect of the proceedings u/s. 263 by the CIT is nothing more than rectification done through the proceedings under section 154 of the I.T. Act by the Assessing officer. A bare reading of sec. 263 makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied with twin conditions, namely, (i) the order of the Assessing officer sought to be revised is erroneous; and (ii) it is prejud....