2016 (1) TMI 1032

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....f appeal: 1. "In law, the Commissioner of Income-Tax ought to have appreciated that the impugned assessment order was not amenable to the divisional jurisdiction U/s. 263 and therefore, the impugned order passed by him U/s 263 is not sustainable. 2. On the facts there being no error much less an error prejudicial to the interest of the revenue, the learned Commissioner of Income-tax ought to have refrained from invoking the provisions of sec.263 of the Act. 3. Without prejudice, the learned Commissioner erroneously disallowed the expenditure of Rs. 2,36,07,661/- as deduction without considering the fact that the AO had considered the explanation of the appellant and had passed a speaking order U/s 143(3) r.w.sec 1....

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....4C of the Act on 18/10/2012 on a total income of Rs. 347,04,06,832/- after making several disallowances. Being aggrieved by the disallowance, an appeal was filed and pending disposal. As the matter stood thus, the ld.CIT (LTU) had issued notice u/s 263 dated 4/2/2015 calling upon the assessee-company to show cause as to why the assessment order cannot be revised, as the AO had failed to disallow a sum of Rs. 2,36,07,661/- as no tax deduction was made. In response to show cause notice, assessee-company submitted vide letter dated 11/3/2015 that provision for expenses was made at the end of the accounting year without any reference to any vendor and in the beginning of the next accounting year, this provision was reversed and actual invoice w....

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....e that arises for our consideration in the present appeal is whether the ld.CIT(LTU) was justified in assuming jurisdiction under the provisions of sec.263 of the Act. The only ground on which the ld.CIT(LTU)exercised the power of revision u/s 263 was that the claim of allowance of Rs. 2,36,07,661/- under the provisions of sec. 40(a)(ia) was not examined by the AO during the course of assessment proceedings. Learned counsel for the assessee could not demonstrate before us that the issue was examined by the AO during the course of assessment proceedings. It is settled principle of law that non-enquiry by the AO on an issue confers jurisdiction on the CIT to revise the assessment. The Hon'ble jurisdictional High Court, in the case of CIT vs. ....