Om Art Prints v. CIT
Decision: In assessee’s favour./p>
Revision under section 263–Erroneous and prejudicial order—AO made proper enquiry
Facts:
After the matter was remanded back by CIT to AO, AO examined the liability of assessee with regard to deduction of TDS on certain charges and found that only freight charges attracts the TDS, which was not deducted by the assessee and accordingly brought to tax under section 40(a)(ia). Pr. CIT observed that as in the orders under section 263, it was clearly mentioned that the assessee had accepted the non-deduction of TDS and assured to pay the tax with interest, thus, by allowing the expenditure of other payments, AO had acted beyond jurisdiction and therefore, remitted the matter back to the AO. However, assessee contended that since AO had followed the instructions of CIT and took conscious decision, revision order passed under section 263 by Pr. CIT, was not sustainable.
Held:
Perusal of order under section 263 passed by CIT indicated that the assessee had accepted that some payments were made without making the TDS and assured to pay tax on such amount and the CIT directed to verify all such payments liable for TDS and apply the provisions of section 40(a)(ia), which shows that the CIT had not directed the AO to make the addition of the entire sum and the assessee also did not accept for such addition. Since the AO had followed the instructions correctly, there was no case for making revision under section 263. As Pr. CIT misunderstood the direction given by the CIT under section 263, therefore, the order passed by the CIT under section 263 was.
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