No section 263 revision permissible without pointing out what inquiries/verification hadn’t been made by AO in original assessment: HC

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No section 263 revision permissible without pointing out what inquiries/verification hadn’t been made by AO in original assessment: HC

The P & H High court has recently held that section 263 revision is not permissible without pointing out that inquiries/verification hadn’t been made by AO in original assessment.

The copy of the judgement is as under:

 

 

Kanin (India)

[2022] 141 taxmann.com 83 (Punjab & Haryana)

Let us have a short overview of the case:

  1. The case was related to the scope and power under Section 263 of the Income-tax Act, 1961 with regard to the Revision of the assessment order prejudicial to interest of revenue vis a vis Explanation 2(a).
  2. The related Assessment year in the case was AY 2013-14.
  3. Issue was whether in order to attract section 263 Assessing Officer’s order must be erroneous and also prejudicial to interest of revenue?Another issue was as to whether before reaching conclusion that order of Assessing Officer is erroneous and prejudicial to interests of revenue, revisionary authority itself has to undertake some enquiries to establish that assessment order is erroneous and prejudicial to interests of revenue
  4. ITAT asserted it as yes for both the issues..
  5. ITAT then proceeded with the next issue as to whether where order was passed by Principal Commissioner holding that assessment made by Assessing Officer was erroneous and prejudicial to interest of revenue as assessment order had been passed without making inquiries or verification, however, Principal Commissioner was not in a position to point out as to what inquiries or verification should have been made but had not been made by Assessing Officer so as to make present case fall within Explanation 2(a) to section 263, Tribunal rightly set aside order passed by Principal Commissioner?
  6. ITAT decided the issue in favour of the assessee & set aside the assessment.

Conclusion:

Where revision order was passed by Principal Commissioner holding that assessment made by Assessing Officer was erroneous and prejudicial to interest of revenue as Assessment Order had been passed without making inquiries or verification, however, Principal Commissioner was not in a position to point out as to what inquiries or verification should have been made but had not been made by Assessing Officer so as to make present case fall within Explanation 2(a) to section 263, Tribunal rightly set aside order passed by Principal Commissioner

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