CIT while exercising power U/S. 263 must record a specific finding that it is a case of no enquiry: Calcutta HC

COMMISSIONER OF INCOME TAX, KOLKATA – XII VERSUS GOPAL SHARMA (ITA NO. 31 OF 2015)

Facts:

1. Scrutiny assessment for the year under consideration was completed by an order determining the total income of the assessee at Rs. 3,19,86,520/-.

2. The CIT invoked his powers under Section 263 of Income Tax Act, alleging that the assessing officer completed the assessment in hasty manner and accepted the return of income without making necessary enquiry and verification and hence, the order was prejudicial to the interest of revenue.

3. Therefore, a show cause notice was issued to the assessee to answer few issues hinting at undervaluation of stock and the assessee submitted reply.

4. However, the CIT rejected the contention raised by the assessee and affirmed the proposal in the show cause notice and directed the assessing officer to make necessary investigation on the said issues and pass orders as per law.

5. Aggrieved by this, the assesse preferred appeal before the tribunal which allowed the same. Hence, the matter was before the High Court.

Hon Calcutta HC held as below:

1. We have noted as to the exercise conducted by the assessing officer in the scrutiny assessment which was examined by the tribunal and found that the due enquiry conducted by the assessing officer and after perusal of the documents, stock register etc. the assessment was completed.

2. The tribunal also re-appreciated the factual position and found that the CIT while exercising power under Section 263 of the Act has not recorded a specific finding that it is as case of no enquiry by the assessing officer rather the observation was there could be a possibility of understatement of the closing stock.

3. The appeal by the Revenue is dismissed

 

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