| The Tax Publishers2020 TaxPub(DT) 4025 (Ctk-Trib) INCOME TAX ACT, 1961
Section 263
Where AO made addition on grounds, which were beyond purpose for taking limited scrutiny, as instant case was of lack of inquiry and there was no application of mind by AO on issues, which formed subject-matter of revisional jurisdiction under section 263, therefore, there was no illegality in action of PCIT in exercising the said jurisdiction.
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Revision under section 263 - Erroneous and prejudicial order - AO made addition on grounds, which were beyond purpose for taking limited scrutiny -
Assessee-individual was deriving income from execution of mining contract works. Case of assessee was selected for limited scrutiny and was duly examined on basis of reasons/points raised in notice under section 143(2) by AO. Thereafter, PCIT made revision in terms of section 263. According to assessee, once case was selected under limited scrutiny, which was duly examined by AO, thereafter, PCIT had no jurisdiction under section 263 for revision of case decided by AO. Held: AO made addition on claims of the expenses debited into the profit and loss account (repair and maintenance, spare parts, etc.) on lump sum basis, which was beyond purpose for taking limited scrutiny. AO is not only an adjudicator but also an investigator. It is his duty to ascertain the truth of the facts stated in the return. When circumstances of the case are such so as to provoke an enquiry, it is his duty to make proper enquiry. Failure to make enquiry in such circumstances would make the assessment order erroneous and prejudicial to the interest of the revenue. Since instant case was of lack of inquiry and there was no application of mind by AO on issues which formed subject-matter of revisional jurisdiction under section 263. Therefore, there was no illegality in action of PCIT in exercising the said jurisdiction.
Followed:Baby Memorial Hospital Ltd. v. ACIT, (2019) 111 taxmann.com 189 (Cochin-Trib.) : 2019 TaxPub(DT) 7471 (Coch-Trib).
REFERRED : Duggai & Co. v. CIT (1996) 226 STR 456 (Del) Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC). Dawjee Dadabhoy & Co. v. S.P. Jain (1957) 31 ITR 872 (Cal.) : 1957 TaxPub(DT) 0061 (Cal-HC) Ramapyari Devi Saraogi (1988) 67 ITR 84 (SC) : 1968 TaxPub(DT) 0135 (SC) Smt Taradevi Agarwai v. CIT (1973) 88 ITR 323 (SC) : 1973 TaxPub(DT) 0389 (SC), Uma Shankar *Rice Mills v. CIT (1991) 187 ITR 638 (Ori.) : 1991 TaxPub(DT) 0331 (Ori-HC)
FAVOUR : In assessee's favour
A.Y. : 2014-2015
IN THE ITAT, CUTTACK BENCH
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