INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Aspect of under-invoicing while not considered by AO making assessment order -

Assessee filed return of income and as elements of transfer pricing were involved, its case was referred to TPO in terms of section 92CA. Matter was put up before DRP and ultimately AO made final assessment under section 143(3), read with section 144C. Thereafter, CIT exercised revisional powers under section 263, inter alia, by reference to Serious Fraud Investigation Officers' (SFIO) reports, which were available in meanwhile. Assessee contested assumption of jurisdiction by CIT under section 263. Held: CIT, in exercising its revisional jurisdiction, satisfied the twin requirements as prescribed in section 263. There was material before Tribunal to at least prima facie infer that there was under-invoicing and that this aspect of under-invoicing was not considered by AO in making his assessment order. CIT, in exercising its revisional jurisdiction, did not shut out any of the defences open to assessee, but directed AO to pass a fresh assessment order after verifying and examining all the relevant facts of the case, legal position and giving adequate opportunity of being heard to assessee.

Followed:Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2008-09

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