INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO did examine applicability of section 80P(2)(a)(i) - Whether order of Tribunal quashing order of Pr. CIT is under section 263 justified

The assessee, in its return of income had claimed deduction on its entire total income of Rs. 32,31,576 under section 80P(2)(a)(i). However, the AO, while scrutinizing the case, restricted such deduction to Rs. 26,96,495 after taking into account the assessee's explanation as to the justifiability of claim of deduction under section 80P(2)(a)(i). Subsequently, Pr. CIT invoked revisional jurisdiction under section 263 on the ground that the AO did not make necessary enquiry on the applicability of section 80P(2)(a)(i) in course of scrutiny proceedings and set aside the assessment order with the direction to the AO to make fresh assessment in line with the observation made by him in the order under section 263. On appeal, ITAT quashed the order under section 263 on the ground that the AO, in course of assessment proceedings under section 143(3), did conduct necessary enquiry and the assessee had duly responded to the querries, raised by the AO. Besides, the CIT, before assuming revisionary jurisdiction under section 263 did not conduct any independent enquiry on his own and casually issued direction to the AO by invoking provisions of section 263. The Pr. CIT preferred the present appeal under section 260A against the order of the ITAT. Held: On perusal of records, it transpired that the AO had duly applied his mind on the issue of applicability of section 80P(2)(a)(i) and ITAT, having discussed, in details, the legal provisions, involved herein, opined that no interference by the Pr. CIT invoking provisions of section 263 had been called for. In view of the above, it was opined that no question of law arose in this case and hence, the order of the ITAT quashing the 263 order, was upheld.

Followed:M/s. The Totgars' Cooperative Sale Society Ltd. Vs. ITO 2010 TaxPub(DT) 1466 (SC), M/s. Guttigedarara Credit Co-Operative Society Ltd. Vs. ITO (2015) 377 ITR 464 (Karnataka) : 2015 TaxPub(DT) 4004 (Karn-HC), CIT Vs. Jafari Momin Vikas Co-Op. Credit Society Ltd. [Tax Appeal No. 442 of 2013, dated 15-1-2014] : 2014 TaxPub(DT) 2000 (Guj-HC), ITO Vs. DG Housing Projects Ltd. (2012) 343 ITR 329 (Del) : 2012 TaxPub(DT) 1727 (Del-HC), CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) : 1993 TaxPub(DT) 1357 (Bom-HC), Gunja Samabay Krishi Unnayan Samity Ltd. Vs. PCIT [ITA No.110/Kol/2021, dt. 28-6-2022], Shri Basavaraj, CEO, Primary Agriculture Credit Co-operative Society Ltd. Vs. CIT(A) [I.T.A. No.867/Bang/2017, dt. 31-5-2017], ITO Vs. M/s. Jafari Momin Vikas Co-op Credit Society Ltd. [ITA No.1491/Ahd/2012, C.O. No.138/Ahd/2012, dt. 31-10-2012]

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2016-17

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