| The Tax Publishers2020 TaxPub(DT) 0157 (Del-Trib) INCOME TAX ACT, 1961
Section 263
Where AO failed to make proper enquiry on the issue for which the assessee's case was reopened, the CIT was justified in setting aside reassessment order on the ground that the said order was deemed to be erroneous and insofar as prejudicial to the interest of Revenue.
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Revision under section 263 - Erroneous and prejudicial order - AO failed to make proper enquiry -
During search and survey action conducted at the premises of a third party, various documents and information were unearthed which led to belief that he was engaged in business of providing accommodation entries. The information culled out from the relevant seized documents led the AO to believe that the assessee-company had taken accommodation entry amounting to Rs. 4,90,000. Accordingly, the AO proceeded to reopen the case of the assessee. Subsequently, the AO completed the reassessment at the returned income. Thereafter, CIT issued notice under section 263 on the ground that the said reassessment order was erroneous and prejudicial to the interest of Revenue as the AO failed to examine the seized material and had also failed to tax the amount of Rs. 4,90,000 as unexplained credit. Held: Though assessment was reopened on allegation of accommodation entry taken from a party, which was subjected to search, however, the AO had not examined the seized material in the form of cash book and books containing the details of cheques issued by such concern, which indicated accommodation entry of Rs. 4,90,000 pertaining to assessee also. Further, the reassessment order made only a reference to the appraisal report but did not state whether the relevant seized material was examined by AO or whether the assessee was ever confronted with the seized documents. It was also undisputed that the cheque number/amount mentioned in the seized documents was found duly credited in the books of accounts of the assessee. Thus, evidently, the AO failed to make the enquiry on the issue for which the assessee's case was reopened and hence, the CIT rightly set aside the re-assessment order on the ground that the said order was deemed to be erroneous and insofar as prejudicial to the interest of Revenue.
REFERRED : Deniel Merchants Pvt. Ltd. & Anr. v. ITO & Anr. (Appeal No. 2396/2017) dated 29-11-2017: 2017 TaxPub(DT) 5217 (SC) Surya Jyoti Software Pvt. Ltd. v. Pr. CIT ITA No. 2158/Del/2017 vide Order dated 25-10-2017
FAVOUR : Against the assessee
A.Y. : 2007-08
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