IN THE ITAT, MUMBAI BENCH

C.N. PRASAD, J.M. & MANOJ KUMAR AGGARWAL, A.M.

Sleek International v. ACIT

I.T.A. No. 3327/Mum/2019

25 February, 2020

In favour of assessee.

Assessee by: Vijay Mehta and Govind Jhaveri, learned ARs

Revenue by: Sushil Kumar Poddar, learned CIT-DR

Manoj Kumar Aggarwal, A.M.

1.1 As per the provisions of section 263 of Income Tax Act, 1961, specific revenue authorities namely Pr. Commissioner of Income Tax/Commissioner of Income Tax is vested with the supervisory powers of suo moto revision of any order passed by the assessing officer [AO].

For the said purpose, the appropriate authority may call for and examine the record of any proceedings under the Act and may proceed to revise the same provided two conditions are satisfied -- (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the revenue. If one of the condition is absent, i.e., if the order of the Income Tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but it is prejudicial to the revenue-recourse cannot be had to section 263 of the Act as held by Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), dt. 10-2-2000 and noted by Hon'ble Delhi High Court in CIT v. Vikas Polymers (2010) 194 Taxman 57 (Del) : 2010 TaxPub(DT) 2189 (Del-HC), dt. 16-8-2010. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (supra) has held that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer.