INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Assessment order passed on identical facts examined during earlier years following decision of jurisdictional High Court, treated as erroneous and prejudicial -

Pr. CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground that AO merely relying on decision of jurisdictional High Court treated Investment and Employment Subsidy received by assessee as capital receipt not chargeable to tax. Held: Matter relating to treatment of subsidy was arising year after year right from assessment year 2012-13 and in said year, matter had been duly examined by AO and subsidy had been treated and accepted as capital subsidy and not brought to tax. Though principles of res judicata doesn't apply in income tax proceedings, however, as there was no change in the facts and circumstances of the case, past consistent position so adopted should not be disturbed. At the time when power under section 263 was exercised by Pr.CIT, there was nothing on record to suggest that decision of jurisdictional High Court as relied upon by AO had been set aside by Supreme Court or had been subject matter of appeal before Supreme Court or as to how decision was not applicable or the same had been wrongly followed by AO. In such circumstances, it was not be open to Pr. CIT to hold that AO who had acted in terms of the High Court's decision, had acted erroneously. Accordingly, Pr. CIT was not correct in exercising jurisdiction under section 263.

REFERRED : CIT v. Shri Cement Ltd. 2018 TaxPub(DT) 4686 (Raj-HC).

FAVOUR : In assessee's favour

A.Y. :

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