INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Possible view taken by AO -

Assessee-society did not file return of income as required under section 139(4A), therefore, proceedings under section 147 were initiated. In response to the said proceedings, the assessee filed the return and accordingly, such proceedings were dropped. Thereafter, CIT found that during relevant year under consideration, the assessee disclosed an opening balance of certain amount as corpus fund. Accordingly, the CIT issued notice under section 263 concluding that the proceedings under section 147 were dropped without proper enquiry and appreciation. Held: Assessee's contention that it was sending its accounts to Mumbai Office for purpose of consolidation was found to be correct. Further, the finding recorded by CIT that the proceedings under section 147 were dropped without proper enquiry and appreciation, could not be sustained as from perusal of the record, it was evident that an enquiry was conducted and confirmation was sought from the CIT (E), Mumbai who confirmed that consolidation was done at Mumbai and assessment was completed and exemption under section 11 was granted. Further, the AO applied his mind on the basis of the facts and found that no income had escaped assessment for the relevant assessment year. Further, the view taken by the AO was one of the possible views; therefore, it could not be held that order of the AO was erroneous and prejudicial to the interest of Revenue that required an action under section 263. Hence, the order passed under section 263 was quashed.

Relied:Malabar Industrial Co. Ltd. v. CIT 2000 TaxPub(DT) 1227 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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