INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial to interest of Revenue - AO took a possible view -

AO on verification of audit report found that assessee had claimed VAT payment and CST payment. In order to verify the correctness of the claim, AO addressed a letter to Tax Officer under section 133(6) who informed that necessary challans/ records were not traced out in the office for verification of genuineness of payment of VAT and CST and that a fake challan scam occurred in his office. Since assessee did not submit original challans, AO came to the conclusion that payment of VAT and CST were not genuine. Accordingly, he disallowed the same and also initiated penalty proceedings under section 271(1)(c). Assessee submitted its explanation and after considering the same, AO dropped the penalty proceedings. Thereafter, CIT assumed the powers under section 263 and verified the assessment records and observed that penalty proceedings under section 271(1)(c) were dropped without properly verifying the explanation filed by assessee. Thus, such an action was erroneous and prejudicial to the interest of Revenue. Held: As during assessment proceedings on issuance of a notice under section 133(6) to CTO who had stated that there was a scam in their office due to which the records were not traceable and sought further time to verify the challans forwarded by ITO. During penalty proceedings, assessee had given its explanation which was accepted by AO. Since AO had accepted the contentions of the assessee which have not been proved to be incorrect, the said dropping of penalty proceedings by AO could not be said to be erroneous. Where assessee's explanation was found to be satisfactory by AO and there was no adverse finding by the concerned authorities, then the view taken by AO was one of the possible views and cannot be said to be erroneous.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2015-16

SUBSCRIBE FOR FULL CONTENT

OR Try Reload the Page