| The Tax Publishers2020 TaxPub(DT) 4050 (Mad-HC) : (2020) 275 TAXMAN 0394 INCOME TAX ACT, 1961
Section 263
Where the issues, which were the basis for exercise of powers under section 263 were, in fact, the issues, which were considered by AO in limited scrutiny and that the assessee had given proper explanation, which was also taken note of by the AO while completing the assessment under section 143(3); the CIT was justified in invoking jurisdiction under section 263.
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Revision under section 263 - Erroneous and prejudicial order - Disputed issue duly considered and examined by AO in limited scrutiny -
Assessee's case was selected for scrutiny by issuance of a notice under section 143(2), after which, the assessee filed necessary information. AO after verification, completed the assessment. Thereafter, CIT invoked his power under section 263 on the ground that the assessment order was erroneous and prejudicial to the interest of Revenue on the ground that AO failed to adequately verify the source for increase in capital in the finances of the assessee. Held: The reason for selecting the assessee's case for limited scrutiny was to consider two issues, namely, (i) substantial increase in capital in a year; and (ii) the sale consideration of property in income tax return was less than the sale consideration of the property reported in AIR. Those issues were considered by AO and after perusal of documents, verification of the income tax returns of the assessee and making enquiries with the limited company where the assessee held shares, AO came to the conclusion. Further, CIT invoked the revisionary jurisdiction under section 263 mainly on the ground that substantial increase in capital investment reflected by the assessee in his balance sheet as compared to the preceding year. Thus, the issues, which were the basis for exercise of powers under section 263 were, in fact, the issues, which were considered by the AO in limited scrutiny and that the assessee had given proper explanation, which was also taken note of by the AO while completing the assessment under section 143(3). Therefore, CIT was justified in invoking jurisdiction under section 263.
Distinguished:CIT v. Maithan International (2015) 56 Taxmann.com 283 (Cal) : 2015 TaxPub(DT) 2020 (Cal-HC) Ashok Leyland Ltd. v. CIT (2003) 181 CTR (Mad) 332 : 2003 TaxPub(DT) 0538 (Mad-HC) South India Shipping Corporation Ltd. (1998) 233 ITR 546 (Mad) : 1998 TaxPub(DT) 1342 (Mad-HC).
REFERRED : Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).
FAVOUR : In assessee's favour
A.Y. : 2014-15
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