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| The Tax Publishers2020 TaxPub(DT) 5257 (Mum-Trib) INCOME TAX ACT, 1961
Section 263
There is no presumption that non-following of RBI guidelines in an assessment would result in an order which is prejudicial to the interest of revenue. The RBI guidelines and prudential norms are not designed to pluck revenue leakage from income tax point of view. These are mandate to ensure that assessee follows proper Banking Norms. Hence, inference drawn by CIT that non-examination of adherence to RBI guidelines by AO had resulted in a order which was erroneous in so far as it was prejudicial to the interest of revenue was liable to be set aside.
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Revision under section 263 - Erroneous and prejudicial order - Invocation of jurisdiction - Reasoning, AO's failure to verify compliance with RBI guidelines
CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground that RBI being regulator of NBFCs (for assessee also RBI was the regulator, as it was a NBFC for assessee and AO did not verify whether assessee had complied with Guidelines issued by RBI or not. Held: There is no presumption that non-following of RBI guidelines in an assessment would result in an order which is prejudicial to the interest of revenue. The RBI guidelines and prudential norms are not designed to pluck revenue leakage from income tax point of view. These are mandate to ensure that assessee follows proper Banking Norms. Hence, inference drawn by CIT that non-examination of adherence to RBI guidelines by AO had resulted in a order which was erroneous in so far as it was prejudicial to the interest of revenue was liable to be set aside.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 263
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