INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Issue being already verified by AO in proceedings under section 143(3) -

Assessee-co-operative society was carrying on business of providing credit facilities to its members. Its case was selected for scrutiny and assessment was completed under section 143(3). Subsequently, CIT found that the AO allowed deduction under section 80P in respect of interest income earned by the assessee from co-operative bank, which was otherwise not allowable. Accordingly, CIT(A) set aside the assessment order passed under section 143(3) and directed the AO to reframe the assessment de novo. Assessee contended that the CIT ignored the fact that the issue of interest was very much before the AO in assessment proceedings under section 143(3). Therefore, there should not be any revision of the order as envisaged in section 263. Held: It was found that entire details called for during assessment proceedings were submitted by assessee and AO was very well aware that section 80P claim was reflected in the details of the assessee. Assessee vide a letter submitted the details regarding deduction under section 80P that was claimed in return of income, which included interest income from co-operative bank. CIT issued show-cause notice under section 263 on the very same issue, which was verified by the AO in proceedings under section 143(3) itself. Since the AO already verified the issue and jurisdictional Court allowed the claim related to interest income earned from co-operative bank, the CIT could not exercise revisionary jurisdiction section 263. Hence, the revision order passed under section 263 was set aside.

REFERRED : State Bank of India (SBI) v. CIT (2016) 72 Taxmann.com 64 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC)

FAVOUR : In assessee's favour.

A.Y. :

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