Revision Revision by Commissioner : Recent 2023 Ruling by the Supreme Court

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The Tax Publishers Income Tax--Revision Revision by Commissioner : Recent 2023 Ruling by the Supreme Court Akhilesh Kumar Sah This write-up by learned author, aims to discuss Commissioner's revisionary powers in regard to the order of Assessing officers which are prejudicial to the interests of Revenue as per Section 263 in the light of recent ruling of Supreme Court Explanation 2 to Section 263(1) has been inserted in the statute w.e.f. 1-4-2015, according to which the order passed by AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue of the order is passed allowing any relief without inquiring into the claim for invoking Section 263, the turn conditions, namely (i) the order of AO sought to be revised is erroneous, and (ii) it is prejudicial to the interest of revenue, are to be satisfied. If one of them is absent recourse cannot be had to Section 263(i). The phrase 'prejudicial to the interests of Revenue' is not defined in the Act. In a latest decision in Paville Projects Pvt. Ltd., the Supreme Court It was observed that if due to an erroneous order of ITO, Revenue was losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of Revenue. However, only in a case where two views were possible and AO had adopted one view, such a decision, which might be plausible and it had resulted in loss of Revenue, such an order was not revisable under Section 263 of the Act. He opines that keeping in view the observation made by Supreme Court, the order passed by AO was held to be erroneous as well as prejudicial to the interest of Revenue. 1. Introduction The Section 263 of the Income Tax Act, 1961 (for short, 'the Act') deals with the Commissioner's revisionary power in regard to the orders which are pre-judicial to the interests of Revenue. After two decades of leading decision in the case of Malabar Industrial Co. Ltd. v. CIT [(2000) 2 SCC 718:(2000) 243 ITR 83 (SC)], a latest decision of Hon'ble Supreme Court in CIT v. Paville Projects Pvt. Ltd. [Civil Appeal No. 6126 of 2021 (SLP (C) No. 13380 of 2018)] decided on 6-4-2023, is a most recent case in respect of the matters of revision by the Commissioner. 2. Facts of the above mentioned case in brief SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Revision

Revision by Commissioner : Recent 2023 Ruling by the Supreme Court

Akhilesh Kumar Sah

This write-up by learned author, aims to discuss Commissioner's revisionary powers in regard to the order of Assessing officers which are prejudicial to the interests of Revenue as per Section 263 in the light of recent ruling of Supreme Court Explanation 2 to Section 263(1) has been inserted in the statute w.e.f. 1-4-2015, according to which the order passed by AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue of the order is passed allowing any relief without inquiring into the claim for invoking Section 263, the turn conditions, namely (i) the order of AO sought to be revised is erroneous, and (ii) it is prejudicial to the interest of revenue, are to be satisfied. If one of them is absent recourse cannot be had to Section 263(i). The phrase 'prejudicial to the interests of Revenue' is not defined in the Act. In a latest decision in Paville Projects Pvt. Ltd., the Supreme Court It was observed that if due to an erroneous order of ITO, Revenue was losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of Revenue. However, only in a case where two views were possible and AO had adopted one view, such a decision, which might be plausible and it had resulted in loss of Revenue, such an order was not revisable under Section 263 of the Act. He opines that keeping in view the observation made by Supreme Court, the order passed by AO was held to be erroneous as well as prejudicial to the interest of Revenue.

1. Introduction

The Section 263 of the Income Tax Act, 1961 (for short, 'the Act') deals with the Commissioner's revisionary power in regard to the orders which are pre-judicial to the interests of Revenue.

After two decades of leading decision in the case of Malabar Industrial Co. Ltd. v. CIT [(2000) 2 SCC 718:(2000) 243 ITR 83 (SC)], a latest decision of Hon'ble Supreme Court in CIT v. Paville Projects Pvt. Ltd. [Civil Appeal No. 6126 of 2021 (SLP (C) No. 13380 of 2018)] decided on 6-4-2023, is a most recent case in respect of the matters of revision by the Commissioner.

2. Facts of the above mentioned case in brief