2006 (9) TMI 157 - HC - Income Tax

Condition Precedent - Whether, the Tribunal was right in law in annulling the order passed by the CIT u/s 263 ? - HELD THAT:- A reference to the provisions of section 263 of the Act shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. Mere audit objection and because a different view could be taken, are not enough to say that the order of the Assessing Officer was erroneous or prejudicial to the interests of the Revenue. The jurisdiction could be exercised if the CIT was satisfied that the basis for exercise of jurisdiction existed. No rigid rule could be laid down about the situation when the jurisdiction can be exercised. Whether satisfaction of the CIT for exercising jurisdiction was called for or not, has to be decided having regard to a given fact situation.

In the present case, the Tribunal has held that the assessee had disclosed that out of the sale consideration, a sum was to be received for the sale of permit. If that is so, there was no error in the view taken by the Assessing Officer and no case was made out for invoking jurisdiction u/s 263 of the Act.

Thus, the question referred is answered against the Revenue and in favour of the assessee - Reference is disposed of accordingly.