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2014 (3) TMI 932 - ITAT DELHIRevision u/s 263 of the Act – Validity of taking up of closed matters by the successor CIT - Loss incurred in Sterling Exports – Held that:- An error which is not raised in the 263 notice cannot be raised by the CIT – The decision in COMMISSIONER OF INCOME TAX, DELHI (CENTRAL) – I Versus CONTIMETERS ELECTRICALS PVT. LTD. [2008 (12) TMI 4 - HIGH COURT DELHI] followed - the department cannot travel beyond the show cause notice - it would be against the principles of natural justice that a person who has not been confronted with any ground be saddled with the liability - the issue did not form part of the show cause notice and the assessee was not even confronted with it, even before the CIT, it cannot for the basis for revision of the assessment order under section 263 – thus, the issue of SE loss having not been mentioned u/s 263 show cause notice, the setting aside order by CIT in this behalf cannot be sustained - Successor CIT cannot take up the closed 263 proceedings on the same issues and review the order of her predecessor on same issues. FDR Interest u/s 10AA of the Act – Held that:- The show cause notice was to verify whether interest income was included in the books or not – Assessee had demonstrated this aspect to the satisfaction of audit party, CIT(Audit) and predecessor CIT - the set aside for a new issue i.e. eligibility of FDR interest u/s 10AA cannot be sustained. The issue has been examined by CIT and sec. 10AA eligibility has not been disturbed in 263 order - Thus the direction to re-examine eligibility of 10AA qua the FDR interest has to fail on both counts i.e. it is not raised in show cause notice and sec. 10AA has been not disturbed - as long as the audit correspondence, letter of CIT(Audit) and predecessor CIT correspondence and order are available on record, they become part of record - Successor CIT cannot gloss over the same as it implies non perusal of record and non-application of mind - These omissions violate the 263 provisions – Decided in favour of Assessee.
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