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2004 (12) TMI 70 - HC - Income TaxOrder passed by the Commissioner of Income-tax under section 263 - "1. Whether Tribunal was justified in upholding the order passed by the CIT u/s 263, treating the Income-tax Officer's order as erroneous and prejudicial to the interests of the Revenue? 2. Whether Tribunal was justified to hold that CIT acted within his power to initiate proceedings under section 263?" - There is no escape from the conclusion that the Income-tax Officer had not made necessary enquiries before allowing the deduction of interest to M/s. M.M. Enterprises on the credit balance, which resulted in the order not only being erroneous but also prejudicial to the interests of the Revenue. The Commissioner of Income-tax, was therefore, justified in drawing the proceeding under section 263 and also disallowing the amount of interest to be paid to M/s. M.M. Enterprises as it was only a paper transaction. - We, accordingly, answer both the questions in the affirmative, i.e., in favour of the Revenue and against the assessee
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