2002 (9) TMI 65 - MADRAS HIGH COURT - Income Tax

Head Note / Extract:
Whether the Tribunal was right in law in holding that there is no justification to interfere with the order of the Commissioner of Income-tax?" - The order of assessment in the record does not at all show any application of mind by the Assessing Officer to this receipt of Rs. 4.87 crores from the insurer. This amount is not even referred to in the order of assessment. The reference is only to an adjustment statement. That adjustment statement is not annexed to the assessment order. It is a statement filed by the assessee which has been implicitly accepted by the Assessing Officer. As to whether this receipt should be treated as taxable income in the hands of the assessee or excluded altogether from the computation on the ground that it is a capital receipt which did not have the character of a capital gain, is not anywhere discussed. Admittedly, the assessee had treated this amount as income in its profit and loss account and on its own showing it has used a part of this amount for payment of dividends. It was, therefore, necessary for the Assessing Officer to have examined in depth this claim of the assessee and his failure to do so is not only erroneous but also prejudicial to the Revenue. The Commissioner was therefore right in exercising his power of revision under section 263 and directing the Assessing Officer to examine this aspect thoroughly and in accordance with law.