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2014 (1) TMI 1176 - AT - Income TaxValidity of order passed u/s 263 - Held that:- There must be nexus between the reasons given in the show-cause notice and the order of the Commissioner under section 263 - For invoking provisions of section 263 of the Act, contents of the show cause notice and the final order should not be different or rather they should be same - Assessee comes to know about the proposed revision, for the first time, when he receives a notice from the CIT. Accordingly, he files his explanation - If the CIT, while passing final orders u/s.263 of the Act, directs the AO to revise or modify the order on some other ground the assessee would not get any chance to defend himself. Such an order passed by the CIT would fall in the category of ex-parte orders. If the CIT without confronting an assessee, by way of show cause notice, decides some issue against him while passing the final order, same cannot be endorsed, though he is vested with revisionary powers. It is said that power and duty go together or cannot be separated - It is the duty of the CIT that; while using his powers as envisage by the provisions of Sec.263 of the Act; he should not to travel beyond the reasons recorded in the show cause notice. While issuing the show cause notice CIT had informed the assessee that deduction u/s.10B of the Act ought to have been allowed in respect of profits of the EOU I and EOU II undertakings after setting off of the losses incurred by the EOU III undertaking - While passing the final order CIT has held that section 10B dealt with exemption, that setting off of losses was not allowable if a claim pertained to an exemption-section - If the CIT was of the opinion that provisions of section 10B,being exemption section, did not allow setting off of losses she should have mentioned the same it in the show cause notice issued by her - It would have given the assessee an opportunity to deal with question raised by the CIT – CIT had travelled beyond the reasons mentioned in the show cause notice - Decided in favour of assessee.
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