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2017 (2) TMI 686 - AT - Income TaxRevision u/s 263 - whether action has not been taken by the Ld. CIT suo moto but based on the proposal of the AO which is invalid in law and liable to be quashed? - Held that:- In the order passed u/s 263 CIT-A has stated that while reviewing the case my predecessor reviewing authority for the cases assessed by the ACIT observed certain matters which were listed down and thereafter in para 3 of its order, CIT states that the undersigned also took note of the matter and found the above observations correct in view of the facts of the case, and thereafter a show cause notice u/s 263 vide its office letter dated 31.03.2016 was issued fixing the case for hearing on 31.03.2016 itself. The above factual matrix makes it clear that even though the proposal has been initially received by the Pr. CIT for initiating action u/s 263 of the Act, the Pr. CIT has himself gone through the assessment records and thereafter has called for the report of the AO on two occasions and thereafter has issued the show-cause and passed the order u/s 263 of the Act. It is therefore, not a case where the Pr. CIT has simpliciter initiated the action u/s 263 on the basis of the proposal received from the AO rather he has applied his own independent mind and after going through the assessment records has come to an opinion that the order passed by the AO is erroneous so far as it is prejudicial to the interest of the revenue. Denial of natural justice - Whether order has been passed in undue haste and the assessee has been denied an opportunity of being heard and the principal of natural justice has been violated? - Held that:- The assessment order in this case was passed on 24.03.2014 and thereafter, a show cause notice has been issued to the assessee on 31.3.2016 and thereafter the order u/s 263 has been passed on the same date, being the last date of the two years limitation period. The show cause notice was handed order to the assessee at 2 PM on 31.3.2016 and the assessee was asked to reply to the show cause by 4 PM. These facts thus demonstrate that firstly no action was taken by the Pr. CIT for 2 years after passing of the assessment order, and thereafter at the fag-end of the limitation period which was expiring on 31.3.2016, the assessment records were pursued, the reports were called from the AO, a show cause notice was issued to the assessee on 31.3.2016 wherein the assessee was given a limited time window of mere two hours to respond to the show cause. Further, given the fact that the assessee managed to prepare and file its submissions by 5 PM and order u/s 263 was passed by the ld Pr. CIT and handed over to the assessee by 6 PM, we have our serious doubts as to whether the submission of the assessee filed at Kota have been considered at all by the Pr. CIT sitting at Jodhpur while issuing the order u/s 263 of the Act. Thus it is a clear case where the assessee has been denied a rightful opportunity of fair and adequate hearing before the ld Pr. CIT. Allowing a time window of two hours to respond to the show-cause is as good as not allowing any opportunity at all to the assessee. The order has been passed in undue haste and there is nothing on record to suggest the urgency in the matter except the fact that the limitation period to exercise powers under section 263 was expiring on the said date. - Decided in favour of assessee
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