2012 (6) TMI 805 - AT - Income Tax

Summary

Issues involved: Appeal against order of ld. CIT-II, Kolkata u/s 263 of I.T.Act for Assessment Year 2007-08.

Grounds raised by the assessee:
1. Violation of natural justice in show cause notice for u/s 263 action.
2. Failure to pass a speaking order against appellant's submissions.
3. Allegation of order u/s 263 being a mere change in opinion.
4. Incorrect interpretation of 'taxable securities transactions' u/s 88E.
5. Direction to reduce rebate u/s 88E by a specific amount.
6. Request for flexibility to modify grounds of appeal.

Assessee's submission:
The show cause notice u/s 263 did not specify the erroneous order or error in assessment order, leading to lack of clarity on the issue. The notice was incomplete and non-specific, only revealing the issue during the assessee's appearance before ld. CIT. The AO's adherence to judicial discipline in not making additions related to rebate u/s 88E was deemed erroneous by ld. CIT, despite the issue being subjudiced. Lack of specificity in the notice rendered it unsustainable under law, resulting in the order u/s 263 being considered excessive and beyond jurisdiction.

Revenue's response:
The ld. DR supported the order u/s 263, emphasizing that the assessee was given a fair opportunity to address the concerns raised. The ld. CIT's decision regarding the erroneous nature of the AO's order was communicated to the assessee, justifying the need for revision.

Bench's observation:
The show cause notice lacked specificity on the issue deemed erroneous, making it vague and unsustainable under law. No further clarification was provided to the assessee, leading to the conclusion that the order u/s 263 exceeded the jurisdiction granted by the notice. Consequently, the appeal of the assessee was allowed.

Conclusion:
The appeal of the assessee was allowed, with the order pronounced on 29.06.2012.