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REVISION UNDER INCOME TAX - SOME ISSUES

REVISION UNDER INCOME TAX - SOME ISSUES - Income Tax - Direct Tax Code - DTC - By: - Mr. M. GOVINDARAJAN - Dated:- 25-11-2015 - Introduction The Revenue does not have any right to appeal against the order of the Assessing Officer. It is in these circumstances the power of revision has been conferred on the Commissioner under Section 263 of the Income Tax Act, 1961 ( Act for short) to correct erroneous orders which are also prejudicial to the interests of the revenue. It was held in Commissioner .....

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of Assessing Officer cannot be erroneous, if the Assessing Officer, provided, has taken one of two possible views. In such cases the order of Assessing Officer is erroneous, provided, the Commissioner holds and is able to demonstrate that the view taken by the Assessing Officer was not plausible, being legally unsustainable and incorrect. But the finding must be recorded. This would satisfy the statutory requirement that the order passed and made the subject matter of revision was erroneous subj .....

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mmissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120. Limitation Section 263(2) provides that no order shall be made after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. An order in .....

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junction of any court shall be excluded. Erroneous order The position and function of the Income Tax Officer is very different from that of a civil court. The statements made in a pleading provided by the minimum amount of evidence may be accepted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income Tax Officer is not only an adjudicator but also an investigator. He cannot .....

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an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the fact stated therein are assumed to be correct. The Assessing Officer in the assessment order is not required to give detailed reasons in respect of each and every item of deduction etc., There is a distinction between the lack of inquiry and inadequate inquiry . If there was any inquiry even inadequate that would not by itself give occasion to the Co .....

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rial and Dr. Prem Hospital P. Limited V. Commissioner of Income Tax - 2014 (1) TMI 1129 - ITAT DELHI the bona fide belief of the assessee in claiming depreciation at 40% was upheld by the Tribunal in the assessment year 2005-06. The finding that the assessee s belief was a bona fide belief was a final finding of fact by a co-ordinate bench and had to be followed. In the relevant year the facts were stronger as the assessee followed the preceding year s practice which by itself constitutes a bona .....

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available, and therefore, attempted to collect material but failed. It was within the competency of the Assessing Officer to reject the claim of deduction but he allowed the deduction giving a concession after exposing doubt that the material attempted to be collected was not collected, and therefore, he proceeded to pass the orders on the available materials. The Commissioner under his revisional jurisdiction held that Assessing Officer has failed to make inquiry as regards the allowability of .....

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order of the Assessing Officer is prejudicial to the interests of the service. Whether the order is prejudicial or not is to be decided on facts of each and every case. In Hemanth Kumar Bothra V. Commissioner of Income Tax and another - 2014 (2) TMI 519 - MADRAS HIGH COURT the assessee did not challenge the jurisdiction of Commissioner in issuing the notice under Section 263 of the Act. They only contended that the word erroneous was absent in the notice. The Commissioner in the notice indicated .....

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LHI HIGH COURT the income declared by the assessee for the assessment year 2000-01 under Section 115JA was accepted but some additions were made to the income computed under the normal provisions and it was enhanced to ₹ 2.45 crores. The Commissioner, thereafter, revised the order under Section 263 on the ground that income computed under Section 115JA by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue on two accounts- the Assessing Officer had wrongly a .....

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nt to depreciation account and also the Profit and Loss Account in the year in question. On being asked why both the heads were credited, the assessee could not give any explanation or answer. It could not also explain why the revaluation or reduction of ₹ 1.53 crores was made to the revaluation reserve. The Commissioner in his order specifically recorded that enhanced depreciation on re-valued reserve was claimed in the earlier assessment years. The proviso to clause (i) of the Explanatio .....

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e portion of land sold by the assessee was to be deducted, whether the gains arising on sale of immovable properties were assessed as business income or as short term capital gains. The closing stock was credited to the Profit and Loss Account only for the purpose of making the cost relatable to sales under the revenue cost matching principle. Hence the closing stock value would not increase the profit from business. Since no prejudice was caused to the Revenue by assessing the gains arising on .....

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he requirements laid down in Section 263(1). The Commissioner cannot initiate proceedings with a view to starting fishing and roving inquiries in matters which are already concluded. Such action will be against the well accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial controversies in other spheres of human activity as .....

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sioner does not agree, it cannot be treated as order erroneous and prejudicial interests of the Revenue. The Assessing Officer exercises quasi judicial power vested in him and if he exercises such powers in accordance with law and arrives at a just conclusion. Such conclusion cannot be termed to be erroneous only because the Commissioner does not feel satisfied with the conclusion. Whether Commissioner to make further inquiry? In Income Tax Officer V. DG Housing Projects Limited - 2012 (3) TMI 2 .....

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MI 4 - SUPREME Court it was held that nothing bars/prohibits the Commissioner of Income tax from collecting and relying upon new/additional material/evidence and state that the order of Assessing Officer is erroneous. Whether Commissioner can remand the matter? In Parashuram Pottery Works Co. Limited V. Income Tax Officer 1976 (11) TMI 1 - SUPREME Court it was held that the Commissioner of Income Tax cannot remand the matter to the Assessing Officer to decide whether the findings recorded and er .....

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esh consideration by the Assessing Officer on the ground that the order passed by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. The Tribunal confirmed the order of revision. The High Court upheld the order of the Tribunal. In K.V. Balagangadharan V. Deputy Commissioner of Income Tax - 2014 (1) TMI 236 - ITAT COCHIN for the assessment year 2008-09 the amount of deficiency assessed by the Assessing Officer was ₹ 12,48,040/- whereas the Commissioner had .....

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the Assessing Officer. Therefore the direction issued by the Commissioner was to be confirmed. The Assessing Officer was directed to examine the issue in both years independently without being influenced by the observation or workings made by the Commissioner. When Revisional power is not justified? In R. Srinivasan V. Assistant Commissioner of Income Tax - 2012 (12) TMI 903 - MADRAS HIGH COURT it was held that as far as the revisional remedy available to the Revenue is concerned, an order to be .....

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no dispute regarding the payment of TDS amount into the Central Government account before the due date of filing the return of income of the assessee. Being so, exercising the power under Section 263 of the Act by the Commissioner of Income Tax on this issue is not justified. In Commissioner of Income Tax V. New Delhi Television Limited - 2013 (10) TMI 428 - DELHI HIGH COURT the High Court held that the jurisdictional pre conditions stipulated in Section 263 of the Act were not satisfied. The A .....

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and of the assessee before him and before the Assessing Officer but refrained from forming any opinion as to whether the acceptance of the claim by the Assessing Officer was erroneous or not. The order of revision was not valid. Revision of other orders Section 264 deals with the revision of orders other than in Section 263. In the case of any order other than an order to which section 263 applies passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an .....

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n for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier; that the Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period; The Commissioner shall not revise any order under this .....

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