TMI Blog2012 (9) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... oneous, in so far as prejudicial to the interest of the revenue, in the facts and circumstances of the case. (2) The learned CIT, having agreed that pre-operative expenditure are not covered u/s 350, the proposal contained paragraph 2.0 of his notice was not valid, to enable him to assume jurisdiction u/s 263 of the Income Tax Act, 1961, in the facts and the circumstances of the case and in law. (3) The direction contained while setting aside the assessment, in paragraph 4.1 of the impugned order, in the background stated therein, is vague and not sustainable in the facts and circumstances of the case and law. (4) For these and other additional grounds of appeal that may be adduced at the time of hearing, the impugned order u/s 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial run was taxable. He further submitted that during the course of 263 hearing, when the assessee pointed out this to the CIT, the CIT in para 4.1 of his order has noted that he agreed with the A.R of the assessee that pre-operative expenses which are incurred by the assessee prior to the commencement of its business are not covered by section 35D of the Act. However, he held that such expenses are required to be capitalized in the block of depreciable assets and therefore, the assessee s case merits the verification of the expenses of ₹ 3487.18 lakhs as per Schedule-6 to the audited Profit Loss Account and accordingly, directed the Assessing Officer to ascertain the liability or otherwise of the expenditure in computing the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration'. has omitted to so assess resulting in an error which is prejudicial to the interests of the Revenue. In view of such, it is proposed to invoke provisions of the Sectlon-263 of the Act on the order under consideration' to remedy loss to the Revenue. 6. Thus, from the show cause notice, it is observed that the proceedings u/s 263 were initiated as in the opinion of the CIT ₹ 3487.18 lakhs was the income of the assessee assessable to tax for the year under consideration which was omitted to be assessed in the assessment order. The CIT, after considering the submissions of the assessee on this issue which was to the effect that out of ₹ 3487.18 lakhs, ₹ 3204.98 lakhs represents inter-divisional transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do the assessment afresh, with reference to the observations inter alia, as per law and procedure, and after hearing the assessee. 7. We find that the order ultimately has been passed to verify the expenses of ₹ 3487.18 lakhs to ascertain its liability or otherwise in computing the assessable income for the assessment year 2007-08. 8. Firstly, we find that no show cause notice was issued in respect of expenses of ₹ 3487.18 lakhs. Further, even it is assumed that income of ₹ 3487.18 lakhs referred to in show cause notice issued u/s 263 was ordered by the CIT to be verified by the Assessing Officer then also we find that instant order passed u/s 263 is not sustainable as the CIT could not point out any error in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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