IRSHAD IQBAL SORATHIA,SIRSI vs. ITO, SIRSI

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ITA 1143/BANG/2016Status: DisposedITAT Bangalore05 May 2017AY 2011-128 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT was justified in invoking Section 263 as there was a clear lack of enquiry by the Assessing Officer. The audit report's findings constituted relevant information for the CIT, and the assessment order's silence on the issue indicated a failure to conduct an adequate enquiry.

What were the facts?

The Principal CIT invoked Section 263 of the Income Tax Act, 1961, to revise an assessment order passed under Section 143(3) r.w.s. 147. The CIT found the assessment order to be erroneous and prejudicial to the revenue due to a lack of proper enquiry by the Assessing Officer regarding the assessee's bank accounts.

What were the issues?

Whether the Principal CIT was justified in invoking Section 263 due to the Assessing Officer's lack of enquiry, and if audit objections can form the basis for such revision.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’

Before: SHRI VIJAY PAL RAO & SHRI S. JAYARAMAN

For Appellant: Shri Manoj D PUkale, Advocate

Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the revision order dt.16.3.2016 passed under Section 263 of the Income Tax Act, 1961 (in short 'the Act') by Prin. CIT for the Assessment Year 2011-12.

2.

The assessee has raised the following grounds :

3.

We have heard the learned Departmental Representative and considered the written submissions filed by the assessee. The assessment in this case was completed under Section 143(3) r.w.s. 147 of the Act on 7.3.2014. Subsequently, on verification of assessment record, the CIT found that the assessment order passed by the Assessing Officer is prima facie erroneous and prejudicial to the interest of revenue.

1.

Accordingly, the Prin. CIT invoked the provisions of Section 263 and issued a Notice dt.2.12.2015 on the following issues :

4. Having considered the objections and reply by the assessee, the CIT has set aside the assessment order and directed the Assessing Officer to make fresh assessment order after examination of the bank account standing in the name of assessee. Thus the CIT has directed the Assessing Officer to verify and examine the five bank accounts of the assessee wherein the credits were standing. The main objections by the assessee against the impugned order is that CIT has invoked provisions of Section 263 on the basis of the audit objection. We find that the assessment order is completely silent on this issue and therefore the Assessing Officer has not conducted any enquiry on this issue. It is a clear case of lack of enquiry on the part of the Assessing Officer. The assessee's contention was that once the matter was examined by the Assessing Officer then a speaking finding was not required by the Assessing Officer when the claim of the assessee is accepted. Even by considering this contention of the assessee, we find that when the Assessing Officer has not recorded anything in the assessment order to show that an enquiry was conducted and a decision was taken then it is a clear case of lack of enquiry and atleast inadequate enquiry on the part

Assessing Officer. Further if the audit report brings out certain relevant facts then there is no impediment for the CIT for considering those facts for the purpose of invoking the provisions of Section 263 of the Act. The facts pointed out by the audit report will constitute information available with the CIT as per the provisions of Section 263.

Hence we do not find any substance or merit in this objection raised by the assessee. The Hon'ble jurisdictional High Court in the case of CIT Vs. Infosys Technology Ltd. 341 ITR 293 has held that a finding of the Assessing Officer should be supported by a reason however brief it may be if the assessing authority fails in giving the reason then such order definitely constitute an order not merely erroneous but also prejudicial to the interest of revenue and consequently, the CIT could be justified in exercising the jurisdiction under Section 263. Since the CIT has not given any finding on merit and directed the Assessing Officer to conduct a proper enquiry in respect of these issues therefore in the light of the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs.

Infosys Technology Ltd. (supra), we do not find any error or illegality in the impugned revision order of the Prin. CIT.

4.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on the 5th day of May, 2017.

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