M/S. VINEX ENTERPRISES (P) LTD.,MEERUT vs. ACIT, MEERUT
What did the Tribunal hold?
The Tribunal held that the CIT's order was a non-speaking order as it lacked specific findings and directions. The CIT's observation that the assessment order 'appears' to be passed without proper inquiry indicated uncertainty. The Tribunal set aside the CIT's order for fresh adjudication.
What were the facts?
The assessee filed a return declaring a loss, which was processed at Nil income. The AO later made an addition on account of disallowed expenses. The CIT invoked Section 263, stating the assessment order was passed without proper inquiry and was prejudicial to revenue.
What were the issues?
Whether the CIT's order under Section 263 was valid without proper inquiry and opportunity of being heard to the assessee. Whether the CIT's order was a speaking order.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
ORDER
Per N. K. Saini, AM:
This is an appeal by the assessee against the order dated 25.03.2013 of ld. CIT, Meerut.
Following grounds have been raised in this appeal: “1. That notice U/s 263 issued by CIT, Meerut was vague and is based upon incorrect facts and law and no reasonable and proper opportunity being heard was allowed. Hence, entire proceeding is against the principle of natural justice.
2. That the finding given by the Ld. CIT, Meerut relating to admissibility of expenses on foreign tour, repairs and maintenance account is already examined by the A.O. and taken one of the possible view in 2 Vinex Enterprises (P) Ltd. favour of the assessee. Therefore, to set aside this issue against assessee is nothing but duplication of work. Therefore, finding given by the CIT is unjustified & unnecessary in view of Hon'ble Supreme Court & Allahabad High Court judgment.
3. That the assessee has right to add, delete or modify any grounds during the appeal proceeding.”
3. From the above grounds, it is gathered that the main grievance of the assessee relates to the proper opportunity of being heard not provided while passing the impugned order u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act)
Facts of the case in brief are that the assessee e-filed its return of income on 30.09.2008 declaring a loss of Rs.9,44,077/- which was processed u/s 143(1) of the Act on Nil income. Later on, the case was selected for scrutiny and the AO framed the assessment u/s 143(3) of the Act by making an addition of Rs.2,38,568/- on account of disallowance of expenses under the head freight & cartage, electricity & generator, wages & incentive, packing material etc. Thereafter, the ld. CIT, Meerut invoked the provisions of section 263 of the Act by observing that the assessment order appears to have been passed without proper investigation and inquiry and thus found to be erroneous and prejudicial to the interest of the revenue.
3 Vinex Enterprises (P) Ltd.
The ld. CIT observed in the impugned order as under: “As regards admissibility of expenses on foreign tour, repairs and maintenance account of vehicle even the details have now been given during 263 proceedings. Similarly the assessee has enclosed fresh P&L A/c giving the provisions of MAT as per section 115JB of the Income tax Act now during 263 proceedings. It is reiterated that giving information in 263 proceedings. It is very well settled that without furnishing some information during 263 proceedings does not absolve the AO of his duty to call for such details and examine them properly.”
The ld. CIT directed the AO to examine the issue properly on each aspect and pass the fresh order.
Now the assessee is in appeal. The ld. Counsel for the assessee submitted that a reasonable and proper opportunity of being heard was not provided by the ld. CIT. It was further submitted that the ld. CIT(A) had not given any specific direction to the AO by pointing out that how and in what manner the assessment order dated 24.12.2010 u/s 143(3) of the Act passed by him was erroneous and prejudicial to the interest of the revenue.
In his rival submissions the ld. DR supported the impugned order of the ld. CIT.
We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is 4 Vinex Enterprises (P) Ltd. noticed that the ld. CIT in the body of the impugned order categorically stated that the assessment order passed by the Assistant Commissioner, Circle-2, Meerut appears to have been passed without proper investigation and inquiry from that observation. From the said observation of the ld. CIT, it is clear that he was not sure how and in what manner the assessment order passed was without investigation and inquiry done by the AO, the word “it appears” used by him shows that he was not sure. Moreover, the ld. CIT stated that Sh. Rajiv Jain, CA attended on behalf of the assessee with whom the issues were discussed. However, nowhere it is stated that what were the submission of the assessee and why those were not accepted. Furthermore, the ld. CIT admitted that the assessee had furnished the details relating to admissibility of expenses on foreign tour, repairs & maintenance, account of vehicles but no findings have been given on the said details, neither any remand report was sought, it is also not directed which inquiry was to be made by the AO. He simply directed the AO to examine the issue again and to pass a fresh order. In our opinion, the order passed by the ld. CIT is a non-speaking order. We, therefore, deem it appropriate to set aside the impugned order to the file of the ld. CIT for deciding the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
5 Vinex Enterprises (P) Ltd. 10. In the result, the appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 08/02/2017)
More judgments on Section 263
- Gillette India Limited, Mumbai vs Principal Commissioner of Income Tax, JaipurITA 1316/JPR/2026[2018-19]Status: Disposed16 Oct 2026AY 2018-19
- Neo Structo Construction P. Ltd., Ahmedabad vs The Pr. CIT- 3, AhmedabadITA 1216/AHD/2026[2015-2016]Status: Disposed16 Oct 2026AY 2015-2016
- Vimal Harilal Baldania, Gandhidham vs The ITO Ward 2, GandhidhamITA 770/RJT/2025[2017-18]Status: Disposed15 Oct 2026AY 2017-18
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1493/KOL/2026[2015-2016]Status: Disposed15 Oct 2026AY 2015-2016
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1492/KOL/2026[2013-2014]Status: Disposed15 Oct 2026AY 2013-2014
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