“principal officer”
The decision most relied on for principal officer is CIT v. Max India Ltd. (295 ITR 282), cited in 1,162 judgments on BharatTax.
Leading authorities on principal officer
Under Section 263, an assessment order is not erroneous and prejudicial to the interest of the revenue merely because the Principal Commissioner disagrees with the Assessing Officer's (AO) view, particularly if the AO has adopted one of two permissible views in law, unless that view is completely unsustainable. If due inquiries were made, the AO's order does not become erroneous solely because the fact of inquiries was not recorded.
The Principal Commissioner of Income Tax (PCIT) cannot invoke revisionary powers under Section 263 merely on the ground of "inadequate enquiry" by the Assessing Officer (AO) if the AO has conducted an enquiry, examined evidence, and formed a possible view. For Section 263 to apply, the PCIT must demonstrate that the assessment order is both erroneous (contrary to law) and prejudicial to the revenue.
An assessment can be reopened if there is tangible material indicating escapement of income, demonstrating a live link between the material and the reasons recorded for reopening. The Assessing Officer must apply their mind to the material facts, and the sanction under section 151 should not be based on borrowed satisfaction.
Appeals before the Income Tax Appellate Tribunal (ITAT) must be filed before the bench with territorial jurisdiction over the Assessing Officer's location or the assessee's principal place of business.
The Principal Commissioner of Income Tax cannot exercise revisional jurisdiction under Section 263 if the Assessing Officer has taken one of two possible views on a debatable issue during assessment proceedings.
The Principal Commissioner can revise an assessment under Section 263 if the Assessing Officer's inquiry into share application money or cash credits under Section 68 was inadequate, constituting an order erroneous and prejudicial to the revenue. The primary onus to prove the identity, creditworthiness, and genuineness of such credits remains with the assessee.
An assessment order is not erroneous and prejudicial to the revenue merely because it does not explicitly discuss an issue for which the Assessing Officer had raised queries and the assessee had provided a response. In such a scenario, the Principal Commissioner cannot invoke revisionary powers under Section 263.
Additions made by an Assessing Officer under Section 68 for unsecured loans or share capital/premium are perverse if based merely on an allegation of 'shell companies' without proper findings, especially when the assessee has provided evidence and lenders confirmed transactions through Section 133(6) notices.
