Saif Partners India IV Limited Vs CIT (ITAT Delhi)
ITAT Delhi held that revisional power under section 263 of the Income Tax Act not invocable in case of ‘inadequate inquiry’, in fact, revisional power is invocable only in case of ‘lack of inquiry’.
Facts- This appeal by the assessee is preferred against the order dated 27.03.2022 framed u/s 263 of the Income-tax Act, 1961 by the CIT, International Taxation, Delhi -3 pertaining to Assessment Year 2017-18.
The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in assuming jurisdiction u/s 263 of the Act and further erred in holding that the order dated 09.12.2019 framed u/s 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue.
Conclusion- It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By ‘erroneous’ is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry.
Hon’ble Delhi High Court in the case of CIT Vs Sunbeam Auto has held that if there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under s. 263 of the Act, merely because he has a different opinion on the matter. It is only in cases of ‘lack of inquiry’ that such a course of action would be open.
We find that in the appeal under consideration, the ld. CIT called for a valuation report in revisionary proceedings. However, when the valuation reports were filed by the assessee, the ld. CIT chose to set aside the entire matter back to the file of the Assessing Officer without appreciating that it was incumbent upon the ld. CIT to himself examine the valuation reports and verify as to how the case of the assessee was erroneous and prejudicial to the interest of the Revenue following the ratio laid down by the Hon’ble Jurisdiction High Court in the case of the Delhi Airport Metro Express [P] Ltd.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is preferred against the order dated 27.03.2022 framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as ‘The Act’] by the CIT, International Taxation, Delhi -3 pertaining to Assessment Year 2017-18.
2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in assuming jurisdiction u/s 263 of the Act and further erred in holding that the order dated 09.12.2019 framed u/s 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue.
3. The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in light of Rule 18(6) of IITAT Rules.
4. We have given thoughtful consideration to the orders of the authorities below.
5. Briefly stated, the facts of the case are the assessee is a public company incorporated under the laws of Mauritius in 2010 and operates as an investment holding company. For the purposes of Indian tax laws, the assessee is a non resident company and is a tax resident of Mauritius under Article 4 of the India Mauritius Tax Treaty.
6. The assessee holds a valid tax residency certificate issued in Mauritius for the period under consideration. The assessee also holds a valid global business license issued by the Financial Services Commission in Mauritius.
7. The assessee filed its return of income electronically on 30.10.2017. The total income of the assessee was computed as under:
