Case Law Details
Ellora Infratech Pvt. Ltd. Vs PCIT (ITAT Delhi)
ITAT Delhi held that invocation of revisionary power u/s. 263 of the Income Tax Act unjustified when AO has exercised its quasi-judicial powers and arrived at a conclusion with reasonable application of mind.
Facts- The case of the assessee was assessed u/s. 143(3) of the Act. Subsequent to the assessment, the Pr. CIT received a proposal from the new incumbent AO vide its communication seeking invocation of supervisory jurisdiction u/s. 263 of the Act. Thereafter, in exercise of powers conferred u/s. 263 of the Act, the Pr. CIT issued SCN alleging that the impugned assessment order is erroneous in so far as it is prejudicial to the interest of the Revenue for the reasons mentioned the SCN.
Pr. CIT held that the order passed u/s. 143(3) is erroneous and prejudicial to the interest of the revenue and consequently cancelled and set aside the assessment order with a direction to the AO to pass a fresh reasoned assessment order based on facts and issues discussed in the revisional order. Being aggrieved, the present appeal is filed.
Conclusion- Where the AO has exercised its quasi-judicial powers and arrived at a conclusion with reasonable application of mind, such action cannot be brushed aside as erroneous etc. simply because the Revisional Commissioner does not feel satisfied with extent of the inquiry and expects observance of higher standards in this regard. Where the assessee has furnished relevant material and offered explanation, the assessment cannot be ordinarily set aside on the counters of Section 263 for framing better assessment without showing any objective material available on record adverse to the assessee.
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