Kiri Industries Ltd. Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that invocation of revisionary jurisdiction under section 263 of the Income Tax Act by the Principal CIT erred since AO has taken legally plausible view. Accordingly, order set aside.
Facts- The assessee filed the return of income declaring a total income of Rs. Nil. However, AO completed the assessment u/s. 143(3) read with Section 144B determining the assessed income at Rs. 3,37,97,789/-.
Later, PCIT was of the view that the AO had erred in not considering the Audit Report, which indicated the inadmissibility of the claimed interest. This oversight was deemed to have resulted in a loss of Revenue, thereby satisfying the conditions for revising the assessment u/s. 263. As a result, the Principal Commissioner exercised the powers conferred u/s. 263, setting aside the AO’s order.
Being aggrieved, against the order passed by PCIT u/s. 263, assessee has preferred the present appeal.
Conclusion- Held that when the Assessing Officer has taken a legally plausible view, duly supported by judicial precedents, then, in our considered view the Principal CIT is precluded from taking recourse to 263 proceedings only with a view to substitute another view with that of the view taken by the Assessing Officer, unless the view taken by the Assessing Officer is wholly unsustainable. However, as noted by us in the preceding paragraphs, the view taken by the Assessing Officer is a legally plausible view and therefore, looking in the instant facts, Principal CIT erred in invoking revisionary jurisdiction u/s 263 of the Act.
