CIT cannot revise assessment for issues already examined by AO

CIT cannot revise assessment to make afresh examination of issues already examined by AO

Brief of the case:

ITAT Mumbai held that CIT cannot revise assessment for making afresh examination of  an  issue already examined by the AO who has taken one of the possible views because there has been no erroneous order which could  ordered to be revised.

Facts of case:

CIT passed an order u/s 263 setting aside the assessment directing AO to make fresh assessment for AY 2004-05. CIT noted that the assessee has invested an amount of Rs.25 lakhs by way of share application and share premium in share of M/s. Turkhia Group of Companies and noticed that the assessing officer has not verified the issue regarding the high share premium paid. Such lack of inquiry made CIT to believed that assessment order was erroneous insofar as prejudicial to the interests of revenue.  Aggrieved by the said order the assessee filed the present appeal before the ITAT.

Contention of the Assessee:

• It was submitted that during the course of reassessment proceedings the assessee has produced documentary evidences of source of funds used in investing in shares of Turkhia Group of Companies and of investment made in shares of the group.
• Assessing Officer after detailed examination and making full inquiries in the matter passed the assessment order and therefore there is no case of the said order being erroneous.
• Further, the assessment order was passed on the basis of evidence on record and inquiries to the source of money and investment made by assessee company. And since there is no other new evidences which has been brought on record to substantial the ground taken by CIT, therefore, there is no justification in passing the impugned order u/s 263.
  

Held by ITAT Mumbai:

• ITAT observed that CIT can revise the assessment only when two conditions viz.

i) the order of the AO sort to be revised is erroneous AND

ii) it is to be prejudicial to the interest of the revenue

• It is well settled position of law that power under Section 263 cannot be exercised for starting fishing and roving enquiries. In the garb of exercising power under Section 263, the Commissioner cannot initiate proceedings with a view to starting fishing and roving enquires in matters or orders which are already concluded. Because the matter which has already been considered by AO in making assessment and who has taken one of the possible views then the assessment order cannot be termed as erroneous.
• In the present case, the AO was given documentary evidences of investment made in shares of Turkhia Group of Companies and also for the source of monies received to invest. Assessing Officer after detailed examination and making full inquiries in the matter passed the assessment order and therefore there is no case of the said order being erroneous. Further no evidence has come on record after passing of order by AO.
• Since the AO has examined the issue by making necessary enquiries, the assessment order cannot be held erroneous. Since the view taken by the AO is one of the possible views the assessment order cannot be held to be prejudicial to the interest of revenue.