In assessment proceedings pursuant to order under section 263 assessee cannot seek to show that there was some other benefit in favour of revenue which was prejudicial to interest of assessee

Only in the cases where the assessment order is erroneous and prejudicial to the interests of the revenue and not prejudicial to the interest of the assessee can be reopened under section 263 and the assessee is not eligible to claim any new benefit in the assessment proceedings pursuant to section 263.

RELEVANT PARAGRAPH

FACTS

The assessee, a public limited company, filed its return of income for the assessment year 2000-01 on 30-11-2000 admitting an income of Rs.1,04,25,160 and the same was processed u/s 143(1) on 15-3-2001. The assessee had also filed revised return of income on 28-3-2002 admitting an additional income of Rs.2,54,89,190. Subsequently, the case was selected for scrutiny and the assessment was completed u/s 143(3) on 2632003 determining the total income at Rs.1,28,99,070 as per normal provisions of the Act and book profits of Rs.1,74,03,970 u/s 115JA of the Act. After perusing the assessment order passed u/s 143(3) of the Act, the CIT, Central, Hyderabad has issued a show cause notice under section 263 to the assessee as he was of the opinion that the order passed under section 143(3) was erroneous and prejudicial to the interest of the revenue on several grounds. After verifying the submissions made by the assessee, the CIT set aside the assessment order passed under section 143(3) of the Act with a direction to the assessing officer to redo the assessment after re-examining the issues involved and taking into account all the facts on record. Consequent to the order of the CIT u/s 263 of the Act dated 2672004, the assessing officer passed the present assessment order u/s 143(3) read with section 263 of the Act on 20th March, 2006 making an addition of Rs.6,61,951 as long term capital gain. Aggrieved by this order, the assessee filed an appeal before the CIT (A). During the appellate proceedings, the assessee raised additional ground of appeal stating that while computing the book profit under section 115JA of the Act, the net profit should have been reduced by the amounts credited to the Profit & Loss A/c on account of withdrawal from the provisions made, which had not been allowed in the earlier years. The aforesaid additional ground of appeal was forwarded to the assessing officer for his examination and comments. The assessing officer vide his remand report dated 942007 submitted that additional ground raised by the assessee can be admitted and the claim is allowable in view of the provisions of section 115JA of the Act. On the basis of the remand report from the assessing officer, the additional ground was admitted by the CIT (A) and the claim of the assessee was also allowed with a direction to the assessing officer to recompute the book profits as per the revised claim of the assessee.

HELD

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