Sterling Farm Research And Services Pvt. Ltd. Vs CIT (Kerala High Court)
The Kerala High Court heard an appeal filed by Sterling Farm Research And Services Pvt. Ltd. challenging a suo motu revisional order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961, pertaining to the Assessment Year (A.Y.) 2016-17. The Section 263 order was confirmed by the Income Tax Appellate Tribunal (ITAT).
I. Background and The Core Issue
The appellant had two divisions: a Fertilizer Division and a Test House Division. The Test House Division was sold, which the assessee treated as a ‘slump sale’ under Section 50B of the Act, and filed its return accordingly.
The Assessing Officer (AO) finalized the assessment under Section 143(3) by an order dated December 20, 2018. This assessment order (Annexure E) contained the observation: “During the year under consideration assessee has sold various assets of the company and produced supporting documents for income from Capital Gain declared. All the documents/materials produced are verified.”
Subsequently, the Commissioner issued a notice under Section 263, proposing to set aside the assessment. The Commissioner found that the AO had “not enquired into the entire aspects of the matter” and had merely completed the assessment by accepting the assessee’s stand, which was deemed an incorrect assumption of facts.
