M.R Apparels Private Limited Vs Principal Chief Commissioner of Income Tax (Delhi High Court)
Delhi High Court held that CIT has rightly held that assessment order was passed without making necessary inquiries and verification hence in terms of clause (a) of Explanation 2 to Section 263, the assessment order is deemed to be erroneous in so far as it is prejudicial to the interests of the revenue.
Facts- The appellant has filed the present appeal u/s. 260A of the Income Tax Act, 1961 impugning an order dated 06.02.2024 passed by ITAT. The appellant (assessee) had preferred the said appeal impugning an order dated 18.11.2019 passed by the learned Principal Commissioner of Income Tax u/s. 263 of the Act holding that the Assessment Order dated 04.05.2017 passed by AO u/s. 143(3) of the Act in respect of the assessment year 2015-16, is erroneous, in so far as it is prejudicial to the interest of the Revenue.
Notably, CIT concluded that the AO had not verified the necessary relevant facts relating to the taxability of sale of certain immovable property. CIT found that AO did not examined the details regarding the dishonour of cheques.
Conclusion- Held that the audit report could not have commented upon the dishonour of cheques, as the report was issued prior to the date of the cheques aggregating ₹1,45,00,000/-. The AO had accepted the said report. The assessment order does not indicate any enquiries in this regard. The learned CIT has rightly held that the Assessment Order was passed without making the necessary inquiries and verification. Thus, in terms of clause (a) of Explanation 2 to Section 263 of the Act, the assessment order is deemed to be erroneous in so far as it is prejudicial to the interests of the revenue.
