Arul Industries Vs ACIT (Madras High Court)
Conclusion: Where AO had made inquiry and formed view, though inquiry may be inadequate, revision u/s 263 was not justified merely because CIT had different opinion in the matter.
Held: Assessee, a partnership firm was engaged in manufacture and sale of kitchen utensils had filed return for AY 2007-08 declaring NIL income. Scrutiny assessment u/s 143(3) was completed on 15.12.2009, determining income at ₹47.89 lakh (including LTCG ₹12.88 lakh). Post-search (u/s 132 in another group, u/s 133A at assessee’s premises), assessment was redone u/s 143(3) r.w.s. 153C on 12.12.2011. AO treated building as business asset and allowed depreciation after restricting excess claim. CIT invoked revision u/s 263 holding that: (i) difference between cost of construction claimed and DVO valuation was not considered, and (ii) long-term capital gain on sale of old building was not properly brought to tax. Tribunal upheld revision. It was held that once there was an inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order under Section 263 merely because he had a different opinion in the matter. It could not, therefore, be said to be a case of erroneous order and prejudicial to the interest of the Revenue warranting inference with the order that was drawn by Assessing Officer in the assessment proceedings.
