In the case between Rashtriya Chemicals & Fertilizers Limited vs. Commissioner of Income Tax, Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) recently held that revisional jurisdiction cannot be invoked since there is no prejudicial to the interests of the Revenue even if there is lack of inquiry by the Assessing Officer (AO).
Assessee Company in the present case being a corporate Assessee engaged as the manufacturer of fertilizers and chemical products. The Deputy Commissioner of Income Tax has determined the income of the Assessee at Rs.198.12 crores under normal provisions and Rs.365.02 crores under section 115JB as against the returned income of Rs.193.66 Crores and Rs.365.02 Crores under normal provisions and under section 115JB respectively on assessment. Consequently, the assessment order was subjected to exercise of revisional jurisdiction under section 263 of the Income Tax Act 1961 and accordingly a show cause notice issued to the Assessee also.
Counsel for the Assessee advocate Ketan K Ved contended that the AO duly appreciated the computation under section 115JB during original assessment proceedings filed by the Assessee and completed the Assessment with due application of mind and hence, the CIT’s interference was not justified particularly when there was no omission on the part of the AO to complete the assessment as per law.
On the other hand, the Revenue argued that the impugned item was not allowable to the assessee in terms of express provisions as contained in section 40(a)(v) of the Act and the AO was required to add back the same to arrive at book profit under section 115JB of the Act. The failure to do so has caused the loss of Revenue and therefore, the jurisdiction under section 263 was perfectly justified.
The Tribunal bench comprising of Judicial Member Joginder Singh and Accountant Member Manoj Kumar Aggarwal observed that “the adjustment of the impugned item as suggested by the CIT was not legally tenable in the law which leads to inevitable conclusion that the omission to carry out the said adjustment did not result in any loss of Revenue. Therefore one of the prime conditions prejudicial to the interest of Revenue to invoke the revisional jurisdiction under the provisions of section 263 has remained unfulfilled in the present case”. Therefore, the impugned order could not be sustained in law. The division bench said while allowing the appeal filed by the Assessee.
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