Allowing Income Tax Claim without Examination amount to ‘Erroneous Assessment’: ITAT upholds Revisional Order [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), in a recent decision held that theallowing income tax claim without proper examination by the AO amounts to erroneous assessment and therefore, the CIT can invoke revisional jurisdiction under section 263 of Income Tax Act, 1961.

In the instant case the assesse L &T Infra Debt Fund Limited has approached the appellate tribunal challenging the order passed by commissioner of income tax setting aside the order of the Assessing officer who had allowed exemption under S 10(47). CIT exercised the revisional power, on the ground that the officer has passed the erroneous order without application of mind. In that impugned order, claim for exemption by the assesse in respect of infrastructure debt fund was allowed by the officer.

It was contended on behalf of the assessethat the disallowance of exception under section 10(47) for A Y 2016-2017is valid becausethe notification by the CBDT with effect from 2018-2019 should be applied retrospectively. And the same had been accepted by the assessing officer. On the other hand, CIT justified the revision proceeding holding that the CBDT notification regarding s.10(47) of the act will have effect only from A Y 2018-2019 and the assessing officer had failed to examine all these aspects.

The Tribunal bench comprising Shri B R Bhaskaran (Accountant Member) and Mr. Pawan Kumar Jadale (Judicial Member) upheld the revisional order by Commissioner of Income Tax, observing that the assessment order passed by the assessing officer without application of mind is erroneous and the exception so allowed without examining the claim would be prejudicial to the interest of revenue. While observing the scope of revision proceeding the tribunal referred the observation made in Malabar industrial co. Ltd v CIT made by the SC. The CIT was justified in setting aside the order of assessing officer.

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