The Kolkata bench of the Income Tax Appellate Tribunal, in a recent decision held that the Commissioner of Income Tax (CIT) cannot exercise its revision powers under section 263 of the Income Tax Act, 1961 when the assessing officer has passed the order after conducting a thorough examination. The Tribunal,applied the ratio in Gabriel India Limited in which the Supreme Court has expressed a similar view.
In the instant case, the Revenue has approached the Appellate Tribunal challenging the order of the Commissioner of Income Tax, who set aside the order passed by the Assessing officer by exercising its power to revisionon ground that the officer has passed the impugned order without application of mind. In the impugned order, the assessees’ claim for exemption in respect of dividend income was allowed by the officer.
It was contended on behalf of the assessee that issue relating to the disallowance under section 14A read with Rule 8D thus was examined by the Assessing Officer during the course of assessment proceedings and this position is accepted even by the ld. CIT in his impugned order passed under section 263 of the Income Tax Act. The Revenue further relied upon the decision of the Apex Court in Gabriel India Limited, in which it was held that ITO’s conclusion cannot be termed as erroneous simply because Commissioner does not agree with his conclusion and the substitution of the judgment of the Commissioner for that of the ITO is not permissible under section 263 of the Act.
The Tribunal, while invalidating the order impugned passed by the CIT, observed that “If the facts of the present case are considered in the light of the ratio laid down by the Hon’ble Supreme Court in the case of Gabriel India Limited (supra), we are of the view that the order of the Assessing Officer passed under section 143(3) by accepting the claim of the assessee on the issue of disallowance under section 14A read with Rule 8D could not be held to be erroneous and the ld. CIT was not justified in setting aside the same by exercising the powers conferred upon him under section 263. In that view of the matter, we set aside the impugned order passed by the ld. CIT under section 263 and restore that of the Assessing Officer passed under section 143(3).”
Read the full text of the order below.
