The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench ruled that the Commissioner cannot invoke Revisional Jurisdiction to cancel Assessment.
The assessee, Subbaraya Annamalai Siva Kumar paid a cash aggregate of which is exceeding Rs.20,000 in a single day for the purchases made from M/s. Pearl Beverages Limited during the year under consideration and the total of such cash payments work out to Rs.76,76,197/- during the financial year 2008-09 relevant to the assessment year 2009-10.
A show cause notice under section 263 of the Income Tax Act, 1961 was issued to the assessee calling for assessee’s objections as to why the assessment order under section 143(3) read with section 147 should not be revised under section 263 of the Income Tax Act, 1961. For this purpose, the case was posted for hearing on March 19, 2016. The said notice was duly served on the assessee on March 31, 2016.
The assessee has not complied with the said show cause notice. Again an opportunity through a letter dated January 3, 2017, was afforded to the assessee requesting to appear before the Commissioner of Income Tax, Tirupati on January 16, 2017. For this also, there is no compliance from the assessee.
As there was no compliance from the assessee, a final opportunity was afforded to the assessee vide letter dated January 23, 2017, posting the case for hearing on February 6, 2017, to file his objections, if any, for revision of his assessment. For this also, the assessee has not chosen to either appear in person or through his authorized representative to submit his explanation.
The assessee has no explanation to offer for the above discrepancy. The Assessing Officer is directed to cancel the order under section 143(3) read with section 147 dated January 6, 2015 and make a fresh assessment keeping in view the discrepancy. The AO shall calculate the tax and issue notice under section 156 accordingly.
The department failed to dispute the clinching fact that the Pr.CIT’s impugned order has nowhere held the assessment in question dated January 6, 2015, as an erroneous one so far as it causes prejudice to the interest of Revenue as per Section 263 of the Act. The Principal CIT has rather directed the Assessing Officer to cancel his corresponding assessment in issue in other words.
The coram L.P.Sahu and S.S.Godara found no reason to sustain either of the two courses adopted by the Pr.CIT.
The ITAT while allowing the appeal of the assessee in the light of the decision of the Apex court in the cases of Malabar Industrial Co. vs. CIT, CIT vs. Max India Ltd., and CIT vs. Kwality Steel Suppliers Complex held that an assessment or reassessment, as the case may be, could only be revised in case it satisfies the twin conditions of erroneous as well as causing prejudice to the interest of revenue; simultaneously. There is no such indication in the Pr. CIT’s above-extracted directions. Coupled with this, he has also directed the Assessing officer to cancel the assessment himself which the latter has no jurisdiction to do as per Section 263 of the Act.