Failure to Point Out any Error which can be Prejudicial to Interest of Revenue: ITAT quashes the Revisional Order [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) quashed the revisional order when PCIT failed to point out any error which can be prejudicial to interest of Revenue.

Shri Gurdeep Singh, the assessee is the sole proprietor of M/s Sunrise Steels engaged in the trading of MS Bar, Angle, Patti etc.  The assessee filed its return on 18.10.2017 which was accepted by the AO vide his order dated 27.12.2019. The PCIT set aside this order passed by the AO  u/s 143(3) of the Act exercising powers u/s 263 of the Act. 

The AO has simply raised a query and accepted the returned income ignoring the fact that huge deposits were made in the demonetization period and comparative analysis from the earlier year was required to be done by him.  It was submitted that even the household withdrawal contribution of Rs. 10,000/- of the assessee has been accepted by the AO.

It was evident from the records that repeated enquiries were made by the AO where the queries were raised on the e-portal and specifically the AO has required the assessee to reply on the eportal.  The PCIT incorrectly concluded that the AO has casually accepted whatever replies have been made by the assessee. Hence, it was concluded that the comparative analysis that the AO was required to examine was not examined.

The PCIT failed to consider the fact pleaded on record before the AO that the assessee in response to the specific query of the AO had responded that this was the first year of the assessee's business and there was no past comparison available which the assessee could file. 

A Coram comprising of Smt. Diva Singh, Judicial Member & Shri Vikram Singh Yadav, Accountant Member observed that the Revisionary Authority cannot be permitted to exercise the power on a shoddy perusal of the record.  The Revisionary Authority is expected to exercise the power considering the record.  The power cannot be permitted to be exercised on whims. 

It is seen that the replies of the assessee and the queries raised by the AO are through the e-portal and this fact stands un-demolished by the Revenue. The Tribunal viewed the impugned order as full of conjectures and surmises. 

While allowing the appeal of the assessee the Tribunal held that “for the assumption of jurisdiction u/s 263, the PCIT is bound to point out the error in the order and that too such an error which is prejudicial to the interests of the Revenue. “ The lack of enquiry or inadequate enquiry is an incorrect presumption and the order is directed to be quashed.

To Read the full text of the Order CLICK HERE

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