The Allahabad High Court has ruled that the revisional jurisdiction cannot be exercised by the Income Tax Officer under the provisions of section 263 of the Income Tax Act, 1961.
A division bench of Justice Abhinava Upadhya and Justice Ashok Kumar confirmed that the Income Tax Officer has no authority for revision since the same was solely vested upon the Commissioner of Income Tax and Principal Commissioner of Income Tax.
The assessee in the present appeal was engaged in transport business on own account and on commission basis. The assessee had filed his return for the AY 2006-07 completed under section 143(3) of the act amounted to Rs. 2,28,910/. During the course of audit, the auditor had inserted a note. The auditor had pointed in the note that firm earns only commission but their previous income was recorded as total receipt from party.
The CIT, Kanpur set aside the order by finding that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue
The department contented that show cause notice was issued by the Income Tax Officer (Technical) was on behalf of the commissioner of income tax under section 263of the Act, and the satisfaction recorded by the ITO is also have the same effect.
The division bench of the High Court, while overruling the contentions observed that Section 263(1) is necessary to be looked into the purpose of determination of power vested with the authority concerned to revise the order prejudicial to the revenue.
While considering the fact, the Court held that in the instant case, neither CIT has applied his mind nor has he brought on record that the assessment order was incorrect or prejudicial to the interest of revenue.
Finally the Court ruled that an order cannot be revised by the equally situated or equally ranked authority or by an authority who is authorized under the law.
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