The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) held that the order passed by the assessing officer in the absence of proper inquiry shall be liable to revision under Section 263 of the Income Tax Act, 1961.
The Principal Commissioners of Income Tax (PCIT) on examination of the details/ record available before her observed that the assessment order passed under Section 143(3) read with Section 143(3A) and 143(3B) of the Income Tax Act appears to be erroneous insofar as it is prejudicial to the interest of the Revenues and she proposed to modify the order under the power vested under Section 263 of the Income Tax Act.
The assessee was allowed an opportunity to show cause as to why the order passed under Section 143(3) read with Section 143(3A) and 143(3B) of the Income Tax Act should not be revised under Section 263 of the Income Tax Act in a suitable manner.
The Authorized Representative of the assessee supported the assessment order and also filed a detailed written submission countering that the order of the PCIT invoking Section 263 of the Income Tax Act is not maintainable as the assessment order is neither erroneous nor prejudicial to the interest of the Revenue.
The Departmental Representative supported the order of the PCIT and submitted that the invocation of Section 263 of the Income Tax Act by PCIT(A) is justified.
In the case of M/s. Gee Vee Enterprises, it was held that the Assessing Officer is not only an adjudicator but also an investigator and failure of the Assessing Officer to conduct the required inquiry and accepting the statement of the assessee without due verification renders the orders erroneous as well as prejudicial to the interest of the Revenue.
The Two-member bench comprising of Sandeep Gosain (Judicial member) and Rathod Kamlesh Jayantbhai (Accountant member) held that the Assessing Officer is required to make necessary verification and to determine and finalize the assessment in accordance with the prevailing law to determine the correct income of the assessee liable to tax after allowing reasonable opportunity to the assessee.
Thus, the appeal of the assessee was dismissed.
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