The assessment was completed by the assessing officer under section 143(3) of the Income Tax Act 1961, assessing the income at Rs.2,98,060.
Subsequently, the Pr. CIT on going through assessment records found that certain points which were mentioned in the selection of the case for scrutiny under CASS were not taken into consideration by the assessing officer while completing assessment.
The Pr. CIT was of the view that the assessing officer passed an order without making required investigation for examination which has resulted in the assessment being erroneous in so far as it is also prejudicial to the interest of the revenue.
Hence, Pr. CIT issued notice under section 263 of the Act calling upon the assessee as to why assessment order should not be revised.
The explanation offered by the assessee was not found acceptable by the Pr. CIT, he therefore, held that the assessment order is erroneous in so far as also prejudicial to the interest of the revenue on account of passing of the order without making requisite enquiry/investigation in respect of deduction under section 54B of the Act .
He, therefore, set aside the assessment order and directed the assessing officer to reexamine the issue afresh after causing necessary enquiry/investigation.
The two-judge bench of Manish Borad and Kul Bharat clarifies It is settled position of law that the provisions of section 263 of the Act can be invoked when twin conditions i.e. the assessment order is erroneous and prejudicial to the interest of Revenue are satisfied.
The Tribunal observed that in the present case under the identical facts the jurisdictional High Court has ruled in favour of the assessee regarding availability of deduction under section 54B of the Act where the investment in new assets is made in the name of son of the assessee. The revenue has not brought to our notice any contrary judgment by the Hon’ble jurisdictional High Court or Supreme Court as a binding precedence.
Therefore, the ITAT held that it cannot be construed that the order passed by the assessing officer is prejudicial to the interest of the revenue and Pr. CIT was not justified in invoking the provision of section 263 of the Act.Subscribe Taxscan AdFree to view the Judgment