The Delhi Bench of Income Tax Appellate Tribunal (ITAT) ruled that the Revision Order by CIT valid if necessary enquiry has been conducted.
The assessee, JNS Instruments Ltd. earns income from business and profession. A search and seizure operation u/s 132(1) of the Income Tax Act, 1961 was carried out in the JP Minda group of cases. The case of the assessee was also covered in the said search action. The case of the assessee was centralised along with other cases of the JP Minda group and notice u/s 153A of the Act was issued for furnishing return of income. In response the assessee filed NIL return of income. The Assessing Officer accepted the return of the assessee and completed the assessment u/s 143(3) read with section 153A of the Act.
It came to the knowledge of the Ld. Pr. CIT that the assessee had earlier filed its return showing total income at Rs. NIL and that during the course of assessment proceedings, the then Assessing Officer had made a reference to the Transfer Pricing Officer (TPO) u/s 92CA of the Act vide letter dated 26.7.2013 to determine the Arms Length Price (ALP) of the international transactions with Associated Enterprises. The Pr. CIT also noted that the search and seizure operation was conducted while the assessment was pending.
The coram of Accountant Member Prashant Maharishi and Judicial Member, Sudhanshu Shrivastava observed that CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings and connected matters recorded are erroneous.
The ITAT ruled that CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law.
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