Revision Order merely because of Non-mentioning of specific reasons for accepting the explanation of the assessee is Invalid: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the revision order under section 263 of the Income Tax Act, 1961 cannot be invoked merely because the Assessing Officer has not mentioned the specific reasons for accepting the explanation of the assessee.

The assessee, Reliance Payment Solution is engaged in the business of “operation of semi closed prepaid instrument by the RBI”. The assessment was picked up for scrutiny assessment, and one of the reasons for selection of case for scrutiny was “depreciation claimed at higher rate”.

In the assessment order, however, the Assessing Officer did not make any observations on this aspect of the matter. The Principal Commissioner initiated the revision proceedings under section 263 invoking this as a reason.

The Tribunal bench comprising Pramod Kumar, (Vice President) and Kuldip Singh, Judicial Member observed that there was a specific question and detailed reply submitted by the assessee during the assessment proceedings. Yet, learned CIT(A) has subjected the assessment order to revision proceedings on the short ground that the Assessing Officer passed the assessment order “without making any further enquiry” and concluded that “in the absence of any specific inquiry made by the Assessing Officer or recording his reason for accepting assessee‟s submission without any appropriate evidence, it cannot be said that documents submitted by the assessee were duly submitted by the assessee”.

“Everything thus hinges on whether assessee‟s submission being accepted can be faulted with, whether the assessee ought to have produced the appropriate evidence and whether non-recording of the reasons for accepting explanation will render the order erroneous and prejudicial to the interest of the revenue,” the Tribunal said.

Concluding the order in favour of the assessee, the Tribunal held that “the fact remains that the specific issue raised, in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the Assessing Officer. Merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order “erroneous and prejudicial to the interest of the revenue”.

To Read the full text of the Order CLICK HERE

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