Revision order Passed without Recording Whether Notice Issued is Served to Assessee or Not: ITAT Sets Aside Revision Order [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has set aside the revision order holding that the revision order passed without recording whether notice issued was served to assessee or not.

On the basis of search and seizure operation carried out at the premises of assessee, Citron Infra projects Ltd “incriminating material” was seized on the basis of which notice under Section 153A of the Income Tax Act, 1961 was issued. During the course of assessment proceedings, the assessee filed submissions in response to the notice issued under Section 142(1) of the Income Tax Act.

The Assessing Officer noticed that during the year under consideration the assessee company had issued 31,00,000 shares at premium of Rs.190/- per share to the different applicants. The value of the share was determined by a valuation report issued by Sanjay & Shah Company, Chartered Accountant at Rs.200/- per share.

However, the PCIT by invoking the revisionary jurisdiction issued a notice under Section 263 of the Income Tax Act by flagging the issue that the AO should have computed the fair market value of the assessee company as per NAV method provided in rule- 11UA(2)(a) of the Income Tax Rules, 1962 and thereby invoked the provisions contained under section 56(2)(viib) of the Income Tax Act and worked out the share value as per rule 11U of the Income Tax Rules.

The PCIT reported to had given the opportunity to the Assessee proposing to revise the assessment order but show cause notice was not compiled. Another notice was again issued but the assessee failed to respond. Consequently, the PCIT held the order passed under section 144 read with section 153A of the Income Tax Act as erroneous in so far as being prejudicial to the interest of the Revenue and thereby set aside the same.

K.C. Selvamani, on behalf of the revenue contended that the present assessee was negligent since beginning as he had neither appeared before the AO nor before the PCIT.

The two-member Bench of Kuldip Singh, (Judicial Member) and Gagan Goyal, (Accountant Member) allowed the appeal filed by the assessee holding that the impugned order had been passed in haste without bringing on record if alleged notices issued to the assessee were ever served upon. It is also a fact on record that assessment order in this case was also passed at the back of the assessee.

To Read the full text of the Order CLICK HERE

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