The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, has recently in an appeal filed before it, held that the revisional authority shall avoid the attitude of “I have the power and I shall exercise”.
The aforesaid observation was made by the Chandigarh ITAT, when an appeal was preferred before it by an assessee, wherein the correctness of the order dated 26.03.2021, of the Pr .CIT, Chandigarh, pertaining to the assessment year 2016-17 had been assailed, on the grounds that the Principal Commissioner of Income Tax has wrongly assumed jurisdiction under section 263 of the Income Tax Act, to set aside the assessment order dated 26.11.2018 passed by the Assessing Officer, in as much as the order is neither erroneous nor prejudicial to the interest of Revenue, that as such the assumption of jurisdiction under section 263 of the Income Tax Act is beyond his competence, and further that the Principal Commissioner of Income Tax, has erred in failing to consider the various replies and submissions placed on record in proceedings before her in the correct perspective, which is arbitrary and unjustified.
The facts of the case were that the assessee had returned an income of Rs.19,44,840/- in the return filed on 22.07.2016, Subsequent to which the assessee had filed a Revised return on 27.10.2016 declaring an income of Rs.29,55,280/-.
Following the same, the case of the assessee was selected for a limited scrutiny through CASS for the following reason that large deduction was claimed u/s 54B, 54C, 54D, 54G, 54GA (Schedule CG of ITR ).
Succeeding the same, the AO had,as per the cryptic order, passed records that notice was issued to the assessee u/s 143(2) along with a further notice u/s 142(1) ,with questionnaire through ITBA. Thereafter,the AO had accepted the returned income of the assesee, which consisted of her income from salary, rental income, capital gain and income from other sources.
However, this order dated 26.11.2018 was set aside by the PCIT after show causing the assessee and considering the reply filed. And it is by being aggrieved by the same that the assessee has preferred the instant appeal before the Chandigarh ITAT.
Inviting attention to the grounds raised and the facts on record, Shri Tej Mohan Singh, the AR for the assessee submitted that the arguments of the assessee before the ITAT are two fold.
Firstly, addressing the Show Cause Notice issued by PCIT, it was submitted that his objection to the impugned order is on the ground that the issue had been fully enquired into by the AO before the passing of the order, and hence that the conclusion drawn by the PCIT, is incorrect on facts.
It was further argued by the AR that the AO had made all due enquiries in the course of the assessment proceedings, and also that even otherwise, the order passed by the PCIT is incorrect as the PCIT had either carelessly or deliberately chosen to rely exclusively on Clause-16 of the MOU incorrectly, and despite the assessee’s written submissions on record, has chosen to ignore for no stated reasons, the various other clauses of the very same MoU.
With the AR further reiterating his submissions, stating that on both the issues, the AO had made full and proper enquiries, and further that the MoU had been read selectively and not completely by PCIT, thereby making it non-maintainable, Shri Sarabjeet Singh, the CIT-DR fairly submitted that the fact had been ascertained correctly by the PCIT .
It was further submitted by the CIT-DR that as per record, no other Show Cause Notice had been issued to the assessee on this issue, except the one extracted in the order, and that no query in the course of the hearing , by way of an order sheet entry on the file of the PCIT is also available. Andaccordingly, on this issue, he fairly submitted that he would be relying upon only the impugned order.
Hearing the opposing contentions of both the sides and perusing the materials available on record, the Chandigarh ITAT observed:
“We have heard the rival submissions and perused the material available on record. The short issue for consideration in the present appeal is whether the order passed by the AO dated 26.11.2018 on the basis of material available on record can be said to be erroneous and prejudicial to the interests of the revenue or not as has been held by the ld. PCIT.”
“On a reading of the impugned order when taken along with the record available, we find that in the facts of the present case, the direction of the Revisionary Authority in setting aside the assessment order dated 26.12.2018, no case has been made out for exercise of power”, the ITAT Bench added.
“This style of functioning may have been prevalent unquestioningly during colonial times under a foreign rule, however, it is no longer acceptable in the preset times.”, the ITAT Panel consisting of Vikram Singh Yadav, the Accountant Member, and Diva Singh,the Judicial Member commented.
Thus, allowing the assessee’s appeal while quashing the impugned order of the PCIT, the ITAT Bench held :
“If by an order any error or prejudice is caused to the Revenue, the Revisionary Authority, we agree, has all the powers of setting aside such orders. However, in order to disturb the vested right of the assessee, the Revisionary authority is duty bound to look at the records available and necessarily needs to set out the error, and the prejudice caused by the order sought to be set aside. The attitude that I have the power and I shall exercise it requiring the assessee again to support it claim cannot be accepted.”
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