The Income Tax Appellate Tribunal (ITAT), Jaipur bench has held that revisional jurisdiction under Section 263 of the Income Tax Act, 1961 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer.
The assessee, Om Prakash Agarwal earned income from trading in Ghee, Vansapati Oil and Edible oil. The return declaring total income at Rs. 8,90,270/- was e-filed on 31.10.2017, which was processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny under CASS. Notice U/s 143(2) was issued on 29.09.2018, which was duly served upon the assessee. Thereafter, notice u/s 142(1) was issued on 05.02.2019 and 03.05.2019 requiring certain details from the assessee.
The department observed that in the year under reference cash of Rs. 1,47,45,000/- has been deposited in the two bank accounts of the assessee. The Pr. CIT, exercising her revisionary powers under section 263, issued a SCN dated 16.02.2022 for clarifying the assessee as to why the assessment should not be held erroneous in so far as it is prejudicial to the interest of Revenue. Assessee submitted a detail reply to the SCN on 28.02.2022, which did not find favour with the Pr. CIT and an order under section 263 of the Act was passed on 26.03.2022.
The Counsel for the assessee, Mr. Praveen Saraswat submitted that the additional ground, being pure legal ground, it is raised for the first time as the assessee got the information late under Right to Information and came to know about the legal issue and therefore, raised the same now in this appeal as additional ground.
The Counsel for the respondent, Sanjay Dhariwal objected for the additional ground raised by the assessee and submitted that the information relied upon is merely department internal communication cannot be considered and thus, he submitted not to accept the additional ground at this stage.
The Bench consisting of Dr S SeethaLakshmi, Judicial Member and Rathod Kamlesh Jayantbhai, Accountant Member observed that “This provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to Revenue’s interest, that the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. However, despite our deep and careful consideration of the material on record including the finding recorded in the subjected Assessment order dated 03.07.2019 and in the findings recorded in the order under challenge, we do not find any incorrectness and incompleteness in the appreciation of facts made by the AO. In the light of these observations, we do not agree on this aspect to this extent with Pr. CIT.”
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