Revisional Jurisdiction can’t be invoked merely because AO treated Expenses under a different Head: ITAT [Read Order]

Revisional Jurisdiction - AO - ITAT - Taxscan

The Income Tax Appellate Tribunal ( ITAT), Hyderabad bench has held that the Commissioner of Income Tax cannot invoke revisionary jurisdiction under section 263 of the Income Tax Act, 1961 merely for the reason that the Assessing Officer has allowed expenses under a different head.

As per the provisions of the Income Tax Act, the revisional jurisdiction can be exercised only if two conditions are fulfilled, ie., the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue.

In the instance case, the Principal Commissioner was of the view that the assessee’s administrative expenses are in the nature of compulsorily office expenditure which has been held eligible for intra-head set-off against income from other sources than under section 57(iii) by the Assessing Officer. The factual position is hardly different qua its latter two heads of financial costs; including that directly paid to the bank of Rs.2,8,53/- pertains to the very account only as well as the fact that the impugned depreciation/amortization has been a continuing relief granted very well from the preceding assessment years, whose facts and figures are nowhere in dispute.

The Tribunal bench comprising Accountant Member Laxmi Prasad Sahu and Judicial Member SS Godara quoted the landmark decision of the Apex Court in Malabar Industrial Co. Vs. CIT wherein it was held that an assessment has to be both erroneous as well as causing prejudice to the interest of the Revenue.

“Simultaneously, before it is sought to be subjected to exercise of revision jurisdiction u/s.263 of the Act. Their lordships further make it clear that it is not each and every assessment that attracts Section 263 revision but only wherein the Assessing Officer has not taken one of the two possible views; as the case may be. We draw strong support therefrom and reverse the learned PCIT’s action exercising Section 263 revision jurisdiction. The impugned Section 143(3) regular assessment dt.16-03-2015 stands revived as the necessary corollary, therefore,” the Tribunal said.

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