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Section 263 of the Income-tax Act, 1961 – Revision – Revisional proceedings invalid as assessment order was not the result of non-enquiry or non-application of mind or assumption of wrong facts.
Facts: Assessee before the Tribunal has raised the ground that whether CIT was unjustified in law and on facts in exercising his revisional jurisdiction u/s. 263 for setting aside the assessment order in respect of the issues set out in the SCN even though the assessment order with regard to those issues was neither erroneous nor prejudicial to the interest of the Revenue.
Held, that both in the reasons set out in SCN as well as in the impugned order, CIT observed that in respect of issues, proper enquiry was not conducted by the AO which the circumstances of the case demanded and for absence of proper enquiry, the assessment order was considered by CIT to be erroneous and prejudicial to the interests of the Revenue. It is true that the courts have held that an order of assessment can be considered to be erroneous if there was lack or total absence of enquiry with regard to an issue which has material bearing on the assessment of total income for the relevant year. However in such a case the CIT has to first demonstrate that no enquiry at all was conducted and consequent to which not only the order became erroneous but such an error also caused prejudice to the revenue. After the enquiry, it was found that assessment order was not the result of non-enquiry or non-application of mind or assumption of wrong facts and while passing the assessment order, AO had followed the permissible view in law which cannot be said to be 'unsustainable in law'. Therefore, the jurisdictional facts for usurping the jurisdiction u/s 263, being absent, it was held that action of CIT was without jurisdiction and all subsequent actions are 'null' in the eyes of law – EVEREADY INDUSTRIES INDIA LTD. Vs. PR. CIT [2020] 181 ITD 528 (ITAT-KOLKATA)