Case Details: CIT v. N. … Continue reading “CIT can look into report of ‘Directorate of Vigilance & Anti-Corruption’ to invoke Sec. 263: HC”
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Case Details: CIT v. N. Sasikala – [2023] 146 taxmann.com 149 (Madras)
Judiciary and Counsel Details
S. Vaidyanathan & C. Saravanan, JJ.
Karthik Ranganathan Standing Counsel & S. Rajesh for the Appellant.
T. Vasudevan Jr. Standing Counsel for the Respondent.
Facts of the Case
Assessee an individual failed to file return of income as per the time mentioned under section 139(1). Subsequently, a notice under section 144 was issued and the assessee filed return of income.
The assessment was completed under section 144 as the assessee failed to furnish any of the documents called for and the return of income was not validly explained in the return filed beyond the stipulated time.
Meanwhile, the Assessing Officer (AO) received a DVAC’s (Directorate of Vigilance and Anti-Corruption) Report in which the assessee was a beneficiary. A copy of the report was sent to AO but he completed the assessment without considering it.
CIT invoked the revision powers under section 263 as AO committed mistake by ignoring DVAC’s report. Against such an order, the assessee preferred an appeal to the tribunal which duly granted relief to the assessee.
ITAT Held
The Tribunal held that the powers under section 263 i.e., the revisionary powers can be exercised by the CIT only based on information available as per the Income Tax Act. DVAC’s report was out of the records and information received under the Income-tax act.
Aggrieved by the order of the Tribunal, the CIT preferred an appeal to the Madras High Court.
The Madras High Court held that the order passed by Tribunal in allowing the assessee’s appeal was unsustainable. The orders passed were prejudicial to the interest of revenue. Further, the Tribunal was at fault not only for passing an impugned order but the Tribunal required to look into the matter and pay attention to the mistakes committed by the AO.
Overlooking of mistakes committed by AO resulted in an erroneous order passed in the favour of the assessee. Therefore, Tribunal erred in allowing the assessee’s appeal.
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