In
Harun Ali v. Principal Commissioner of Income Tax, Dehradun, the Delhi
Bench of the Income Tax Appellate Tribunal examined the validity of revisionary
proceedings initiated under Section 263 of the Income-tax Act, 1961 for
Assessment Year 2015–16.
The
assessee’s case was selected for limited scrutiny under CASS for
specific reasons relating to mismatch in tax credit, mismatch in turnover, and
increase in capital and sundry creditors. The assessment was completed under
Section 143(3) after examination of issues falling within the limited scrutiny
mandate. Subsequently, the Principal Commissioner invoked Section 263 alleging
that the Assessing Officer had failed to examine labour and material payments
and the applicability of disallowance under Section 40(a)(ia), treating the
assessment order as erroneous and prejudicial to the interests of Revenue.
The
Tribunal noted that the issues raised by the Principal Commissioner for
revision were not part of the original limited scrutiny selection criteria.
It held that the Assessing Officer is not empowered to travel beyond the scope
of limited scrutiny and, correspondingly, the Principal Commissioner cannot
invoke revisionary jurisdiction on issues which were never the subject matter
of assessment.
The
Tribunal further reiterated that Section 263 can be invoked only when both
statutory conditions—erroneous order and prejudice to Revenue—are
satisfied. Where the Assessing Officer has taken a possible view within the
scope of limited scrutiny, revision under Section 263 amounts to substitution
of opinion, which is impermissible in law.
Accordingly, the ITAT held that the revisionary order passed under Section 263 was without jurisdiction and unsustainable in law, and allowed the appeal of the assessee.
Source Link- https://itat.gov.in/public/files/upload/1767771858-WdFKnv-1-TO.pdf
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