BSES Rajdhani Power Ltd vs. Pr CIT (Delhi High Court)-11 nov 2017
Question of law discussed: Whether revision power u/s 263 are limited to something which has not been covered by AO during its assessment proceeding or anything can be considered by using sec 263 which is against the revenue/ prejudicial etc?
Some important discussions/ points of the cases (for easy reference):
1- A show cause notice under Section 263, on 16.03.2016, was issued by the Commissioner, alleging that there was variation in cost of fixed assets, which aspect had not been verified or examined by the AO while framing assessment under section 143(3) of the Act. In response to the show-cause notice issued under Section 263 of the Act, the assessee filed its replies, resisting the move to revise the completed assessments; the appellant also pointed that since the original order of the AO had merged with that of the CIT (A), after the disposal of appeal, the re-appraisal under Section 263 was unwarranted,
2- The assessee’s appeal to the ITAT was rejected by the impugned order. The Tribunal held that the assessment was concluded by the AO without making adequate enquiries with respect to variation in cost of fixed assets and accordingly, order passed by the Respondent under Section 263 of the Act was upheld. As regards issues concerning applicability of TDS provisions on expenditure claimed by the assessee and benchmarking of transactions with group concerns, the Tribunal set aside the order of the CIT, holding that no opportunity was provided to the assessee regarding those issues and accordingly, directed the Respondent to pass fresh order in respect thereof after providing reasonable opportunity to the assessee.
3- Counsel argued that the order of the CIT under Section 263 could not be upheld under any circumstance and the ITAT, in refusing to set it aside, compounded the error. It was particularly stressed that the issues in addition to the one relating to depreciation were not part of the show cause notice and could not have been made the subject matter of revision; furthermore, no opportunity of hearing was granted by the Commissioner
4- It was further discussed that previous judgments of this Court and several other High Court has now been overruled in Commissioner of Income tax v Amitabh Bacchan 2016. In that judgment, the Supreme Court held that the failure to issue notice on any particular issue does not vitiate the exercise of power under Section 263, as long as the assessee is heard and given opportunity,
5- Referring to earlier verdicts of various courts "“Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic pre-condition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being heard.
This Court is of the opinion that the revisional order, to the extent that it did not provide any pre-decisional opportunity to address the issues it dealt with, could not be sustained; the ITAT has granted relief of a limited nature on that score. However, we do not agree that those issues were incapable of consideration as they were gone into by the AO. Accordingly, the CIT, in exercise of his power under Section 263 will proceed
For reading full text of the case please refer link - http://itatonline.org/archives/bses-rajdhani-power-ltd-vs-pr-cit-delhi-high-court-s-263-revision-the-failure-to-issue-notice-on-any-particular-issue-does-not-vitiate-the-exercise-of-power-us-263-as-long-as-the-assessee-is-heard/bses-rajdhani-263-revision/
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