The Income Tax Appellate Tribunal (ITAT), Kolkata Bench held that the assessment cannot be revised on grounds of mere suspicion that income is escaped.
The assessee, Nitson & Amitsu Pvt. Ltd. is a company and is in the business of trading as well as construction. It filed its return of income for the AY 2013-14. The AO passed an order under section 143(3) of the Act.
The Pr. CIT issued a show-cause notice proposing to revise the assessment order passed under section 143(3) of the Act by the DCIT.
The Tribunal noted that the Pr. CIT has not pointed out any specific error in the order of the AO. He stated that there was an inadequate enquiry. It is well settled that inadequate enquiry is no ground to set aside an assessment order as erroneous and prejudicial to the interest of the Revenue.
The Pr. CIT had a suspicion that income liable to tax has escaped assessment as in his view the AO should have conducted more enquiries. What is the nature of further enquiries or what the AO missed to examine and what would have been the income that has escaped is not made clear by the Pr. CIT.
The Coram consisting of Aby T. Varkey and J. Sudhakar Reddy held that the Pr. CIT should have conducted enquiries and should have verified the accounts and other documents and details himself and pointed out specifically as to where an error has occurred which is prejudicial to the interest of the Revenue and which in his opinion would result in the assessee being not assessed at the correct amount of income and only after such enquiries, examination and verification he can come to a conclusion that there is an error insofar as it is prejudicial to the interest of the Revenue.
The ITAT held that Pr. CIT is not authorized to simply set aside an assessment order by making certain general observations based on suspicion and wrong working out of the WIP and without specifically pointing out errors which are prejudicial to the interest of the Revenue. Mere suspicion of likely escapement of income is not a ground for revision by invoking powers under section 263 of the Act. Such an order is bad in law.
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