This article examines the Income Tax Appellate Tribunal’s ruling in ITA No.530/Del/2021, where Rajiv Jain, a business owner from Muzaffarnagar, challenged the revision of his tax assessment for the year 2015-16 by the Principal Commissioner of Income Tax.
Rajiv Jain filed his tax returns declaring an income of Rs.21,79,850 for the year. The return was scrutinized, and the assessing officer completed the assessment with an adjusted total income of Rs.22,85,950. Subsequently, the PCIT reviewed and found the assessment to be erroneous and prejudicial to the interest of the revenue, focusing on the genuineness of sundry creditors and loans from family members, which led to a revision under section 263 of the Income-tax Act, 1961.
The tribunal evaluated the thoroughness of the initial inquiry by the assessing officer and the applicability of section 263. Jain’s counsel argued that the assessment proceedings were comprehensive, including detailed scrutiny of relevant transactions. The tribunal found that the initial assessment did involve proper inquiry and that the revision by the PCIT was not warranted under the circumstances presented, leading to the restoration of the original assessment order.
The decision emphasizes the importance of the assessing officer’s discretion in tax inquiries and the limitations on the revisionary powers of the PCIT under section 263. It highlights the need for tax authorities to establish clear errors or oversight in the original assessment before invoking revisionary powers. This case serves as a precedent for assessing the boundary of revisionary authority and the necessary thoroughness in initial tax assessments.
Order pronounced in the open court on April 29, 2022.
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