Law:

Section:

I. Section 263 of the Income-tax Act, 1961 - Revision - Of orders perjudicial to interests of revenue - Assessment year 2002-03 - Where Assessing Officer allowed warrantly claim after making detailed enquiry on issue, assessment order could not be revised under section 263 [In favour of assessee] While making original assessment the Assessing Officer allowed the warranty claim of the assessee. The Commissioner, while exercising powers under section 263, set aside assessment order on the ground that there was lack of enquiry. The Tribunal quashed the order of the Commissioner. Held that there was no discussion in the order of the Commissioner as to how and in what manner the enquiry was lacking and what was the fault and default committed by the Assessing Officer. The Assessing Officer had examined the said aspect in the original assessment proceedings and accepted the stand of the assessee. There was no finding of the Commissioner that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue. Moreover, the question of warranty claim was reopened in the assessment year 1999-2000 after an order under section 263. That order was struck down by the Tribunal and that decision had been upheld by the Court. Therefore, the Tribunal was justified in quashing the order of the Commissioner. II. Section 263 of the Income-tax Act, 1961 - Revision - Of orders perjudicial to interests of revenue - Assessment year 2002-03 - Where Commissioner exercised jurisdiction under section 263 by wrongly interpreting auditor's note, his order was rightly set aside by Tribunal [In favour of assessee] The assessee claimed deduction under section 35DDA of one-fifth of the amount payable under the voluntary retirement scheme. The Assessing Officer allowed the claim. The Commissioner, while exercising jurisdiction under section 263, set aside the assessment order on the ground that the audit report created a doubt as to whether said expenditure was actually incurred or not. The Tribunal quashed the order of the Commissioner. Held that the assessee had clarified that the note was written by the auditor as a precautionary measure for reporting that…

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