Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 2001-02 - Whether for making a valid order under section 263 it is essential that Commissioner has to record an express finding to effect that order passed by Assessing Officer is erroneous which has caused loss to revenue - Held, yes - Whether where assessment order has been passed by Assessing Officer after taking into account assessee's submissions and documents furnished by him and no material whatsoever has been brought on record by Commissioner which showed that there was any discrepancy or falsity in evidences furnished by assessee, order of Assessing Officer cannot be set aside for making deep inquiry only on presumption and assumption that something new may come out - Held, yes FACTS For the relevant assessment year, the assessment of the assessee-company was completed under section 143(3) at certain income as against nil income declared by the assessee. However, the Commissioner, by an order passed under section 263, set aside the assessment describing the same as erroneous and prejudicial to interest of revenue. The Commissioner observed that the assessee had shown certain closing stock of finished goods but the Assessing Officer had not obtained any details of the closing stock from the assessee; that the assessee had shown certain insurance claim receivable but no details had been furnished by it and the Assessing Officer also had not made any enquiries in respect of that issue from the insurance company; that the assessee had claimed deduction under section 80HHC but no details had been furnished and the Assessing Officer disallowed the entire claim of deduction under section 80HHC without making enquiry from the Directorate of Foreign Trade; and that the assessee had shown certain income as exchange variation though in the immediate previous year no such gain was shown and, therefore, that point needed examination by the Assessing Officer. On appeal, the Tribunal set aside the order passed by the Commissioner. The Tribunal went into each of the issues which were highlighted by the Commissioner in his order observing that same were…

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