Law:

Section:

Section 40A (2), read with section 263, of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments - Assessment year 2001-02 - Commissioner, by invoking powers under section 263, set aside assessment order passed by Assessing Officer on ground that in its trading account, assessee-company had reduced gross receipts by claiming sub-let payments to sub-contractors and in his view said payments could not be considered as genuine ones and legitimate business expenditures - Accordingly, he made addition by disallowing said payments - On appeal, Tribunal recorded findings that there was no illegality committed by assessee in entrusting its work to sub-contractors and in making all due payments to them; and that there was no evidence on record that said contractors were related to assessee or were associates or sister concerns of assessee - It, therefore, held that no disallowance could be made on account of said payments - Whether on facts, Tribunal was justified in quashing order of Commissioner passed under section 263 - Held, yes Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Whether where Assessing Officer has taken a particular view on basis of evidence produced before him, it is open for Commissioner, in revisional proceedings under section 263, to take a different view on same material - Held, no - Whether on facts stated under heading 'Business disallowance - Excessive or unreasonable payments' when Assessing Officer had duly verified all details from books and records, and had made no addition in regular assessment, Commissioner was justified in invoking revisional jurisdiction under section 263 - Held, no FACTS The Commissioner issued a show-cause notice to the assessee-company under section 263 in respect of the order passed by the Assessing Officer under section 143(3), stating that in its trading account, the assessee had reduced gross receipts of Rs. 30.8 crores by Rs. 7.84 crores claiming the same as sub-let payment to sub-contractors and the Assessing Officer had not inquired into the genuineness of the said payments and the identity of sub-contractors. The assessee was…

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