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TAX CONSULTANTS
REVISION AND RECTIFICATION
UNDER INCOME-TAX ACT
CA Ketan L. Vajani
caketanvajani@gmail.com
3rd March, 2014
Agenda
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Revision
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erroneous in so far as it is ;
Prejudicial to the interest of revenue
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Rectification order
Order passed u/s. 143(3) r.w.s. 147
Communication u/s. 195(2) determining tax liability
u/s. 195(1)
Order u/s. 197(1)
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Meaning of Record
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Twin Conditions
Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC)
The scheme of the Act is to levy and collect tax in accordance with
the provisions of the Act and this task is entrusted to the Revenue.
If due to an erroneous order of the ITO, the Revenue is losing tax
lawfully payable by a person, it will certainly be prejudicial to the
interests of the Revenue.
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It has been held by this Court that where a sum not earned
by a person is assessed as income in his hands on his so
offering, the order passed by the AO accepting the same as
such will be erroneous and prejudicial to the interest of the
Revenue. Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84
(SC) and Smt. Tara Devi Aggarwal vs. CIT (1973) 88 ITR 323
(SC)
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Change of Opinion
Where two views are possible and the ITO has taken
one view with which the CIT does not agree, it
cannot be treated as an erroneous order prejudicial to
the interest of the Revenue, unless the view taken by
the ITO is unsustainable in law
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Meaning of Erroneous
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Erroneous Orders
CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom.)
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Erroneous Orders
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Non-erroneous Orders
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Lack of Inquiry by AO
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Lack of Inquiry
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Non-Initiation of Penalty
- SLP
CIT can not set aside the assessment order for sole
purpose of initiation of penalty proceedings CIT Vs.
Parmanand M. Patel (2005) 278 ITR 3 (Guj)
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Non-Initiation of Penalty
Addl CIT Vs. Indian Pharmaceuticals (1980) 123 ITR 874 (MP)
CIT Vs. Surendra Prasad Agrawal (2005) 275 ITR 113 (All)
CIT Vs. Ashok Construction Co. (2006) 280 ITR 368 (All.)
C.A. Abraham vs. ITO (1961) 41 ITR 425 (SC) and CIT vs. Bhikaji
Dadabhai & Co. (1961) 42 ITR 123 (SC) has held that the
assessment does not mean only computation of income but
consideration of all facts including the liability for penalty that may
attract the provisions contained in s. 271(1)(a) of the Act.
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Dropping of Penalty
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Retrospective Amendment
In Max India, the fact was that two views were possible at the
time of passing of the revision order by CIT and the
retrospective amendment was made after the order u/s. 263 by
CIT.
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HC / SC order Vs Circular
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Ranbaxy Laboratories Ltd. Vs. CIT (2012) 345 ITR 193 (Delhi)
(Mumbai)(URO)
Order passed by TPO can not be subject to section 263 CIT does
not have a power to revise TPOs order Tata Communications
Ltd. Vs. Dy. CIT ITA (TP) No. 3121 & 3122/Mum/2013 order
dated 20-12-2013 itatonline.org
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Doctrine of Merger
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Deduction claimed u/s. 35B Rs. 8,90,676/AO allowed Rs. 5,63,350/Appeal for balance dismissed by CIT (A)
Latter CIT invoked revision in respect of Rs. 5,63,350/for the reason that same was allowed without verifying
the details.
Held Revision possible
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Subject Matter
CWT
Vs.
Sampathmal
Chordia,
Executor to the Estate of Late Neni
Kavur Bai (2002) 256 ITR 440 (Mad)
Different
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Subject Matter
Prejudicial to Revenue
Dawjee Dadabhoy & Co. Vs. S.P. Jain (1957) 31 ITR 872 (Cal)
"The words prejudicial to the interests of the Reveune' have not been
defined, but it must mean that the orders of assessment challenged are
such as not in accordance with law, in consequence whereof the lawful
revenue due to the State has not been realized or cannot be realized. It can
mean nothing else."
Venkatakrishna Rice Co. Vs. CIT (1987) 163 ITR 129 (Mad)
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Notice must also mention the reasons as to why the order is treated as
erroneous 341 ITR 537 (Del) / Brahma Builders Vs. DCIT (2012) 77
Revision can not be made on any point other than the one mentioned
in the notice CIT Vs. Ashish Rajpal (2009) 320 ITR 674 (Del.)
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Crew B.O.S. Products Ltd. Vs. ACIT (2012) 138 ITD 542
(Del.)
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Powers of CIT
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Fundamental Concepts
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Condonation of Delay
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Fresh Evidence
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M. Chettaypan & Ors. Vs. CIT ((1977) 110 ITR 684 (Mad)
Digvijay Cement Co. Ltd. Vs. CIT (1994) 210 ITR 797 (Guj)
C. Parikh & Co. Vs. CIT (1980) 122 ITR 610 (Guj)
Chandrakant J. Patel Vs. V. N. Srivastava 339 ITR 310 (Guj)
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662 (Ker.)
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No Prejudice to Assessee
Meaning of Prejudice
Benefit given by CIT Rs. 10 Lakhs on one issue CIT also proposes an addition on another Issue
for Rs. 8 Lakhs - Whether order is prejudicial to
assessee
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Subsequent order of AO
N. Seetharaman Vs. CIT (2008) 298 ITR 210 (Mad)
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Adjudicating
Authority
CIT
CIT (A)
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Fees Payable
Writ Petition to HC
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The CIT (A) shall also amend the order for rectifying
such mistake which has been brought to his notice by
the Assessing Officer
If the amendment has the effect of enhancing
assessment or reducing a refund or increasing the
liability of assessee in any manner then notice shall be
issued to the assessee and proper opportunity shall be
allowed
Order shall be in writing.
If the order results in demand then notice of demand
shall be issued u/s. 156.
If the order results in refund to the assessee, the same
shall be granted.
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78 ITR 26 (SC)
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Meaning of Record
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Meaning of Record
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Lakhanpal National Ltd. Vs. DCIT (1996) 222 ITR 151 (Guj)
CIT Vs. Coventry Spring & Co. Ltd. (2002) 257 ITR 632 (Cal)
Joseph Thomas Vs. Agricultural ITO (1981) 127 ITR 764 (Ker.)
stayed
when
Sultan Leather Finishers P. Ltd. Vs. ACIT (1991) 191 ITR 179
(All)
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ITR
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Time Limit
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Multiple Rectifications
Time Limit
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Dismissal of Rectification
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