CIT vs Convergence

Whether the Income Tax Appellate Tribunal was justified in setting aside the order passed by the CIT u/s 263 of the Income Tax Act, 1961 is the question raised in this appeal. In the present case the assessee had not produced its books of account at the time of assessment before the assessing officer and, therefore, the assessing officer on the basis of the material on record estimated the income of the assessee and accordingly passed the assessment order.

The Commissioner of Income Tax after invoking jurisdiction u/s 263 of the Income Tax Act, 1961 passed an order setting aside the assessment and directed fresh assessment.

On appeal, the Income Tax Appellate Tribunal set aside the order of the CIT by recording a finding that without recording the basis on which the assessment made by the assessing officer is on the lower side and, hence, the assessment is erroneous and prejudicial to the interests of the Revenue, it was not open to the CIT to invoke jurisdiction u/s 263 of the Income Tax Act, 1961.

In our opinion, the decision of the Income Tax Appellate Tribunal is based on finding of facts and no question of law arises out of the order of the Income Tax Appellate Tribunal. In the result, we see no merit in the appeal and the same is hereby dismissed with no order as to costs.