PCIT's revision under section 263 invalid when AO properly examined and allowed section 80P(2)(d) deduction after due inquiry

ITAT Jodhpur held that PCIT's revision u/s 263 was invalid where AO had already examined the issue and allowed deduction u/s 80P(2)(d) after proper inquiry. The tribunal ruled that revision cannot be used merely to review AO's opinion or impose a different view when AO adopted a permissible course in law. Following SC precedents in Malabar Industrial Co. Ltd and Max India, the tribunal emphasized that revenue loss alone doesn't justify revision unless the AO's view is totally unsustainable. Since assessment was conducted with due inquiry and verification, PCIT lacked power to invoke s.263. Assessee's appeal was allowed.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the order passed under section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (PCIT).

Condonation of Delay:
The assessee filed an appeal with an 8-day delay, citing the serious medical condition and subsequent death of the counsel's father as the reason. The Tribunal condoned the delay, referencing judicial precedents that advocate a liberal approach in such cases to promote substantial justice. The Tribunal found the reasons advanced by the assessee sufficient and condoned the delay.

Validity of Order under Section 263:
The Tribunal examined whether the order passed by the Assessing Officer (AO) under section 143(3) was erroneous and prejudicial to the interest of the revenue, as claimed by the PCIT. The PCIT had revised the AO's order, arguing that the AO failed to disallow deductions under section 80P(2)(d) for interest received from cooperative banks, which are not considered cooperative societies under the Income Tax Act.

The Tribunal noted that:
- The AO had conducted inquiries and considered the details submitted by the assessee regarding the deduction under section 80P.
- The AO's view was a plausible one, permissible under the law, and the PCIT's action was essentially a review of the AO's decision, which is not allowed under section 263.
- The AO had raised specific queries and allowed the deduction after due consideration, thus fulfilling the requirement of making inquiries and verification.

The Tribunal cited various judicial precedents supporting the view that an order cannot be deemed erroneous if the AO has taken a permissible view after due inquiry. The Tribunal concluded that the PCIT's order was not sustainable as the AO had already examined the issue in question. Consequently, the Tribunal quashed the PCIT's order under section 263.

Conclusion:
The appeal of the assessee was allowed, and the order passed by the PCIT under section 263 was quashed. The Tribunal emphasized that the AO had made the necessary inquiries and taken a permissible view, and the PCIT's action amounted to an impermissible review of the AO's decision.

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