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TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 1339
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.... and circumstances of the case and in law, the Ld.PCIT ought not to have framed an ex-parte order inasmuch as the appellants attended the hearing on the appointed day and submitted a letter dated 06th March, 2017. (iii) The appellants further, contends that the Ld.PCIT has not appreciated the facts of the case in its entirety; the impugned order u/s. 263 is bad in law inasmuch as the order of the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. (iv) The appellants further, contend that on the facts and in the circumstances of the case and in law, the Ld.PCIT ought not to have reached the aforesaid conclusions inasmuch as the Assessing Officer after having been satisfied on the basis of all papers and documents that have been furnished to him has accepted the return of income of the appellants. 3. The Learned Counsel for the assessee, at the outset submits that this order of the Ld.PCIT was passed without examining the assessment record. Learned Counsel for the assessee submits that Ld.PCIT does not have the records when notice u/s. 263 was issued. The Learned Counsel for the assessee submits that in the absence of assessment record the Ld.....
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....cial to the interest of the Revenue and accordingly set aside the assessment for making a fresh assessment. 4. Learned Counsel for the assessee referring to Assessment Order dated 16.10.2015 submitted that it is the finding of the Assessing Officer that assessee maintained all the Books of Accounts along with supporting evidences, Books of Accounts are audited and in the course of hearing all relevant details are called for and verified particularly the details of sales and purchases, major expenses and all assets and liabilities are verified, Books of Accounts were produced are also verified at random and it was also observed by the Assessing Officer that maintenance of Books of Accounts and supporting evidences are in accordance with the return of income submitted for the relevant previous year. The Learned Counsel for the assessee submits that in the course of Assessment Proceedings Assessing Officer has called for all the details, he has examined them and concluded the assessment and therefore the order passed by the Assessing Officer cannot be said to be an erroneous order which is prejudicial to the interest of the Revenue. 5. Learned Counsel for the assessee further submit....
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....er Book submits that these are the details in respect of the additions to fixed assets furnished before the Assessing Officer which were also examined by the Assessing Officer and accepted the claims of the assessee. Therefore the Learned Counsel for the assessee submits that all the details in respect of the issues which were raised by the Ld.PCIT in his notice have been furnished to the Assessing Officer in the course of Assessment Proceedings they were all examined by the Assessing Officer and the Assessing Officer has applied his mind and taken a view and therefore it cannot be said that there is no application of mind by the Assessing Officer and the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue simply because the Ld.PCIT has a different view on the issues. 6. The Learned Counsel for the assessee further submits that in the absence of the assessment record it is not known as to how an opinion was formed by the Ld.PCIT that the Assessment Order passed is erroneous and prejudicial to the interest of the Revenue. Learned Counsel for the assessee submits that the order sheet of the proceedings of the assessment under appeal i.e....
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....r the record from Assessing Officer and when the Assessing Officer sent the record to the Ld.PCIT for his examination. Further it is an admitted fact that the Assessing Officer after completing the assessment u/s. 143(3) of the Act on 16.10.2015 collected some of the information from the assessee which was furnished in the course of Assessment Proceedings and reconstructed the assessment record. It appears that the Ld.PCIT based on this information supplied by the Assessing Officer after completion of assessment came to the conclusion that the order passed by the Assessing Officer u/s. 143(3) of the Act on 16.10.2015 is erroneous and prejudicial to the interest of the Revenue. On a perusal of the order passed by the Ld.PCIT we find that the Ld.PCIT came to the conclusion that in the order passed for the Assessment Year 2012-13 the Assessing Officer made additions and disallowances by rejecting Books of Accounts and during the current Assessment Year the Assessing Officer accepted the details furnished without rejecting the Books of Accounts and without making any addition/disallowance as was made in the Assessment Year 2012-13 and therefore he was of the opinion that the Assessment....
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....by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. On a plain reading of the order of the Ld.PCIT we find the whole basis of his order in holding that the Assessment Order for the Assessment Year 2013-14 is erroneous and prejudicial to the interest of the Revenue is only based on the Assessment Order for Assessment Year 2012-13 where the Assessing Officer made certain additions/disallowance after rejecting the Books of Accounts. 11. It is also evident from the letter issued by the office of the Ld.PCIT dated 24.08.2017 that the records were reconstructed. It was further mentioned in the said letter that a voluminous Paper Book was filed by assessee challenging the order u/s. 263 of the Act and this was received after passing the order by the Ld.PCIT and therefore the details of the same could not be incorporated in the order u/s. 263 of the Act. If this is the position we are unable to understand as to how the Ld.PCIT stated in the order that there are no details of verification/examination of the nature of genuineness of the expenses/ claims made by the assessee were placed on record. 12. In the case of CIT v. Gabriel India Ltd [203 ITR 108] th....
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....the AO in regular assessment proceedings and thereafter an audit objection was raised, which was used by the AO to convince the CIT to invoke his jurisdiction under section 263. When we read the section, which reads, as, "(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment". This clearly shows, that the CIT must himself come to a conclusion, after applying his own mind, because, the words used in the section are,"..... and if he considers .....", here, application of his own mind becomes important. It is important to examine the similarity of the expression used under section 147(1) and 263(1). Under section 147(1), the expression used is "has reason to believe" and under....
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....tory, which he cannot. 27. We are aware of the decision of Hon'ble Bombay High Court in the case of Gabrial India Ltd., reported in 203 ITR 108, wherein, the Hon'ble Bombay High Court held, "CIT cannot revise order merely because he disagrees with the conclusion arrived at by the ITO". We are also aware of the case of CIT vs Sunbeam Auto Ltd., reported in 227 CTR 133, wherein the Hon'ble Delhi High Court drew a distinction between "Lack of inquiry" and "inadequate enquiry" and held that in the case of inadequate enquiry, provisions under section 263 cannot be invoked. In our opinion, in the instant case, this is neither the case of inadequate enquiry nor lack of enquiry at the regular assessment stage. 28. Taking into consideration the entire gamut of facts and judicial decisions, placed before us, we are of the considered opinion that the CIT could not have invoked the jurisdiction under section 263 without his own independent application of mind; on otherwise debatable issues and by merely disagreeing on the view taken by the AO. 29. In the result, we set aside the order of the CIT dated 11.02.2011, passed under section 263 and annul the initiation of revision proceedings a....
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.... to be set aside." 16. On a perusal of the Assessment Order passed u/s. 143(3) of the Act on 16.10.2015 for the Assessment Year 2013-14 we find that Assessing Officer observed as under: "3. The assessee is a partnership Firm and mainly does the job of manufacturing, installation and commission of aircraft barrier system for the Ministry of Defence. The assessee writes Books of Accounts on Mercantile system of accounting and maintains all relevant Books of Accounts and supporting evidence. Books of Accounts are audited as per the Income Tax Act, 1961. During the course of hearing all relevant details are called for and verified. The particular details of sales and purchases, major expenses and all assets and liabilities are verified produced Books of Accounts are also verified at random. Maintenance of Books of Accounts and supporting evidences are in accordance with the return of income submitted for the relevant previous year." 17. As could be seen from the Assessment Order the Assessing Officer has given a categorical finding that the assessee is maintaining Books of Accounts and all the relevant Books of Accounts with supporting evidences. Books of Accounts were audited and ....