TaxTMI 
TaxTMI 
2020 (12) TMI 207
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....ssment was reopened after verifying unsecured loans of Rs. 1.74 Crores, received by the assessee from various companies and the Assessing Officer after examining this issue had accepted the unsecured loans as genuine in the reassessment proceedings. The ld. Pr. CIT, cannot for the very same reason revise the assessment order passed by the Assessing Officer. He drew the attention of the Bench to the copy of the reasons recorded for reopening of the assessment as well as the show cause notice issued by the ld. Pr. CIT, prior to passing of his order u/s. 263 of the Act to demonstrate that both actions were for the very same reasons. b) That the Assessing Officer while completing the assessment u/s. 143(3)/147 of the Act on 20/05/2016 had conducted enquiries, obtained information from third parties and on being satisfied with the identity and creditworthiness of the sundry creditors and that the genuineness of the transactions had not made any addition. That adequate enquiries were made and it is not a case of lack of enquiry or lack of application of mind and that revision cannot be made on the ground of inadequate enquiry. c) The ld. Pr. CIT did not conduct any enqu....
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....validity of the reassessment order, the ld. CIT D/R submitted that he is relying on the order of the ld. Pr. CIT. 5. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 6. The reasons for reopening of assessment as recorded by the Assessing Officer are as follows:- "The assessee had filed the return for the AY 2009-10, but was not scrutinized under section 143(3) or 153A. As per the communication received from OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION), UNIT-2(4), KOLKATA, 4TH FLOOR, ROOM NO 4/7A, AAYAKAR BHAWAN ANNEXE, -13, CHOWRINGHEE, KOLKATA-69, VIDE LETTER No. DDIT/U-2(4)/Rungta/2015-16/2331 Dated 14.01.2016 A search and seizure operation under section 132 of the Income Tax Act 1961 was conducted on Rungta group of companies on 25/08/2015. During the course of post search investigation, a report in the form of STR received from DDIT (Inv), Unit-1, Ranchi. The STR was in the name of RECENT SUPPLIERS PVT. LTD. and related with Rungta Group of Companies by way of financi....
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....263 of the Act, are the same and based on the same material. The allegation in this show cause notice issued u/s. 263 of the Act, is that the Assessing Officer has failed to examine and that no enquiry was conducted into the veracity of the loans by the Assessing Officer, is factually incorrect. It is well settled that inadequate enquiry cannot be a ground for exercising of revisionary powers u/s. 263 of the Act. It is for the Assessing Officer to determine the extent of enquiry and investigation to be done on a particular issue. From the papers on record it is clear that the Assessing Officer had conducted enquiries both with the assessee as well as with the third parties and on receipt of all the information, copies of which are placed from pages 43 to 72 of the paper book, has accepted these loans as genuine. The ld. Pr. CIT cannot substitute his opinion for that of the Assessing Officer. It is also seen that the ld. Pr. CIT has not conducted any verification or prima facie investigation on his own to come to a conclusion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue. He also failed to notice that enquiries were in fac....
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....e as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. On the facts of that case, Sec. 80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking Sec. 263. But the Supreme Court rejected the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Officer, there were two views on the word "profits" in that section; that the said section was amended eleven times; that different views existed on the day when the Commissioner passed his order;....
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....o give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec. 263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisional power could not have objected to the finding of the Assessing Officer that expenditure on tools and dies by the assessee, a manufacturer of Car parts, is revenue expenditure where the ....
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....st the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh inquiry in matters which have already been concluded under law. 29. In M.S. Raju (Supra), this Court has held that the power of the Commissioner under Sec. 263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 30. In Rampyari Devi Saraogi (Supra), the Commissioner in exercise of revisional powers cancelled assessee's assessment for the years 1952-1953 to 1960-61 because he found that the incom....
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....so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they e....
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....er, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression "prejudicial to the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word "erroneous" includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. Th....
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....s erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. COMMISSIONER OF INCOME TAX vs. J.L. MORRISON (INDIA) LTD. 366 ITR As regard the submission on behalf of the Revenue that power under Section 263 of the Act can be exercised even in a ca....
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....o be erroneous and was also considered both by the Tribunal as also by us to be a possible view, strengthens the presumption under Clause (e) of Section 114 of the Evidence Act. A prima facie evidence, on the basis of the aforesaid presumption, is thus converted into a conclusive proof of the fact that the order was passed by the assessing officer after due application of mind. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116/Coch/2012; CIT vs. Infosys Technologies Ltd., 341 ITR 293 (Karnataka); S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984; A.A. Doshi vs. JCIT, 256 ITR 685; Hindustan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distinguished. (Paras 90-92, 102) COMMISSIONER OF INCOME TAX vs. SOHANA WOOLLEN MILLS 296 ITR 238 (P & H HC) A reference to the provisions of s. 263 shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the AO was erroneous and prejudicial to the interest of Revenue. Mere audit objection and merely because a different view could be taken, were not enough to say that the order of the AO was erroneous or prejudicial to the interest of the Revenue. The jurisdiction could be exercised if ....