2021 (1) TMI 6

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.... validity of revision order passed by the Pr. CIT. 2. We heard the parties and perused the record. The assessee is engaged in the business of marketing of industrial machinery and also providing software services to industrial machinery. The assessment in this case was completed by the A.O. u/s 143(3) of the Act on 21.11.2016. The A.O. accepted the total income returned by the assessee. 3. The Ld. Principal CIT called for assessment record and noticed that the assessee has claimed a sum of Rs. 1,75,81,254/- as deduction towards "provision for warranty expenses". The Ld. Principal CIT noticed that the A.O. did not make any enquiry with regard to the above said claim. Since the AO has failed to examine this issue, the Ld PCIT held that ....

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....mpowers the Commissioner to call for and examine the record of any proceedings under the 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, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be "erroneous in so far as it is prejudicial to the interests of the Revenue". This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar In....

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....Officer is unsustainable in law." The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282." 6. The Hon'ble Supreme Court has held that the existence of twin conditions, viz., the assessment order should be erroneous and it should be prejudicial to the interests of revenue, should be shown in the revision order passed u/s 263 of the Act. The Hon'ble Apex Court has further held that non-application of mind on the part of the Income-tax Officer would make the assessment order erroneous. In the instant case, we notice that the assessing officer did not conduct any enquiry at a....