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2021 (7) TMI 1133
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....ord and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Commissioner of Income Tax had a different opinion and that too, without; having established in any manner that, view adopted by the learned Assessing Officer was an impossible view. 1.2 That the learned Principal Commissioner of Income Tax has failed to appreciate that action u/s 263 of the Act is otherwise too inapplicable on the factual matrix of the facts of the instant case since admittedly, undisputedly and undeniably not a case of "lack of enquiry" or "lack of investigation" and perusal of the show cause notice itself would show that it has not been denied or disputed that all relevant information including books of accounts have been furnished/obtained in the course of assessment proceeding and therefore in absence of any enquiries by the learned Principal Commissioner of Income Tax the invocation u/s 263 of the Act is not in accordance with law. 1.3 That the learned Pr. Commissioner of Income Tax has also failed to appreciate that,....
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....ion in claim of the depreciation to Rs. 2,07,12,27,938/-, asset-wise detail of which is available on page 47 of the paper-book. 4.2 The Learned Counsel further submitted that in the revised return, rather than increase which could have become a cause of enquiry, there is a fall in claim of loss. He submitted that Learned PCIT has made no specific finding as how the assessment order is erroneous insofar as the issue of claim of reduced loss in revised return. The learned Counsel further submitted that revised return has been filed validly in terms of section 139(5) of the Act and once valid revised return is filed, it substitutes the original return of income and, therefore, the only return that has to be assessed is the revised return and thus, the basis adopted by the Learned PCIT is not sustainable. In support of the contention that if a revised return is filed under section 139(5) of the Act, the assessment can be completed only on the basis of the revised return and not otherwise, the Learned Counsel relied on the decision of the Hon'ble Odisha High Court in the case of Orissa Rural Housing Development Corporation Ltd. Vs. ACIT reported in 343 ITR 316. 4.3 As far as the i....
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....submitted before the Learned PCIT that return of income was revised due to change in depreciation and some figures in original balance-sheet were mentioned erroneously under wrong heads, which were later on observed and rectified as the auditor has rectified the figure while furnishing revised audit report. Regarding unsecured loan, the Learned Counsel submitted that confirmation in respect of all the unsecured loan were furnished before the Learned PCIT. Regarding sundry creditor, the learned Counsel submitted that all evidence to the effect that information were filed before the Assessing Officer, were produced before the Learned PCIT. 4.7 It was submitted by the assessee before the Learned PCIT that proper inquiries were made by the Assessing Officer and, therefore, the assessment order is not erroneous and prejudicial. The learned Counsel further relying on the decision of the Hon'ble Delhi High Court in the case of ETT Ltd Vs CIT reported in 112 taxmann.com 321 (Del), submitted that Learned PCIT has not given any finding as how the assessment order is erroneous and prejudicial to the interest of the Revenue and thus it is liable to be quashed. In support of his contention h....
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....e revisionary jurisdiction u/s. 263 cannot be exercised simply to make roving and fishing enquiry. It is a well settled law decided by the various Courts in the judgments relied upon by the Ld. Counsel that, the revisionary authority first of all should give a finding as to how the assessment order is erroneous and prejudicial to the interest of the revenue. If such an authority is of the view that the Assessing Officer did not make any enquiry, then it is incumbent upon CIT to specify as to what kind of inquiry or verification has not been done and even Ld. CIT can also conduct some prima-facie enquiry himself or through AO to reach to a conclusion or inference that the assessment order passed by the Assessing Officer is erroneous in so far as prejudicial to the interest of the revenue. Such an enquiry or exercise by the Ld. CIT is completely lacking in the present case. If the Assessing Officer has carried out detailed enquiry and has examined all the records called upon by him after raising queries, then Ld. CIT without pointing out as to how such an enquiry is inadequate or not proper cannot set aside the assessment. Even the fiction created by Explanation 2 to section 263 wher....
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....ire force of assessee's submissions before making an adverse decision against the assessee. Moreover, the Ld. CIT has observed in a cryptic, summary and nonspeaking manner in aforesaid order dated 31.03.2018, that the AO had not conducted requisite enquiry/investigation on exempt income earned by the assessee and applicability of the Provision of Section 14A of the IT Act, read with Rule 8D of I.T. Rules, 1962; without dealing with submissions made and materials placed by the assessee before the Ld. CIT vide aforesaid Letters dated 11.12.2017 and 23.02.2018, as per foregoing paragraphs (38.1.1) and (38.1.1.2) of this order. It is also found, in view of foregoing paragraph (37.2) (i) of this order, that the allegations of the Ld. CIT against the AO, narrated by him in paragraph 4 of the aforesaid order dated 31.03.2018, fluctuate in severity and description. From these features of the aforesaid order dated 31.03.2015 of Ld. C1T; it can be concluded that the order has been passed by Ld. CIT in a hasty manner, without due applications of mind, without fully taking into consideration the submissions made and materials placed by the assessee before Ld. CIT, and without dealing with ....
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....t a specific error or mistake on the order of the Assessing Officer rather than using probability or guess work. The relevant finding of the Hon'ble High Court is reproduced as under: "19. We also note that Id PCIT in his order u/s 263 of the Act, vide para 5 of his order, has stated that "the Assessing officer made some partial application of mind". We note that there is no concept of "partial application of mind", it should be either application of mind or non application of mind. The relevant para no. 5 of his order is reproduced below: "5. Considering the submission of the assessee, facts and circumstances of the case as discussed above, 1 am of the opinion that the Assessing officer made some partial application of mind relating to point no. 3(/7) mentioned above/and regarding point no. 3(/) mentioned above, the assessment order passed on 30-12-2016 u/s 143(3) of the Act was erroneous in so far as prejudicial to the interests of the revenue. In the facts and circumstances of the case, I am of the considered view that the matter should be restored back to the file of the Assessing Officer to treat and tax the undisclosed income of Rs. 3,95,933/- as per provisi....
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.... 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. In fact, if the PCIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the PCIT to conduct such inquiry. All that PCIT has done in the impugned order is to refer to the Circular of the CBDT and conclude that "in the case of the Assessee company, the AO was duty bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular 9/2014 but the AO failed to do so. Therefore, the order of the AO is erroneous insofar as prejudicial to the interest of revenue". 11. In the considered view of the Court, this can hardly constitute the reasons required to be given by the PCIT to justify the exercise of jurisdiction under Section 263 of the Act. In the context of the present case if, as urged by the Revenue, the Assessee has wrongly claimed depreciation on assets like land and building, it was incumbent upon the PCIT to undertake an inquiry as regards which of the assets were purchased and installed by the Assessee out of its own funds during the AY in question and, which ....
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.... CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not." 6.1.5 The Mumbai bench of the ITAT in the case of Narayan Tatu Rane (supra) has also arrived at similar finding holding that where the PCIT has not brought any material on record by making inquiries or verification to substantiate his inference, the Learned PCIT is not justified in holding the assessment order as erroneous. The relevant finding of the Tribunal is extracted as under: "21. In the instant case, as noticed earlier, the AO has accepted the explanations of the assessee, since there is no fool proof evidence to link the assessee with the document and M/s RNS Infrastructure Ltd, from whose hands it was seized, also did not implicate the assessee. Thus, the assessee has been expected to prove a negative fact, which is humanely not possible. No other corroborative material was available with the department to show that the explanations given by the assessee were wrong or incorrect. Under these set of facts, the AO appears to have been satisfied with the explanations given by the assessee and did not make any addition. We have n....
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....various issues and on going through the record we note that he has failed to give any finding as to how and in what manner the order of the assessing officer on the various issues noted by him can be said to be erroneous let alone prejudicial to the interests of the Revenue. We note that no enquiry has been made by the Pr. CIT at his own instance and he has merely directed the assessing officer to pass an order in accordance with law. The law envisages that first the Ld. Pr.CIT is to point out how the order can be said to be erroneous without such an exercise the direction to pass the order in accordance with law becomes meaningless. The responsibility to do so cannot be shunned or abrogated by the said authority whimsically. The law requires that the order passed by the Pr. CIT should be a speaking order pointing out the error as in the absence of the same it is an arbitrary exercise which cannot be countenanced. We find support from the decision of the Hon'ble Delhi High Court in the case of DCIT versus Delhi Airport Metro Express private apart from various other decisions cited by the parties. The Court in categoric terms has held that the law envisages before the revisionar....
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....stant case, the Learned PCIT has held the assessment order as erroneous and prejudicial to the interest of the Revenue that no inquiries have been carried out by the Assessing Officer on following issues. 1. Difference in figures of revised return and original return 2. unsecured loans 3. sundry creditors and debtors 6.4 We find that before us, the Learned Counsel of the assessee has referred to various queries raised by the Assessing Officer and reply submitted by the assessee. For ready reference, the date-wise questionnaire by the Assessing Officer and reply by the assessee are reproduced as under: 10/08/2017 questionnaire issued by the Assessing Officer( Page 112 of paper-book) 24/08/2017 reply filed by the assessee ( Page 113 -115 of paperbook) 17/10/2017 Question issued by the Assessing Officer(page 116 of paper-book) 08/11/2017 Reply filed by the assessee (page 117-118 of paperbook) 23/11/2017 Reply filed by the assessee (page 119-120 of the paper-book) 07/12/2017 Reply filed by the assessee (Page 1221-123 of paperbook) 6.5 The Learned PCIT has made following observations on the three issues: Sr. No. ....
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....ed his return within the permissible period, then said return substitute the original return of income for all purposes and the original return is to be ignored. The assessee has already filed revised audit report, which in itself is self-explanatory as how the loss claimed by the assessee has been reduced due to the reduction in claim of the depreciation. We also find that the revised return the assessee has reduced the loss as compared to the original return and hence there was no occasion of any suspicion of excess claim, which warrant comparison of the figures with the original return. Before the Learned PCIT, the assessee has produced all the details of the original return and revised return along with enclosures, but Learned PCIT has not pointed out any error in the said explanation of the assessee. He has merely directed the Assessing Officer to obtain all the details and take necessary action. This action of the Learned PCIT is not justified in view of the precedents discussed above. 6.7 On the issue of the unsecured loans, the assessee filed all the confirmations of unsecured loans before the Learned PCIT and detailed in respect of addition to loan during the year under....