TaxTMI 
TaxTMI 
2021 (10) TMI 650
X X X X Extracts X X X X
X X X X Extracts X X X X
....not recording a conclusive finding that the assessment order of AO is erroneous and prejudicial to the interest of the revenue, which is pre-requisite for initiation of proceedings u/s 263 of the Act. The above grounds are without prejudice to each other. The Appellant craves leave to alter, amend or withdraw all or any of the grounds herein or add any further grounds as may be considered necessary either before or during the hearing. 3. From the aforesaid ground nos. 1 and 2 it is discerned that the assessee is raising legal issue as to the jurisdiction of the Ld. PCIT to invoke Section 263 of the Act. 4. Brief facts of the case as noted by the Ld. PCIT is that the assessee company filed its return of income dated 29.11.2014 declaring total income of Rs. 9,14,26,540/-. Later the case was selected for scrutiny through CASS and thereafter assessment was framed u/s 143(3) of the Act 26.12.2016 determining the total income at Rs. 10,09,57,307/-. According to the Ld. PCIT on verification of the assessment records he found that the order of the assessment was erroneous so far as it is prejudicial to the interest of the revenue for the following grounds: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t portion only): "4.1. In my considered opinion this is a case of lack of enquiry on the part of the AO. The decision on all above discussed issues could be taken only after examining and verifying the facts/submissions of the A.R. Not collecting the full facts and not taking enquires on all above issues to logical end which could enable AO to take decision based on the totality of facts makes this order erroneous insofar as prejudicial to the interest of revenue. After having considered the position of law and facts and circumstances of the instant case, I am of the considered opinion that the assessment order passed by the AO is erroneous insofar as it is prejudicial to the interest of the revenue in accordance with the Explanation 2(c ) below section 263(1) of the Act. The AO is directed to provide reasonable opportunity to the assessee company to produce documents and evidences which it may choose to rely upon for substantiating its own claim. Thereafter a fresh assessment order may be passed in accordance with the relevant provisions of law. 5. ...................... 5.1. ........................ 5.2. ............................. 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve invoked the revisional jurisdiction u/s 263 of the Act without satisfying condition precedent as required u/s 263 of the Act i.e. without holding validly that the AO's order is erroneous as well as prejudicial to the revenue. 6. Before we advert to the facts and law involved in this lis before us, let us revise the law governing the issue before us. The assessee has challenged in the first place, the very usurpation of jurisdiction by Ld. Principal CIT to invoke his revisional powers enjoyed u/s 263 of the Act. Therefore, first we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the Pr. CIT rightfully exercised his revisional power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im in the SCN, still these facts/clarifications/explanation have not been enquired/verified into or brought to the notice of the AO during the assessment proceedings. According to Ld. PCIT on these five (5) faults, there was lack of enquiry by the AO during the assessment proceedings. According to Ld. PCIT since the AO has not enquired into the five (5) faults/issues brought out in his SCN; the order of the AO is erroneous as well as prejudicial to the Revenue. Moreover according to Ld. PCIT though the issue of commission payment made by the assessee to the tune of Rs. 3,39,92,698/- was initially selected for scrutiny under CASS, still the AO has not conducted any enquiry by even calling for the details related to the commission expenses. And according to Ld. PCIT , when the issue of transfer pricing is arising there in the return of income, and once the AO is conducting scrutiny assessment as per CBDT binding instructions on the same should have been examined by the AO. Therefore he concluded that on the five (5) issues pointed out by him in the SCN, this was a case of lack of enquiry on the part of the AO therefore he held at para 5.3 that he was of the view that AO's order was e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specific criteria's are satisfied and since the assessee's case does not fall in the ken of that instructions the AO need not refer it to TPO. According to AO, this assessment year in question i.e. AY 2014-15 therefore the Instruction No. 3/2016 was erroneously taken aid by the Ld. PCIT to interdict the AO's order which is bad in law. Thus according to Ld. AR, since the AO has gone through the tax audit report and profit and loss account the faults/issues pointed out by the Ld. PCIT in his show cause notice issued for invoking jurisdiction u/s 263 of the Act is bad in law for want of jurisdiction. 9. Further according to Ld. A.R. during the revisional proceedings before the Ld. PCIT the assessee had brought all materials/documents to show that the AO's view (not to take any adverse view) in respect of five (5) issues were not dealt by the Ld. PCIT by giving specific findings as to whether the AO's action is erroneous and prejudicial to the revenue and for that he cited the decision of Hon'ble Delhi High Court in the case of ITO vs. D.G. Housing Projects Ltd. reported in (2012) 343 ITR 329 (Del) and drew our attention to para 17 to 19 of the order which reads as under: 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue. 19. In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded the CIT is that "order passed by the Assessing Officer may be erroneous". The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order-passed by the Assessing Officer-was erroneous. He came-to-the-conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent's computation figures but he had reservations. The CIT in the order has recorded t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of the AO per-se erroneous as well as prejudicial to the revenue. According to Ld. CITDR the AO has to discharge the dual role of an investigator as well as that of an adjudicator and if he fails in any one of this issue it would vitiate/make the order of the AO on these issues erroneous as well as prejudicial to the revenue. Therefore, according to Ld. CITDR on the five (5) issues pointed out by the Ld. PCIT in his SCN while invoking his power under Section 263 of the Act, the Ld. PCIT was satisfied that AO has not made any enquiry at all therefore he has rightly invoked revisional jurisdiction u/s 263 of the Act which need not be interfered by us. He also pointed out that the case law relied upon by the assessee in D.G. Housing supra is not applicable in the facts of the case and is distinguishable. According to Ld. CITDR's the observations of the Hon'ble High Court was made in that case in the light of the fact that it was a case wherein AO had enquired into the issues and therefore it was not a case of lack of enquiry but it was a case of inadequate enquiry, which is not what happened in assessee's case. In assessee's case there was no enquiry by the AO, so it is not a case o....