TaxTMI 
TaxTMI 
2022 (4) TMI 177
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....of Income Tax (Appellate Tribunal) Rules, but its grievance revolves around a solitary issue of assumption of revisionary jurisdiction, hence it is necessary to reproduce grounds challenged before we ride the bike; "1. That the order u/s 263 is bad in law in as much as it is considered that, since no ledger account of Mr Subbarao was filed, the payment made to him of Rs. 1,00,000/- was liable to be considered as unexplained expenditure and hence order u/s 143(3) is erroneous and prejudicial to the interest of revenue, though Assessing Officer did consider this aspect and since payment was claimed in subsequent year, it was not considered by the Assessing Officer during the year." "2. That the Pr. Commissioner of Income Tax erred in observing that none appeared after a request for 10 days adjournment in as much Pr. Commissioner of Income Tax was on leave during that time and the learned Commissioner of Income Tax came back on 14/05/2018 only on which date Assessee's Counsel attended" "3. That the order u/s 263 is vitiated in law in as much as this expenditure of Rs. 1,00,000/- is not claimed during the year, but it is claimed to have been paid in Asst Year....
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....position and the case laws relied upon by the appellant assessee as well the respondent revenue. 6. It is evidently noticeable from the records are that; 6.1. The appellant company filed its return of income for the AY 2014 2015 on 31/10/2014 and was processed u/s 143(1) of the Act, subsequent to processing of ROI/ITR, a search action u/s 132 was carried out on the assessee on 12/02/2015 by an investigating wing of the department, wherein certain incriminating documents were seized and inventoried in the presence of the appellant. Out of such inventoried incriminating documents one of the files named "Madhumati Kobra" containing 93 loose papers inventoried as "B/4" was retrieved and wherefrom it was found that, the assessee company had incurred certain expenditure through cash payments to various contractors which were remained unaccounted in the books of accounts maintained by it and for which no explanation proffered. Interestingly during the course of block assessment proceedings, Ld AO tabulated these cash payments chronologically into party-wise, expense-wise and sought clarification vis-à-vis an explanation from the appellant company as to why these should not be....
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....oned at Sr 2 of the afore-quoted table for sum of Rs.1,00,000/-, which the appellant company claimed to have paid as advance against wages and finally addition from "B/4" were restricted to Rs. 3,43,803/- 6.4. Underlining this disfigured amount of unexplained cash payment, Ld PCIT invoked the revisionary powers vested in him by virtue of section 263(1) and by an order directed the Ld AO for a limited purpose of correcting the apparent grievous mistake of not taxing the cash payment as unexplained expenditure u/s 69C on the basis of concluded findings. 6.5. On the basis of aforesaid observation, the Ld PCIT by issue of show cause notice [for short "SCN"] dt 18/01/2018 called upon the appellant company to explain as to why the assessments framed in its case should not be revised u/s 263 of the Act, and in reply thereof assessee company first assailed the validity of the jurisdiction and then averred that, considering the submission made during 153A assessment, Ld AO after necessary inquiry into the transactions and due deliberation had framed the assessment, therefore the exercise of revisionary jurisdiction is exiled. On merits of the case, it was also averred by the appellant....
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.... the order of AO is erroneous insofar as it is prejudicial to the interests of the revenue is concern. Consequently, the provision mandates the satisfaction of existence of twofold conditions before invocation and these explicitly are; (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If any one of two is absent or unsatisfied, that is where the order of the assessing officer is erroneous but is not prejudicial to the revenue or where order is not erroneous but is prejudicial to the revenue, then the recourse to Section 263(1) of the Act fails. 8.3. Albeit the foresaid twin satisfaction drawn from the assessment records may trigger the revisionary jurisdiction, yet such shall not automatically empower the revisionary tax authorities to conclude the revision proceedings without obeying additional dual riders such as; (i) making or causing to be made such enquiry as necessary and (ii) according an opportunity of being heard to the assessee following the principle of natural justice. 8.4. In the light of provision of law, it is of paramount importance to note that, an incorrect assumption of fact....