TaxTMI 
TaxTMI 
2022 (4) TMI 329
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....sioner of Income Tax (Central), Ludhiana has erred in assuming the jurisdiction under section 263 of the Income Tax Act by invoking the explanation 2 of section 263 of the Act without pointing out in which manner the inquiries or verification should have been made. 3. That the learned Principal Commissioner of Income Tax (Central), Ludhiana has failed to consider the fact that the assessment was made under section 143(3) of the Act by the AO after verifying the unsecured loans and making detailed inquiries. The loans were also verified by the Investigating Wing during post search inquiry made after the search. As such, the observations of the of the learned Principal Commissioner of Income Tax (Central), Ludhiana that the loans were not examined as per section 68 of the Income Tax Act are against the facts and circumstances of the case. 4. That the learned Principal Commissioner of Income Tax (Central), Ludhiana has failed to consider the fact that the refining loss of old gold ornaments was duly examined by the Investigating Wing on the day of search i.e. 11-02-2016 at the time of getting trading account prepared. Therefore, the AO after considering the detailed ....
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....ages 1 to 13 of the paper book and it was further submitted that while filing the return of income, the said amount of Rs. 2.83 crore had been duly offered to tax. It was further submitted that during the course of search, gold trading account, diamond trading account and silver trading account from 01.04.2015 to 11.02.2016 were also prepared by the department and at page 14 of the paper book, in the gold trading account, refining loss of 450.840 grams has been mentioned and that after considering the said 'refining loss,' closing stock of 82053.709 grams had been determined as on 11.02.2016. 3.1.2. It was further submitted that the Assessing Officer issued a notice u/s. 142(1) of the Act (placed at paper book pages 48 to 50) wherein, amongst other queries, the AO raised specific queries with respect to the gross profit rate and the net profit rate as well as loans and advances to which the assessee had given an elaborate reply enclosing relevant evidences. The Ld. AR submitted that the assessee had also submitted quantitative details of opening and closing stock and item wise trading account quantity wise. It was further submitted that the assessee also provided details....
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....ral), Ludhiana and it was not a case that where no enquiry was made. 3.1.7. Our attention was, thereafter, drawn to the show-cause notice issued by the Ld. PCIT and placed at page 126 to 127 of the paper book and it was submitted that in the said show cause notice only two issues have been raised viz. refining loss of 450.840 grams and unsecured loan. It was submitted that in response to the show cause notice, reply was been given (placed at pages 128 to 131 of the 'paper book') which have been duly reproduced by the Ld. PCIT in the impugned order. It was further submitted that, however, while passing the order u/s. 263, the Ld. PCIT has set aside the issue of verification of unsecured loan in respect of one party i.e. M/s. T.K. Professional Pvt. Ltd. in spite of the AO having duly enquired into the issue during the course of assessment proceedings. It was also submitted that the unsecured loan from M/s. T.K. Professional Pvt. Ltd. had been returned in the assessment year 2017-18 as per necessary evidence placed at page 149 of the 'paper book'. The Ld. AR also drew our attention to the 'trading account' of gold prepared at the time of search at page 14 of....
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.... (iv) CIT vs. Anil Kumar Sharma reported in 335 ITR 83 Delhi-HC (v) CIT vs. Hindustan Marketing & Advertising Co. Ltd. reported in 341 ITR 180 Delhi-HC (vi) CIT vs. Late Shri Vijay Kumar Koganti reported in 195 DTR 428 Madras High Court. (vii) M/s. DTE Exports Pvt. Ltd. vs. Pr. CIT (ITAT Visakhapatnam). 3.1.9. Reliance was placed on numerous other judicial precedents copies of which have been enclosed in the paper book and the same have been taken on record. 3.1.10. It was further contended by the Ld. AR that proceedings u/s. 263 can be invoked only on the personal satisfaction of the Ld. PCIT and it was brought to our notice that in the present case the proposal u/s. 263 was moved by the AO to Ld. PCIT for invoking provision of Section 263 and, thereafter, the Ld. PCIT, on the basis of the said proposal, had issued a notice u/s. 263, and, thus, it was argued that the observation of the Ld. PCIT in the impugned order that he had occasion to peruse the assessment record is not correct. Reliance was placed on the order of the 'Amritsar Bench' of the ITAT in the case of 'Ambey Construction' in ITA No. 208/Asr/2017 vide order date....
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....erused record as well as the paper book filed by the assessee in support of its contention that the AO had made adequate enquiries during the course of assessment proceedings and further in support of its claim that the assessee had submitted all relevant documents and evidences in response to the queries raised by the AO. We have duly considered the assessment order and at the very outset it can be seen that all the issues which were the subject matter of the show cause notice issued by the Ld. PCIT had already been enquired into by the Assessing Officer and he, after duly considering the voluminous documents and evidences furnished by the assessee, reached a conclusion after due application of mind. It is a matter of record that specific queries were raised by the AO and required details were filed in respect of unsecured loans as well as in respect of refining loss in gold account. It is also not the case of the Department that the assessee did not discharge its onus before the AO. Therefore, we are unable to concur with the view taken by the Ld. PCIT that the AO had not conducted necessary enquiries prior to the passing of the assessment order. We also do not agree with the arg....
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...., the Hon'ble Delhi High Court in the case of DIT Vs. Jyoti Foundation [2013] 357 ITR 388 (supra) held as under: "that inquiries were certainly conducted by the Assessing Officer. It was not a case of no inquiry. The order under section 263 itself recorded that the Director felt that the inquiries were not sufficient and further inquiries or details should have been called for. The inquiry should have been conducted by the Director himself to record the finding that the assessment order was erroneous. He should not have set aside the order and directed the Assessing Officer to conduct the inquiry." 5.4. In the present case also, the A.O. made the requisite enquiries, therefore, it is not a case of no enquiry and if the Ld. Pr. CIT was not satisfied with the enquiries made by the AO, he should have conducted the enquiries himself to record the findings that the assessment order was erroneous and he should not have simply set aside the order passed by the AO directing him to conduct the further enquiries. 5.5. On identical issue, the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Unique Autofelts (P) Ltd. (2009) 30 DTR 231 (P & H) held as under: ....
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....a person, it will certainly be prejudicial to the interests of the Revenue. The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue 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." 5.7. In the present case, even at the risk of repetition, we observe that the AO had made enquiry regarding unsecured loans and had also enquired into the issue of melting loss and the assessee too had responded to the query and had submitted details and evidences in support of its contention before the AO. The same was duly brought to the notice of the Ld. PCIT also in response to the show cause notice issued u/s. 263 of....