TaxTMI 
TaxTMI 
2023 (7) TMI 340
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.... either before or at the time of hearing." 3. The brief facts of the case are that the assessee filed his return of income for assessment year 2013-14 declaring total income of Rs. 25,000/-. The assessment under section 143 (3) of the Act was completed at a total income of Rs. 3,15,05,000/-. During the year under consideration, the assessee sold the immovable property for sale consideration of Rs. 5,50,00,000/- and out of same, he deducted, as expenses incurred in connection with transfer, a sum of Rs. 3,25,00,000/- being payment made to various illegal occupants and a sum of Rs. 1,50,00,000/- being payment to made to Titco Ltd for removing the charge created on the property. In the assessment order, the AO did not accept deduction claimed of Rs. 3,25,00,000/- towards payment to illegal occupants. However, the assessing officer allowed deduction of payment of Rs. 1,50,00,000/- made to Titco Ltd. Thereafter, the Principal CIT initiated 263 proceedings on the ground that the AO had incorrectly allowed deduction of payment made to Titco Ltd amounting to Rs. 1.50 crores, in light of the decision of Honourable Supreme Court in the case of VSMR Jagadish Chandran 227 ITR 240 wherein the ....
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....ome consideration was directly paid to trust (tenant) for handing over vacant possession of building to assessee, said amount could not be taxed in hands of assessee. In the instant case as well, the said amount of Rs. 1.50 crores was not paid by the assessee to Kitco Ltd, but this amount of Rs. 1.50 crores was paid by the seller directly to Kitco Ltd in order to remove the encumbrance to the free title to the aforesaid property, and therefore, in light of the aforesaid decision, a plausible view could be taken that the said amount never accrued to the assessee in the first place. Therefore, given the fact that the proceedings in question are 263 proceedings, wherein the AO had given a thoughtful consideration on the issue whether the sum of Rs. 1.50 crores paid directly by the seller to Titco Ltd could be claim deduction while computing capital gains in the hands assessee, it cannot be held that there was any lack of enquiry on the part of AO while computing the assessment or that the view taken by the Assessing Officer was not a legally plausible. It may be that the view taken by PCIT was perhaps a legally more plausible view, in light of the decision rendered by the Hon'ble ....
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....on in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Office....
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.... to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provison shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have ....