AI Drafter 
TaxTMI 
TaxTMI 
2024 (3) TMI 157
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....ned AY on 31.10.2002, declaring its total income to the tune of Rs. 65,41,08,720/-. The ITR filed by the respondent-assessee was processed under Section 143(1) of the Act. Subsequently, a notice under Section 143(2) was issued on 28.03.2003, intimating that the case of the respondent-assessee has been selected for the scrutiny. 3. In pursuance of the proceedings under Section 143(3) of the Act, an assessment order was passed by the Revenue on 30.03.2005, wherein, the income of the respondent-assessee for the concerned AY was assessed at Rs. 87,01,68,210/-. 4. However, on 22.03.2007, the CIT while exercising power of revision of orders which are erroneous and prejudicial to the interest of the Revenue as per Section 263 of the Act, quashed the assessment order and remitted the matter back to the Assessing Officer ["AO"] for a de novo adjudication with respect to the following two claims: i. The claim for deduction of Rs. 1114.68 lacs on account of provision for non-performing assets. ii. The claim for deduction of Rs. 114.06 lacs on account of interest rate swap. 5. In compliance of the directions passed by the CIT, on 18.12.2007, the AO adjudicated the af....
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....tion 2 to Section 263 of the Act. While taking this Court through the original assessment order at Annexure A-1, he submits that the AO has merely sought details with respect to the claims in question, however, the same cannot be construed as an enquiry for the purpose of satisfying the conditions laid down in Section 263 of the Act. Learned counsel further submits that if the assessment order is read in juxtaposition with questionnaire dated 02.11.2004, the same would indicate that the AO has not decided anything in respect of allowability of the said claims. 9. Learned counsel for the Revenue has drawn our attention to Paragraph 4 of the order dated 22.03.2007, wherein, CIT has placed reliance on the decision of the Orissa High Court in the case of Umashanker Rice Mill v. CIT [1990 SCC OnLine Ori 368] to hold that the power under Section 263 of the Act is available to be exercised by the CIT, if on the basis of the material available on records, the CIT feels that there should be further enquiry. 10. Learned counsel has also placed reliance on the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [(2000) 2 SCC 718] to substantiate his a....
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.... v. Gabriel India Ltd. [(1993) 203 ITR 108], CIT v. Nirma Chemicals Ltd. [(2009) 309 ITR 67], CIT v. Ashish Rajpal [(2010) 320 ITR 674 (Delhi)]. 15. We have heard the learned counsel appearing on behalf of the parties and perused the record. 16. Vide order dated 06.11.2019, this Court framed the following question of law:- "A. Whether, in the facts and circumstances of the case, the Hon'ble ITAT was justified in quashing the order under Section 263 of the Income Tax Act?" 17. The brief controversy involved in the present appeal pertains to the invocation of revisional jurisdiction under Section 263 of the Act by the CIT to set aside the original assessment order dated 30.03.2005. 18. Before adverting to the merits of the case, it is apposite to refer to the power of the revisional authority of the CIT envisaged as per Section 263 of the Act. For the sake of clarity, the relevant extract of Section 263 of the Act is reproduced as under: "263. Revision of orders prejudicial to revenue-(1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner] may call for and examine the record of any proceeding under this....
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....me would bestow a revisional power upon the Commissioner. However, the said Clause or any other condition laid down in Explanation 2 does not warrant recording of the said enquiry or verification in its entirety in the assessment order. 21. Admittedly, in the instant case, the questionnaire dated 02.11.2004, which has been annexed and brought on record in the present appeal, would manifest that the AO had asked for the allowability of the claims with respect to the issues in question. Consequently, the respondent-assessee duly furnished explanations thereof vide replies dated 09.12.2004, 20.12.2004 and 06.01.2005. Thus, it is not a case where no enquiry whatsoever has been conducted by the AO with respect to the claims under consideration. However, this leads us to an ancillary question whether the mandate of law for invoking the powers under Section 263 of the Act includes the cases where either an adequate enquiry has not been made and the same has not been recorded in the order of assessment or the said authority is circumscribed to only consider the cases where no enquiry has been conducted at all. 22. Reliance can be placed on the decision of this Court in the case of CI....
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.... AO has applied its mind, the proceedings under Section 263 of the Act would fall in the category of Commissioner having a different opinion. Paragraph 8 of the said decision reads as under:- "8. In view of the above discussion, it is apparent that the Tribunal arrived at a conclusive finding that, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application of mind is discernible from the record, the proceedings under section 263 would fall into the area of the Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal do not warrant interference of this court. That being the position, the present case would not be one of "lack of inquiry" and, even if the inquiry was termed inadequate, following the decision in Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) (page 180) : "that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter." No substantial question of law arise....
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....sed 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. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. (See Rampyari Devi Saraogi v. CIT [(1968) 67 ITR 84 (SC)] and in Tara Devi Aggarwal v. CIT [(1973) 3 SCC 482 : 1973 SCC (Tax) 318 : (1973) 88 ITR 323].)" [Emphasis supplied] 26. Recently, the Hon'ble Supreme Court in the case of CIT v. Paville Projects (P) Ltd. [2023 SCC OnLine SC 371], while relying upon Malabar Industrial Co. Ltd., has discus....