TaxTMI 
TaxTMI 
2024 (11) TMI 1261
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....neous and prejudicial to the interest of Revenue for the following reasons :- "2. On perusal of assessment order dated 23.11.2018, the assessment order was believed to be erroneous and prejudicial to the interest of revenue as per observations given hereunder: i. Large increase in Sundry creditors and reduction in business income as compared to preceding year : During the assessment proceedings, this issue was raised by the then A.O. However, the genuineness and creditworthiness of the sundry creditors was not verified at the time of assessment proceedings. No proper examination was made to identify the veracity of showing large increase in sundry creditors. ii. Gross total income is less than the value of foreign remittance sent : During the assessment proceedings, this issue was raised by the then A.O. However, the aspect of withholding of taxes and reporting of such remittance was not examined rendering the issue unverified. iii. Large business loss set off against other heads of income: The assessee company has declared income of Rs. 54,93,70,062/- under the head Capital Gain and Rs. 1,14,84,307/- under the head "Income from other sources" an....
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....me from write-back of credit balance pertaining to 41 (1) cases. However, no query was raised for its verification. viii. In the computation of Income, the assessee company has deducted profit on sale of land treated under capital gain of Rs. 4,63,79,0271- whereas the same is not appearing in the P&L Account. This issue has not been examined by the then AO. ix. As per Annexure XVI of the Tax Audit Report-Payment of Rs. 29,22,13,920/- has been made to Non Resident Indian u/s 195 of the Income-tax Act, 1961 on which TDS of Rs. 3,05,59,077/- @ 10.45% has been deducted. However, the purpose for which this payment was made to NRI has not been called for and examined during the assessment proceedings. x. As per XIX of the Form 3CD-Turnover and Net Profit has been shown as Nil for current year as well as for preceding year thereby making the Tax Audit Report defective as per Section 139(9) of the Income-tax Act, 1961. xi. As per Form 3CD- Stamp value of Kolkata property is shown at Rs. 130,90,91,035/- as against the sale consideration of Rs. 80,61,00,0001-. Further, as per reply dated 04.09.2018 - Form No. 26QB/26AS - TDS deducted is only at Rs. 80,61,0....
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....ase and in law, the learned Principal Commissioner of Income Tax, Delhi - 1 ['PCIT'] has erred in passing the order under section ('u/s') 263 of the Income Tax Act, 1961. ('Act'), setting aside the order passed by the learned Assistant Commissioner of Income Tax, Circle 3(2), Delhi (' AO') and directing him to make a fresh assessment de-novo. Each of the ground is referred to separately, which may kindly be considered independent of each other. 1. Ground No.1 1.1 On the facts and in circumstances of the case and in law, the learned PCIT has erred in passing the revision order in haste without giving fair and proper opportunity of being heard and without following the principles and rules of natural justice. 2. Ground No. 2 2.1 On the facts and in circumstances of the case and in law, the order passed by the learned PCIT under section 263 of the Act setting aside the assessment framed under section 143(3) of the Act as erroneous and prejudicial to the interests of the revenue is bad in law and void-ab-initio. 2.2 On the facts and circumstances of the case and in law, the learned PCIT failed to appr....
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....ed by the then A.O. However, the aspect of withholding of taxes and reporting of such remittance was not examined rendering the issue unverified. Notice dt. 16.08.2018 (Pg.no.24, CASS Reason - F and L) Reply dt. 04.09.2018 (Pg.no.36, Point-f) (Pg.no.37, Point-L) 3 Large business loss set off against other heads of income The correctness of Assessee Company's claim of income from capital gain and other sources was not verified and examined properly during the course of assessment proceedings. Notice dt. 16.08.2018 (Pg.no.24, CASS Reason - h) (Pg.no.26, Query - 14) Reply dt. 04.09.2018 (Pg.no.36, Point-h) and Reply dt. 15.10.2018 (Pg.no.43, Q.no.14) 4 Large cash payments made for credit card purchases (AIR 002) Information was not provided and the assessment proceedings were concluded without examining this issue. Notice dt. 16.08.2018 (Pg.no.24, CASS Reason-n) Reply dt. 04.09.2018 (Pg.no.37, Point-n) 5 Low income from TCS receipts - Liquor (TCS and profit in Part BTI/Part A-P&L of ITR) This issue has not been examined in details by the then Assessing Officer at the time of assessment proceedings. Notice dt. 16.08.2018 (Pg.no.24, CASS R....
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....ssue no.7, ld. AR brought to our notice order passed u/s 143(3) read with section 263 of the Act dated 31.03.2022, in the above order giving effect, the AO has not made any addition after due verification. Therefore, all the issues raised by ld. PCIT under consideration are either verified by the AO during assessment proceedings itself and the issue no.7 was deleted by the AO after due verification. Therefore, the observations made by ld. PCIT in revision proceedings are mere observations and it is not proved that it is prejudicial to the interest of Revenue. He submitted that all the issues were duly verified by the AO during assessment proceedings. Therefore, revision proceedings are void ab initio. In this regard, he relied on the decisions of Hon'ble Delhi High Court in the case of PCIT vs. Clix Finance India (P.) Ltd. (2024) 160 taxmann.com 357 (Delhi) and CIT vs. Sunbeam Auto Ltd. (2010) 189 Taxman 436 (Delhi). 7. On the other hand, ld. DR for the Revenue brought to our notice page 2 of the assessment order wherein criteria for selection of case under CASS was reproduced and the AO has not verified all the issues which were necessary for selection of the case under CASS. S....
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....ever, 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 CIT v. Sunbeam Auto Ltd. [2009 SCC OnLine Del 4237], wherein, it was held that if the AO has not provided detailed reasons with respect to each and every item of deduction etc. in the assessment order, that by itself would not reflect a non-application of mind by the AO. It was further held that merely inadequacy of enquiry would not confer the power of revision under Section 263 of the Act on the Commissioner. The relevant paragraph of the said decision reads as under:- "17. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Incom....
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.... 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 arises for our consideration." 24. In Ashish Rajpal as well, this Court was of the view that the fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. 25. Further, the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd., enunciates the meaning and intent of the phrase "prejudicial to the interests of the Revenue", in the following words:- "8. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Un....
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....sessing 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 discussed the sanctity of twofold conditions for the purpose of invoking jurisdiction under Section 263 of the Act. The relevant paragraph of the said decision reads as under:- "27. Learned counsel appearing on behalf of the assessee has heavily relied upon the decision of this Court in the case of Malabar Industrial Co. Ltd. (supra). It is true that in the said decision and on interpretation of Section 263 of the Income Tax Act, it is observed and held that in order to exercise the jurisdiction under Section 263(1) of the Income tax Act, the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of t....