TaxTMI 
TaxTMI 
2025 (6) TMI 1122
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....on, the scope of this assessment has been enhanced without taking due approval from the Competent Authority and such enlargement of scope is in violation of Instruction No. 5/2016 issued by the CBDT. The ld. Commissioner found error in this enlarged scope of assessment. Since it is a jurisdictional issue, it will go to the root of the cause of dispute and will ultimately affect the taxability of assessee, therefore, on the strength of Hon'ble Supreme Court decision in the case of NTPC Ltd. Vs CIT reported in 229 ITR page 393, we admit this additional ground of appeal for adjudication on merit. 3. The brief facts of the case are that assessee has filed his original return of income on 19.12.2017 declaring total income of Rs. 25,54,750/-. This return was processed u/s 143(1). Later on, case of the assessee was selected for limited scrutiny and a notice u/s 143(2) was issued by ITO, Ward - 3, Sirsa and copy of this notice issued u/s 143(2) is available at page No. 29 of the Paper Book. The relevant part of this notice read as under: "......... has been selected for limited scrutiny and following issues have been identified for examination : (i) Unsecured loans (ii) Cre....
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.... the returns would indicate that one return was filed by the assessee within due date at Ward-3, Sirsa. This was filed on 19.12.2017. On this return notice u/s 143(2) was issued by ITO, Ward-3, Sirsa. On this very return, second notice was issued by ITO, Ward-4, Panchkula on 29.09.2018 because the revised return was filed on 13.12.2018. By that time, all the notices alleged to have been issued upon the assessee u/s 143(2). In the above circumstances, we are of the view that if original jurisdiction lies upon the assessee at ITO, Ward-3, Sirsa, then ITO, Ward-4, Panchkula has no jurisdiction unless it is transferred by the Competent Authority u/s 127 of the Income Tax Act. The facts regarding transfer of jurisdiction from ITO, ward-3, Sirsa to ITO Ward-4, Panchkula are not available, but it is clear that assessee has responded all the notices of ITO, Panchkula and never raised any objection about change of his jurisdiction. The copies of the replies are available on page No. 52 onwards of the Paper Book. The assessee has not raised this objection even in reply to the Show Cause Notice received u/s 263 of the Income Tax Act before the ld. Commissioner. Hon'ble Supreme Court in th....
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....n from PCIT, CIT, Pr. DIT. No such development has taken place in the present case. Therefore, we observe that scope of limited scrutiny therein could be enlarged by taking approval from the Competent Authority. The issues in which error could be found out by the ld. CIT u/s 263 are to be confined qua those two issues, namely: a) Unsecured loans b) Credit Card Payments 9.2 With the above observation, now we proceed to decide whether action taken by the ld. Commissioner is in consonance with the law or not. In other words, whether action u/s 263 is valid or not? The copy of the Show Cause Notice issued u/s 263 is available on page No. 19 to 27 of the Paper Book. A perusal of this Show Cause Notice would reveal that ld. CIT has raked up three issues : a) Increase in opening capital balance b) Credit Card payments, and c) Unsecured loans 10. We have duly considered the rival contentions and gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act deserves to be taken against the assessee or not, it is pertinent to take note of this Section. It reads as under:- "263( 1)....
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....xplanation.- In computing the period of limitation for the purposes of sub- section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 11. A bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not requir....
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....r an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction u....
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...., ledger, PAN Card and confirmation attached. The details in this reply have been placed on page No. 52 to 93 of the Paper Book. A perusal of the replies given by the assessee would indicate that he has explained the details of alleged unsecured loans. He has filed PAN data of the creditors and submitted the other details. The AO was satisfied with the quality of evidence submitted by the assessee. Though AO has accepted the stand of the assessee but did not make much discussion in the assessment order. But it does not indicate that he has not conducted the enquiry. He has confronted the assessee with the relevant question and thereafter assessee submitted the requisite details to the AO. 16. As far as the issue of credit card payments is concerned, the assessee has submitted the details of credit card payments. The details of such payments are being noticed even by the ld. CIT in the impugned order on page No. 4 to 7. We find that ld. CIT just reproduced the copy of the Show Cause Notice in the impugned order and thereafter observed in paragraph No. 5.3 that there is a discrepancy that credit card details furnished by the assessee were not complete and correct. There is no basis ....
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....The Hon' ble Supreme Court in the case of CIT Vs Max India Ltd. reported in 295 ITR 282 has reiterated this position of law that on fulfilment of twin conditions, i.e. error committed by the AO which has caused prejudice to the interests of the revenue, only then the order u/s 263 can be passed. This aspect can always be examined by an Appellate Authority against an order passed u/s 263. The position of law was also explained by the Hon'ble Supreme Court in the case of Malabar Industries (supra) as well as in a large number of judgements. The remedy of appeal before the Tribunal would not become infructuous simply for the reason that AO has passed the consequential order. We would like to make reference to the latest decision of the Hon'ble Supreme Court in the case of PCIT Vs V-con Integrated Solutions Pvt. Ltd. SLP No. 13205/2025. This SLP was filed against the judgement of Hon'ble Punjab & Haryana High Court in ITA No. 88/2024. "In our opinion, the order passed by the High Court, which upheld the decision of the Tribunal, is correct on facts and in law. This case does not involve a failure by the assessing officer to conduct an investigation. Instead, according....