TaxTMI 
TaxTMI 
2025 (9) TMI 1304
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....unal Rules, 1963, which is on the legal issue of the assumption of jurisdiction by the learned PCIT invoking action under section 263 of the Act, which goes to the root of the matter and it does not require any further verification of facts out of the facts available on record, by relying on the decision of the Hon'ble Supreme Court in National Thermal Power Co. Ltd v/s CIT [1998] 229 ITR 383 (SC), we admit the additional ground of appeal raised by the assessee. However, since ground no.3 and additional ground no.1, are inter-connected on the legal issue, therefore, we first proceed to dispose off these grounds together. Ground no.3 and additional ground no.1, are extracted below:- Gr.No.3 On the facts and circumstances of the case and in law, assessment order made u/s. 143(3) rws.153A dt.29-9-21 for AY 17-18 is invalid; an invalid order cannot be revised u/s. 263 by PCIT; impugned order made u/s. 263 dt.20-3-24 would be invalid and is liable to be quashed. Addl.Gr.No.1: "On the facts and circumstances of the case and in law, revision order made u/s. 263 dt.20-3-24 for AY17-18 by ld PCIT(Central) would be is invalid as base order i.e., assessment....
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....2020-21, in M/s. Maheshwari Coal Benefication & Infrastructure Pvt. Ltd. v/s DCIT, ITA no.113/Nag./2024, etc., vide consolidated order dated 26/12/2024. It is the submission of the learned Counsel for the assessee that when the base order i.e., the assessment made under section 153A r/w section 143(3) of the Act vide order dated 29/09/2021, has been quashed on the count of invalid approval granted under section 153D of the Act by the Addl.CIT, Range-Central, Nagpur (i.e., the competent authority for giving approval under section 153D of the Act) and hence, an invalid order cannot be revised under section 263 of the Act. For this proposition, the learned Counsel for the assessee relied on the following case laws:- i) PCIT v/s Badal Prakash Jindal HUF, (2023) 150 taxmann.com 483 (Ori); ii) Krishan Kumar Saraf v/s CIT, (2016) 83 taxmann.com 331 (Del-Trib); iii) Charbhuja Marmo (India) P. Ltd. v/s PCIT, (2019) (Del-Trib); iv) Pradeep Dattatraya Banginwar v/s PCIT, (2022) (Nagpur-Trib) 217 TTJ 246/ 213 DTR (T) 89; v) Shahi Exports P. Ltd. v/s PCIT, (2021) (Del-Trib), ITA No.2170 & 2171/ Del/2017, order dated 24/03/2021; vi) SBS Realt....
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....udice the right of assessee which has accrued in favour of assessee on account of its income being determined. If the learned PCIT revises such an assessment order, then it would imply extending/ granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended, because the limitations are provided in the statute. The assumption of jurisdiction under section 263 in respect of an assessment which is non-est is also bad in law as a non-est order cannot be erroneous and prejudicial to the interests of the Revenue. An order framed under section 263 for the assessment year 2017-18 is accordingly quashed on the principle of 'Sublato Fundamento Cadit Opus', meaning thereby, that in case the foundation is removed, the super structure falls. Since the foundation, i.e., the order under section 153A r/w section 143(3) has been removed, the super structure i.e., the order under section 263, must fall. For the above proposition, we rely on the following case laws which involve identical issue:- i) PCIT v/s Badal Prakash Jindal HUF, (2023) 150 taxmann.com 483 (Ori.) wherein the Court held as under:- ....
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.... against the same. Therefore, all these decisions could not have been ignored by the Tribunal by merely observing that these were the decisions in WPs instituted by the assessees. 46. For all the aforesaid reasons, the 2 substantial questions of law will have to be answered in favour of the assessee and against the Revenue. Further, the order dt.23-2-12 made by the CIT in the purported exercise of jurisdiction u/s. 263, is liable to be set aside. Since this order has merged into the order of the Tribunal dt.31.10.2014, even this impugned order made by the Tribunal is required to be set aside." iii) Jagjeet Singh v. ACIT (2024) 164 taxmann.com 324 (Asr-Trib) wherein the Tribunal held as under:- "11.2. Thus, the original assessment framed u/s. 147 being without jurisdiction, as such, the revisions proceedings u/s. 263 are void. In this regard the AR relied upon the principle of law enshrined in the legal maxim "sublato fundamento cadit opus" which means that when the cause (foundation) is removed, the effect (consequent action) ceases. The AR interpreted the maxim to imply that in view of the original order passed u/s. 147 being non-jurisdictional, the orde....
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.... the reopening of the assessment vide Order dt.15-3-16, copy of which is filed at page-2 of the PB. The same reads as under: "Dated: 15-3-16 Sd K. Jayant) ITO-Ward 6(1), New Delhi. 12. Whether the Addl.CIT, Range-6, New Delhi is satisfied on the reasons recorded by the ITO that it is a fit case for issue of notice u/s. 148. Yes; Sd Dev Saran Singh Addl.CIT, Range-6, New Delhi. 13. Whether the Pr. CIT, Delhi-2, New Delhi is satisfied on the reasons recorded by the ITO that it is a fit case for issue of notice u/s. 148. Yes; Sd PK Gupta, Pr.CIT, Delhi-2, New Delhi." 6.7....... it is clear that the Addl.CIT and ld PCIT while granting approval for reopening of the assessment u/s. 147/148 merely stated "Yes", which would show that they have not applied their independent mind and merely accorded sanction without going through any material on record. The issue is thus, covered against the Revenue by the afore-cited decisions in which even on more facts the approval was not found valid. Therefore, the issue is covered by the above decisions of the Tribunal in which even on better footing the re-assessment order was quashed and ultimatel....
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.... order dated 06/04/2022; wherein the Tribunal held as under:- "8. ... Our aforesaid view that an invalid reassessment order cannot be revised by the PCIT in exercise of his jurisdiction u/s. 263 is supported by the orders of the co-ordinate benches of the Tribunal in, viz., Charbhuja Marmo (India) (P) Ltd (Del-Trib) ITA No.4749/Del/ 2019, dt.31-12-19; and Supersonic Technologies (P) Ltd (2019) (Del-Trib). We, thus, in terms of our aforesaid observation that now when the very foundation of the impugned revisional proceedings i.e., the reassessment order passed by the AO u/s. 143(3) rws.147, dt.1-12-18 is in itself based on an invalid assumption of jurisdiction by the AO and thus, not sustainable in the eyes of law, therefore, the PCIT could not have assumed jurisdiction u/s. 263 and validated the said reassessment order by restoring the same to the file of the AO with a direction to reassess the income of the assessee afresh, therefore, set-aside the order passed by the PCIT u/s. 263, dt.24-2-21." viii) Classic Flour & Food Processing P Ltd v. CIT (2017) (Kol-Trib) dt.5-4-17; ITA No.764 to 766/Kol/2014, wherein the Tribunal held as under: "11. ...If the va....
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....llowing the appeal (i) that jurisdiction aspect of the order passed in the primary proceedings can be examined in collateral proceedings also. Thus, the assessee could be permitted to challenge the validity of the order passed u/s. 263 on the ground that the assessment order was non est". Since the reassessment order itself is bad in law, therefore, ld counsel for the assessee, rightly contended that the same cannot be revised u/s. 263. Only valid reassessment order can be revised u/s. 263. On this ground itself the proceedings u/s. 263 are bad in law and liable to be quashed. We accordingly, set aside the order of ld PCIT passed u/s. 263 and quash the same." x) Westlife Development Ltd v/s PCIT, (2016) 49 ITR 406 (Mum-Trib) ITA No.688/ Mum/2016, order dated 24/06/2016; wherein the Tribunal held as under:- "8.8. Similar view was taken in Dhiraj Suri (2006) (Del-Trib). In the said case, appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levi....
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....ion of a non-est order and, therefore, the impugned order passed u/s. 263 by the ld CIT is also nullity in the eyes of law and therefore, the same is hereby quashed." 10. Consequent upon the aforesaid observations, we hold that the jurisdiction assumed under section 263 by the learned PCIT and by directing the Assessing Officer to reframe the assessment for assessment year 2017- 18, is treated as bad-in-law and is hereby quashed. Thus, ground no.3 and additional ground no.1, raised by the assessee are allowed. 11. Insofar as ground no.1, the same is reproduced below:- "Gr.No.1 "On the fact & circumstances of the case & in law, assessment made u/s. 143(3) rws.153A dt.29-9-21 for AY17-18 is neither erroneous nor prejudicial to the interest of revenue; issue of excess stock found during survey (dt.26-9-16) of Rs. 2,18,17,729 has considered & accepted by the AO after examining the same through query dt. 31-8-21 & reply dt.8-9-21 submitted before the AO; it is a complete enquiry & verification made by the AO; the AO has taken a possible view which is tenable as per law; in absence of both/ twin pre-requisite condition i.e., erroneousness & prejudicial to the inte....
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.... tax has been duly calculated and paid as per computation of total income in AY 17-18. The assessee had income of Rs. 60,53,948 as profit before extra-ordinary items and tax. The books of accounts are audited as per Companies Act, 2013 and as per section 44AB. All the vouchers are duly vouched and account for in the books of accounts of the assessee during financial year 16-17." 13. It is the further submission of the learned Counsel for the assessee that the Assessing Officer, after considering the reply submitted by the assessee before him and after verifying the relevant details of books of account and other details/submissions, accepted the version of the assessee that the assessee has duly incorporated the 'additional income' on account of excess stock found on 'Coal' which has been surrendered during the course of survey and the Assessing Officer has not made any further addition on that account. The Assessing Officer has duly verified the accounts of the assessee and after being satisfied, by taking a possible view, the Assessing Officer has chosen not to make any further addition on that account. Thus, the learned Counsel for the assessee submitted that it is a case of c....
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....ccount and thus, it is a case of complete enquiry/verification made by the Assessing Officer. Thus, in our considered opinion, the Assessing Officer has taken a considered view after examining the reply of the assessee that excess stock has been shown as additional income in the Profit & Loss Account and which was included in the closing stock in the books of account. Consequently, we hold that the assessment order passed by the Assessing Officer is not an erroneous order and hence the twin conditions do not fulfill by the learned PCIT while framing revisionary order passed under section 263 of the Act. We further noticed that the learned PCIT has not pointed out any definite and specific error in the original assessment order and observed that the inquiry made by the Assessing Officer was inadequate or improper without first pointing out the error in the original assessment order passed by the Assessing Officer. Hence, we hold that the impugned order passed under section 263 by the learned PCIT is beyond jurisdiction, bad in law which is treated as invalid and is hereby quashed. i) PCIT v/s Clix Finance India (P) Ltd. (2024) 160 taxmann.com 357 (Del HC) wherein the Court ....
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....er is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Ld counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders u/s. 263, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open. In Gabriel India Ltd (1993) (Bom HC), law on this aspect was discussed in the following manner (page 113)..." 23. A similar view was taken by Anil Kumar Sharma (2010) (Del HC), wherein, it was held that once it is inferred from the record of assessment that AO has applied its mind, the proceedings u/s. 263 would fall in the category of CIT having a different opinion. Para 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....
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....o not indicate that the twin conditions contained in Sec 263 are fulfilled in its letter and spirit. 28. Notably, the Tribunal, while making a categorical finding that the CIT had failed to point out any definite or specific error in the assessment order, has satisfactorily explained both the claims in question in Para 8.2 of its order, which reads as under:- "8.2 In the Impugned Order, the ld CIT-IV, Delhi held that the AO had not examined the aforesaid 2 issues properly and, therefore, set aside the issues for further inquiries to be conducted by the AO. As regards the first issue is concerned, we note that out of total provision of Rs. 1114.68 lacs, a sum of Rs. 7,60,76,105 was suo moto added back in the computation of income and a further sum of Rs. 73,46,160- was disallowed by the AO in the original assessment order dt.30-3-05. Therefore, out of Rs. 1114.68 lacs Rs. 834.22 lacs already stood disallowed in the original assessment order. The balance amount represented actual write off which was palpably clear from page 2 of the impugned order itself. No deduction on account of any such provision was, therefore, allowed to the assessee. Hence, there is no error ....
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....e constitutionally valid having regard to the fact that the Deptt has no right of appeal to the CIT(A) against any order passed by the AO. It is for this reason, sec263 is enacted to empower the CIT with the authority of revising the order of the AO, where the order is erroneous and the error has resulted in prejudice to the interests of the Revenue. As is clear from the language of the provision, there has to be a proper application of mind by the CIT to come to a firm conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue. Thus, 2 conditions need to be satisfied for invoking such a power by the CIT, which are: (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. (see Malabar Industrial Co Ltd) 8. At the same time, this Court has also laid down that this provision cannot be invoked to correct each and every type of mistake or error committed by the AO. While interpreting the expression "prejudicial to the interests of the Revenue", it is also held that order of the AO cannot be termed as prejudicial simply because AO adopted one of the courses permissible i....
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.... order, in compliance with the statutory notices, the assessee had electronically submitted the details and replies and subsequently, at request of the assessee, manual scrutiny assessment on account of technical difficulties faced by the assessee was carried out with necessary approvals and hearings were held on various dates during which the documents and replies submitted by the assessee were duly considered. Further, as reflected from records produced before the Tribunal, the AO had sent notice u/s. 142(1) along with a detailed questionnaire comprising 38 ques to which replies were submitted by the assessee and the AO duly applied mind to the same before passing the assessment order. That having been done, it could not be labelled as a case of lack of enquiry and consequently, invocation of sec263 was not justified in the light of judicial precedents quoted above. 6. Further, according to records, prior to passing the order u/s. 263, the PCIT had issued SCN dt.15-2-21, which was duly served on the assessee. As mentioned in the order u/s. 263, on behalf of the assessee, not just written submissions in response to the SCN were filed but even a CA and an advocate on behal....
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.... completely misconceived. In our view, as noticed above, while exercising powers u/s. 263, the concerned officer is entitled to examine the entire record, which includes not only the assessment order but also the notices issued, queries raised, responses received, and the material/ evidence placed on record by the assessee. In a nutshell, the record should disclose whether the AO had applied his mind to various facets that cropped up during the assessment proceedings. In other words, furnishing reasons in the assessment order is not the sine qua non of a sustainable assessment order. Courts have repeatedly stated that the AO is not required to give detailed reasons for accepting or not accepting a particular transaction. As observed above, the record should reflect whether the AO applied his mind to the transaction in issue. (Ashish Rajpal (2009) (Del HC) and Sunbeam Auto Ltd (2009) (Del HC))" v) BNP Paribas v. CIT (2024) 38 NYPTTJ 1002 (Mum-Trib), wherein the Tribunal held as under:- "16. It is a settled position of law that powers u/s. 263 can be exercised by the CIT on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudici....
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....e expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Ld counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders u/s. 263, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open". 19. Considering the facts of the case in totality, in light of the judicial decisions discussed hereinabove, we do not find any error or infirmity in the assessment order which could make it erroneous and prejudicial to the interest of the revenue. Therefore, we set aside the order of the CIT dt.....
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....ssion in Explanation-2 "in the opinion of the CIT", it cannot be said to be an arbitrary opinion bereft of facts or law by the CIT. It must be the considered opinion of the CIT which is based on the correct facts and in accordance to well established principles of law. The aforesaid clauses only provide for situation where inquiries or verifications should be made by reasonable and prudent officer in the context of the case. Such clauses cannot be read to authorize or give unfettered powers to the CIT to revise each and every assessment order. The applicability of the clauses is thus essentially contextual. It has to be kept in mind that while the CIT is exercising his revisional jurisdiction over the assessment order, he has to exercise his power in an objective manner and not arbitrarily or subjectively since he is discharging quasi-judicial powers vested in him while doing so. Thus, according to us, Explanation-2 inserted by the Parliament under section 263 cannot override the main section i.e., section 263(1). 20. The next issue, which is also inter-connected with ground no.1, to be adjudicated is that of the applicability of provisions of section 115BBE on excess business s....
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....nd PCIT v/s Mahavir Ashok Enterprises Pvt. Ltd (2024) 167 taxmann.com 396 (Chhattisgarh) and PCIT v. Deccan Jewellers (P) Ltd (2021) 132 taxmann.com 73 (AP). 21. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record. Keeping in view the aforesaid contentions of the learned Counsel for the assessee and in accordance with the provisions of law, we are of the opinion that the excess business stock was found during survey proceedings in the business premises of the assessee, which duly recorded in the books of account. Provisions of section 69 do not attract as excess stock cannot be treated as undisclosed income within the meaning of section 69, which the Assessing Officer has accepted and taken it as one of the possible views. Thus, we are in agreement with the Assessing Officer that he has accepted holding it to be the correct view. The order passed by the Assessing Officer is tenable as per law and it cannot be held as erroneous order. Thus, one of the conditions has not been satisfied in this case and thus, order passed under section 263 is unsustainable in law on the issue of application of section 115....
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.... further stated in the reply that the assessee is engaged in retail trading of Gold and Silver Ornaments since so many years and the object for which the Company is incorporated is also trading of Gold and Silver Ornaments. It has also been stated in the reply that the business activity of the assessee is also accepted and assessed as such in earlier year assessments and as the excess business stock found during survey proceedings under the IT Act during the year u/c in the business premises of the assessee and duly recorded in the books of accounts of the concerned year, section 69 would not be attracted to the assessee. The assessee has also stated in the reply that as far as nature and source of investments is concerned, the investments are in the form business stock of Gold and Silver Ornaments found in the business premises and explanation of the business source of investments given on the basis of documents available in the business premises during the course of survey proceedings by the Director of the assessee was very well verified by the survey team and accepted, and hence, the excess stock of Rs. 2,25,75,951 declared during the course of survey proceedings in the busines....
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....onal excess stock found in the course of search in these cases ought to have been treated as 'undisclosed investment' u/s. 69. The AO did not consider such fact and assessed the additional income as business income @30% instead of 60% by applying section 115BBE. Thus, the assessment orders being erroneous were rightly revised by the PCIT. Hence, the appeals ought to be admitted on the aforesaid substantial questions of law. 12. When there are 2 possible views on the matter and one view has been accepted by the AO after inviting explanation from the assessee and upon being satisfied on such explanation such view cannot be said to be erroneous. 13. As discussed above, explanations had been given by the assessees with regard to the additional income, which were considered and duly accepted by the AO. Assessees relied upon various authorities in support of their explanations which had been duly accepted by the AO. Views of the AO appear to have been approved by the Jt.CIT, Cen-Range, u/s. 153D. In this factual matrix, it cannot but be accepted that a possible view on the matter had been followed by the AO. In doing so, the AO, in fact, followed the consistent view of ....
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....asons cannot be a ground to come to a conclusion that the opinion of the AO was erroneous for the purposes of sec263. Explanation-2 of sec263 elucidates cases where the opinion of the AO can be treated to be erroneous and prejudicial to the interest of the Revenue. Explanation-2 reads as follows: "Explanation 2.- For the purposes of this sec, it is hereby declared that an order passed by the AO shall be deemed to be erroneous in so far as it is prejudicial to the interests of the Revenue, if, in the opinion of the PCIT or CIT,- the order is passed without making inquiries or verification which should have been made; the order is passed allowing any relief without inquiring into the claim; the order has not been made in accordance with any order, direction or instruction issued by the Board u/s. 119; or the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional HC or SC in the case of the assessee or any other person." 17. In the present cases, the AO had issued SCNs calling for explanations from the assessees whether excess stock be not treated as 'undisclosed investment' u/s. 69. In response ....
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....nted out as to how and what basis such finding was arrived at by the AO and non examination of the records cannot be the basis for coming to the conclusion that the assessment order is erroneous and pre-judicial to the interest of revenue. 13. It is a trite law that the PCIT could not have assumed the jurisdiction on mere change of opinion on his part, when the AO while during the course of regular assessment has made inquiry regarding the issue which is the subject matter of the revision. 14. In the facts of the case, though the PCIT would have arrived at a valid finding of error on the basis of his own examination of record including the documents and statement recorded of the assessee during the survey action undertaken u/s. 133A, but there is nothing on record to point out that how the documents pertaining to survey could not have lead to a reasonable belief as entertained by the AO that the income surrender pertained to the professional receipt which is one of the plausible view on the matter." 22. Keeping in view the overall facts and circumstances of the case and in view of the aforesaid findings, we treat ground no.1, as discussed above, raised by the a....
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....equently the case was transferred to the Assessing Officer, Raipur, vide order under section 127 of the Act, for framing revision proceedings under section 263 by recording satisfaction by the Assessing Officer, Nagpur himself that the issue had not been verified by the then Assessing Officer (i.e., his predecessor-in- office of the Assessing Officer). Therefore, the initial/ base assessment order made under section 143(3) by the then Assessing Officer is erroneous and prejudicial to the interests of Revenue. it is submitted that this act of recording satisfaction by the present Assessing Officer about erroneousness and prejudicial nature of the initial/ base order of his predecessor-in-office of the Assessing Officer is contrary to law under section 263(1). The learned Counsel for the assessee further contended that this proposal of the Assessing Officer, Nagpur, is based on audit objection of the Revenue Audit Party vide letter dated 04/11/2022, stating that the contents of the objection of the Revenue Audit Party and the proposal dated 02/05/2023, sent by the Assessing Officer, Nagpur to the learned PCIT, Nagpur and thereafter, the show cause notice dated 09/02/2024, under secti....
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....cords...." and contended that the learned PCIT has initiated revisionary proceedings under section 263 as per law. However, he has not disputed the fact that the Assessing Officer, Nagpur, has made a proposal for framing assessment under section 263 by recording satisfaction that the assessment order passed under section 143(3) r/w section 153A was erroneous inasmuch as it was prejudicial to the interests of the Revenue and the Assessing Officer has requested to take remedial measure under section 263 of the Act. 28. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record. We find that the proposal dated 02/05/2023, sent by the Assessing Officer, Nagpur, is based on audit objection of the Revenue Audit Party vide letter date 04/11/2022 and the contents of the objection of the Revenue Audit Party and the proposal dated 02/05/2023, sent by the Assessing Officer, Nagpur, to the learned PCIT, Nagpur and thereafter, show cause notice dated 09/02/2024, issued under section 263 by the learned PCIT, Bhopal, are exactly similar that the then Assessing Officer has not considered the additional income disclosed of Rs....
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....ndently the AO had made a proposal. In the case in hand before us even the AO made a proposal on the basis of audit report objections. Further, as we examine the notice u/s. 263 available at page 84 of the PB, it appears that the contents of the notice in a tabular form are similar to the proposal dt.27-9-18 of the AO. The audit report is provided by Revenue at page no.1 to 9 of PB and same only seems to be the foundation of all the reasons quoted by the PCIT, for giving a finding that assessment order is erroneous. Thus, though not mentioned specifically in the order of the PCIT, that the jurisdiction is being invoked on the basis of the audit objections and the proposal thereof, the manner in which the PCIT has approached the issues by issuing SCN and the discussion made upon the issue establish non-application of independent mind. It appears that based upon the audit objections and proposal only the jurisdiction u/s. 263 was invoked and exercised to hold assessment order to be erroneous so far as prejudicial to Revenue. 11. Thus, the grounds raised are sustained. The impugned order u/s. 263 is set aside and the appeal of the assessee is allowed." ii) KLG Orchar....
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.... are not required to be decided in the instant case." Considering the facts of the case in the light of the decision passed by the jurisdictional HC, we are inclined to quash the order passed by the ld PCIT u/s. 263." iii) PCIT v. Reeta Lakhmani (2022) 145 taxmann.com 590 (Cal HC) the Court held as under:- "8. ......... it was found that the initiation of the proceedings u/s. 263 was based on a proposal given by the AO and not at the behest of the PCIT. It may be true that the PCIT may have information from the assessment file or through other sources. Nevertheless while exercising powers u/s. 263 the PCIT has to bear in mind the twin conditions are to be conjointly fulfilled. Therefore, before exercise of power u/s. 263 it is the PCIT who has to apply its mind to the issue and thereafter record reasons as to how the twin conditions are satisfied and then issue a SCN to the assessee. In the cases on hand there is nothing on record to show that such an exercise was done by the PCIT. Therefore, ld Tribunal after noting several decisions on the subject rendered by the Co-ordinate Benches of the Tribunal had allowed the assessee's appeal and set aside the ord....
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....er, if they are so advised." 29. Consequently, keeping in view the overall facts and circumstances of the case and in accordance with law as cited supra, we hold that the impugned revisionary order passed under section 263 of the Act by the learned PCIT is invalid, hence, bad-in-law which is hereby quashed on this issue. Accordingly, additional ground no.2, raised by the assessee is hereby allowed. 30. In ground no.2, raised by the assessee reads as under:- "Gr.No.2 On the fact & circumstances of the case & in law, the AO has made assessment u/s. 143(3) rws.153A dt.29-9-21 after getting prior approval from Addl.CIT u/s. 153D dt.29-9-21; the PCIT has revised the impugned order dt.29- 9-21 made u/s. 143(3) rws.153A, without revising the approval of the Addl.CIT u/s. 153D dt.29-9-21; impugned order made u/s. 263 dt.20-3-24 is invalid & is liable to be quashed." 31. The learned Counsel for the assessee argued that the Assessing Officer i.e., ACIT, Central Circle-1(1), Nagpur, has made a search assessment order dated 29/09/2021, under section 153A r/w section 143(3) after obtaining prior approval dated 29/09/2021 under section 153D from Addl.CIT, Range Central....
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....nd the Co-ordinate Bench of the Tribunal, Delhi Bench, in Kapil Mehta (Del-Trib), ITA no.533/Del./2021, order dated 11/10/2021, for the contention that without even revising the approval order under section 153D, revisionary action under section 263 of the Act can be taken by the learned PCIT and there is no restriction for revising the order under section 263 by the learned PCIT. 33. Further, the learned Counsel for the assessee expressed his rebuttal on this point that the Revenue has not filed any appeal against the decision of the Tribunal in Sufalam Infra Project Ltd. (Nag-Trib) (supra) before the Hon'ble Jurisdictional High Court and thus, it had attained finality on this issue till date which is also supported by the judgment of the Hon'ble Madhya Pradesh High Court in Prakhar Developers (P) Ltd (supra). The learned Counsel for the assessee further distinguished the facts of the case in Osho Forge Ltd. (P&H) (supra), which is on the issue that after framing the order by learned PCIT under section 263, in consequential assessment to be made under section 143(3) r/w section 263, there would be no further requirement of obtaining approval under section 153D, which is complet....
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....quential assessment made under section 143(3)/153A, there would be no further necessity of obtaining approval under section 153D and hence, it is not applicable in the facts of the present case. More so, on those set of facts, the case of Sunrise Finlease (P) Ltd (2018) 89 taxmann.com 1 (Guj HC) (supra), as relied on by the learned Counsel for the assessee, would be squarely applicable, as it is held that even after passing the order under section 263, while passing the consequential assessment order, approval under section 153D would be mandatory and without obtaining approval order under section 153D, the consequential assessment framed under section 153A r/w section 143(3) r/w section 263 would be invalid, non-est and unsustainable in the eyes of law. It means, even after the order passed by learned PCIT under section 263 for reopening the concluded case, while framing consequential assessment, there would be requirement of approval order under section 153D, that means, search assessment under section 153A cannot be passed without obtaining approval under section 153D from Jt.CIT, which support the proposition that the learned PCIT cannot pass revision order under section 263 on....
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....ed under section 263 would not stand as mandated by law. It is so, because the assessment order made under section 153A is only after obtaining approval under section 153D by the Jt.CIT. For the arguments put-forth by the learned Counsel for the assessee, he placed reliance on following case laws:- i) Devender Kumar Gupta v. PCIT (2024) 166 taxmann.com 95 (Del-Trib) the Tribunal held as under:- "6. This is countered by the ld DR by relying Shrigopal Rameshkumar Sales (P) Ltd v. ACIT (2022) 140 taxmann.com 628 (Nagpur-Trib) dt.1-4- 22. 7. We have given thoughtful consideration to this aspect of the controversy and we find that a specific Gr.No.2 is raised by the assessee as follows:- "2. That the asstt. Order passed u/s. 153A rws.143(3) after getting an approval of Addl.CIT u/s. 153D could not be revised u/s. 263, hence, ld PCIT exceeded his jurisdiction in invoking sec263 in respect of impugned asstt. Order framed u/s. 153A rws.153D." 8. The assessment orders make it categorical that the same are passed with statutory approval of Addl.CIT, Central-Range, Gurgaon communicated vide his office letter F.No. Addl.CIT (CR)/GGM/ 2021-22/ 664 dt....
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....ment, this aspect was not actually examined at all and only for the reason that there also the impugned assessment order was passed u/s. 153A, does not lay down a view contrary to the one we are relying above. 11. In the light of the aforesaid discussion, we are inclined to allow Gr.No.2 and 3 for AY15-16 and 16-17; and gr.No.3 in AY17-18 and 18-19. Consequently, the appeals are allowed and the impugned orders in respective years are quashed." ii) Smt Abha Bansal v. PCIT (2021) 132 taxmann.com 231 (Del-Trib) dt.31- 5-21; ITA No.383/ Del/2021, the Tribunal held as under: "9. ...search was conducted in the case of assessee on 21-7-16. The AO proceeded to pass the assessment order u/s. 153B(1)(b) r.w. section 143(3). It is also not in dispute that the AO at the assessment stage as well as after completion of the assessment discussed the matter in issue with the Jt.CIT u/s. 153D and after getting approval of the Jt.CIT u/s. 153D passed the impugned assessment order dt.18-12-18. We may note that the order u/s. 143(3) rws.153B cannot be revised without revising the approval of the Jt.CIT. It is also an admitted fact that the ld PCIT did not revise the approval ....
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....d by the Board or by the Pr.CCIT or CCIT or Pr.DG or DG or PCIT or CIT authorised by the board in this behalf u/s. 120. It may be noted that order of assessment passed with the approval of Jt.CIT u/s. 153D could not be revised u/s. 263. The ld DR has, however, relied upon the order of Tribunal, Panaji Bench, but, has not explained whether Dr Ashok Kumar (All HC) or different Benches of the Tribunal have been considered in this case by the Panaji Bench. It is not decided in this case that assessment order cannot be revised without revising the approval u/s. 153D and Explanation-1 to sec263 has also not been considered. Therefore, this decision relied upon by the ld DR would not apply to this case. Further Param Transport (P) Ltd (CG HC) is not with regard to approval obtained u/s. 153D because in this case it was held that revisional power u/s. 263 is applicable to assessments under search and seizure. However, it is not explained by the ld DR whether in this case the approval u/s. 153D has been revised by the ld PCIT. It may also be noted that it is well settled law that if 2 views are possible, then the view which is in favour of the assessee should be made applicable. We rely upo....
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.... case it was held that revisional power u/s. 263 is applicable to assessments under search and seizure. However, it is not explained by the ld DR whether in this case the approval u/s. 153D has been revised by the ld PCIT. It may also be noted that it is well settled law that if 2 views are possible, then the view which is in favour of the assessee should be made applicable. We rely upon Vegetable Products Ltd (1973) (SC). It may also be noted here that the Hon'ble All HC is one of the jurisdictional HCs of Delhi Bench, therefore, preference shall have to be given to the judgment of the Hon'ble All HC as reproduced above. In the totality of the facts and circumstances of the case and following the decisions referred to above, we are of the view that the ld PCIT was not having jurisdiction to proceed u/s. 263 in the matter in issue and as such the order passed by the ld PCIT is nullity and void ab initio. We therefore, decide this issue in favour of the assessee." Surendra L Heera Nandani (Mum-Trib) dt.14-2-18: "28. Since in the instant case also, the AO has passed the order after obtaining necessary approval from Addl.CIT u/s. 153D, therefore, respectfull....
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....se of Surendra L Heera Nandani (Mum-Trib) it was held that ld PCIT has no power to revise the order u/s. 263 since the same has been passed with the approval of the Addl.CIT u/s. 153D. 22. Therefore, in the light of the above decisions, so far as the first limb of legal argument of the ld Sr. counsel for the assessee is concerned, we find merit that ld PCIT erred in assuming jurisdiction u/s. 263 by revising order u/s. 153A rws.143(3) without considering that prior approval already accorded to ld AO u/s. 153D and secondly when orders u/s. 153A has been passed after receiving approval u/s. 153D, ld PCIT erred in revising order u/s. 153A without first revising the order u/s. 153D as which means that no defect has been observed by ld PCIT in approval u/s. 153D. Thus, the action of the ld PCIT assuming jurisdiction u/s. 263 cannot be held to be tenable, the impugned proceedings deserves to be quashed on this grounds itself. iv) Sufalam Infra Project Ltd v. PCIT (2024) (Nagpur-Trib) dt.29-7-24, ITA No.97/Nag/ 2019, the Tribunal held as under: "6. We find that the issue raised by Shri Hirani is appropriately covered by the judgment of the Hon'ble MP HC. The ld ....
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....rein it has been held that the assessment order approved by the Addl.CIT u/s. 153D, cannot be subjected to revision u/s. 263. In view of the above decision also, we hold that the revision order u/s. 263 is not sustainable." 36. Consequently, keeping in view the overall facts and circumstances of the case and in accordance with law as cited supra, we hold that the impugned revisionary order passed under section 263 of the Act by the learned PCIT is invalid hence bad-in-law which is hereby quashed on this issue. Accordingly, ground no.2, is allowed. 37. Ground no.4, being general in nature, hence, no separate adjudication is required. 38. In the result, appeal in ITA no.247/Nag./2024, by the assessee for A.Y. 2017-18 stands allowed. ITA no.248/Nag./2024 Assessee's Appeal - A.Y. 2019-20 39. The following grounds and additional grounds have been raised by the assessee in this appeal:- "1. On the fact & circumstances of the case & in law, assessment made u/s. 143(3) rws.153A dt.29-9-21 for AY19-20 is neither erroneous nor prejudicial to the interest of revenue; after submitting explanation dt. 16-2-24 before the PCIT against the SCN u/s. 263 dt.9-2-24; the PCI....
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.... on the dictate of AO & without examination of the 'record' by PCIT, Bhopal, would be invalid and is liable to be quashed." 40. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record. 41. Insofar as ground no.1, as quoted above is concerned, before us, the learned Counsel for the assessee argued that the assessment made under section 153A r/w section 143(3) is neither erroneous nor prejudicial to the interests of Revenue. The assessee after furnishing its explanation dated 16/02/2024, a copy of which is placed on record at Page-21 to 23 of the Paper Book-1 before the learned PCIT against the show cause notice dated 09/02/2024, the learned PCIT has not given any finding on merits on the issue of 'bad debts' of Rs. 1,53,80,308, stating that as to how the assessee has claimed it incorrectly and in the absence of such factual finding by the learned PCIT on the merits of the case, the learned PCIT has simply passed revisionary order under section 263, for framing assessment de novo which was restored to the file of the Assessing Officer, is not permissible in the eyes of law. 42. It is further su....
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....ly the resultant amount of Rs. 89,72,441 has been claimed as bad debts written-off. The said vital facts have been ignored by the learned PCIT and avoided giving any findings on the merits of the case while passing the impugned revisionary order under section 263 in mechanical manner without any independent application of mind on the issue. Further, the assessment order passed by the Assessing Officer is not an erroneous order, as the claim of the assessee is allowable under section 36(1)(vii) of the Act as has been held by the Co- ordinate Bench of the Tribunal, Mumbai Bench, in Goldiam Jewellery Ltd v. ACIT [2024] 169 taxmann.com 509 (Mum-Trib), held as under:- "8. Apart from the above, we have also gone through Vidras India Ceramics (P) Ltd [2021] 129 taxmann.com 320 (Ahd-Trib) wherein it was held as under: Income Tax: Where assessee-Co has debited provision made in respect of doubtful debts to P&L account and also reduced same amount in balance sheet from sundry debtors/ trade receivable, such simultaneous reduction from sundry debtors amounted to actual write off of debt and hence, same was to be allowed as deduction u/s. 36(1)(vii). II. Sec36(1)(vii....
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....s and circumstances. Therefore, while concurring with the stand of ld AR, we direct the ld AO to delete the impugned additions." 45. We also rely on the judgment of the Hon'ble Karnataka High Court in CIT v/s Millennia Developers Pvt. Ltd. [2019] 100 taxmann.com 369 (Kar.), wherein on similar facts and circumstances, the Hon'ble Court has held as under:- "8. The same is disputed by the ld sr counsel Sri A Shankar appearing for the counsel for the assessee. It is contended that the finding of the AO that the entire scheme is a device to avoid tax cannot be accepted. That the finding of the AO is, therefore, not justified. He placed reliance on sec36(1)(vii), to contend that as long as the bad debts are shown in the books of account, no other que would arise for consideration. The bad debts having been reflected in the books of account, the same requires to be allowed. That there is no law prohibiting writing off the bad debts even in the very same year it became due. His further submission is that the CBDT have issued Circular No.12 of 2016, dt.30-5-16 with regard to "admissibility of claim of deduction of bad debt u/s. 36(1)(vii) r/ws.36(2). While referring to TRF Ltd (....
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....y the assessee is allowed. 48. Ground no.2, relates to the issue of without revising the approval order under section 153D of the Act, search assessment made under section 153A r/w section 143(3) which cannot be revised under section 263 of the Act. 49. During the course of hearing before us, both the learned Counsel appearing for the parties agreed that related facts and circumstances of the issue raised by the assessee is mutatis mutandis to the issue decided by us vide ground no.2, in its appeal bearing ITA no.247/Nag./2024, for the assessment year 2017-18, vide Para-35 and 36 of this order, wherein we have quashed the impugned order passed by the learned PCIT. Consequent upon the decision taken by us on this issue as aforesaid, while maintaining the consistency with the view taken therein, we quash the impugned order passed under section 263 of the Act by the learned PCIT, on this issue by allowing ground no.2, raised by the assessee. 50. Ground no.3, and additional ground no.1, relate to the issue that an invalid order cannot be revised u/s. 263 of the Act by the learned PCIT. 51. During the course of hearing before us, both the learned Counsel appearing for the pa....