TaxTMI 
TaxTMI 
2024 (10) TMI 1720
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.... (2) For that Ld. Pr.CIT has erred in initiating the proceeding under section 263 of the Income Tax Act without existence of the condition precedent for such initiation. (3) For that the Ld. Pr.CIT has erred in recording certain findings which are contrary to the assessment records. (4) For that the Ld. Pr.CIT has traveled beyond the allegations contained in the notice under section 263 while passing the impugned order and thus has exceeded the jurisdiction by not limiting to the allegation in the show cause notice and thereby violating the principles of equity and natural justice. (5) For that the Ld. Pr.CIT has erred in invoking powers under section 263 and passing the order holding the order of assessment u/s 143(3) dated 31/03/2022 to be erroneous in so far as prejudicial without pointing out which of the two phraseology used in section 263 is applicable to the Appellant's case. (6) For that the Ld. Pr.CIT has erred in raising issues on the seized material in the SCN which does not pertained/ belonging to the appellant's company. (7) For that the Ld. Pr.CIT has erred in not providing copy of appraisal report which was a relied upo....
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....case of the appellant is covered by Clause (a) of Explanation-2 to Section 263. (18) For that the Ld. Pr.CIT has erred in holding that the assessee has failed to file complete details along with supporting evidence and explanation in response to notice u/s 142(1). (19) For that the Ld. Pr.CIT has erred in passing the assessment order without raising queries or making enquiries and verification vis-a-vis the seized material. (20) For that the Ld. Pr.CIT has erred in holding that regular books of accounts were neither found during the course of search action nor properly produced by the assessee in course of post search enquiry. (21) For that the Ld. Pr.CIT has failed to appreciate that the books of accounts maintained on Tally was found and seized in course of search and are still lying with the department and thus, Explanation-2(a) is not applicable. (22) For that the Ld. Pr.CIT has erred in relying on some of the judicial precedents without confronting the appellant with the same. (23) For that the Ld. Pr.CIT has erred in relying on judicial precedents which are distinguishable on facts. (24) For that the Ld. Pr.CIT ha....
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....deduction under section 80IA of the Act. He declined the claim made by the assessee and concluded the assessment assessing income at Rs.2,97,98,640/-. 4.Thereafter ld. PCIT on examination of the assessment records deemed fit to issue show-cause notice under section 263 of the Act and the same issued on 26.03.2024 (copy placed at pages 97 to 120 of the paper book). Reply was given by the assessee stating that all the details mentioned in the show-cause notice were forming part of the notice issued under section 142(1) of the Act and the same have been duly examined by the ld. Assessing Officer. Ld. PCIT after considering the submissions filed by the assessee on 26.03.2024 and 28.03.2024 noted that they were repetitive in terms of submission of fact and the documents annexed to these replies were same/similar to the one submitted during the course of assessment proceedings. He observed that there was no explanation or new evidence available with the assessee for the non-cooperation during the search, post-search or assessment proceedings or for the deliberate delay in submission of replies. Ld. PCIT thereafter observed that nothing on record is available, which could show that the....
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....gement are discussed in detail". 6.Thereafter ld. PCIT has relied on plethora of judgments and has even discussed the judgment referred to by the ld. Authorized Representative of the assessee distinguishing them on facts observing that the assessee failed to appreciate that the facts of the case relied upon, are different from the case under consideration in the present proceedings. In the case relied upon by the assessee, the Assessing Officer had made specific enquiry on the issue considered during assessment proceedings and nature of expenditure was explained by the assessee to him but in the instant case, the Assessing Officer failed to conduct any enquiry or verification. Finally, after making the detailed discussion as discussed above, ld. PCIT concluded the revisionary proceedings observing that there is no application of mind on the part of the ld. Assessing Officer, inasmuch as, the necessary verification on facts/inquiries, which should have been made, have not been made, making the order erroneous and prejudicial to the interest of revenue within the meaning of section 263 read with clause (a) of Explanation 2, which provides that the order is passed without mak....
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.... the assessee. Since major transactions appearing in the seized documents were already recorded in the books of account, ld. Assessing Officer after examination of the said seized material, vis-à-vis the books of account maintained by the assessee did not make any addition. However, while computing the assessment, ld. Assessing Officer has made other additions for the unrecorded cash payments and disallowance and deduction under section 80IA of the Act. Therefore, it cannot be said that the assessment has been completed without making proper inquiries or no inquiries. He also submitted that the draft assessment orders were sent to the ld. JCIT for granting approval under section 153D of the Act and the same was granted on 31.03.2022, which itself proves that the detailed inquiry conducted by the ld. Assessing Officer has culminated into an assessment order and that the ld. JCIT, who also keeps a continuous track of the search and seizure assessment cases and after examining the assessment record and the draft order had accorded approval u/s. 153(1) of the Act pursuant to which final assessment order has been passed. He further submitted that ld. PCIT has not revoked the orde....
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....xmann.com 38 (Mumbai); (iii) PCIT, Ludhiana -vs.- venus Woollen Mills [2019] 412 ITR 188 [P&H]; (iv) CIT -vs.- Ballarpur Industries [2017] 85 Taxmann.com 10 (Bombay); (v) Addl. CIT -vs.- Mukur Corpn. [1978] 111 ITR 312 (Guj); (vi) Addl. CIT -vs.- Krishna Narayan Nail [1984] 150 ITR 513; (vii) CIT -vs.- Precision Finance (P) Ltd. [1994] 208 ITR 465; (viii) Duggal & Co. -vs.- CIT [1996] 220 ITR 456; (ix) CIT -vs.- Anand Kumar Jain 370 ITR 140 (Allahabad); (x) Malabar Ind. Co. Ltd. 243 ITR 83 (SC); (xi) Tara Devi Agarwal -vs.- CIT 88 ITR 323 (SC); (xii) CIT -vs.- South India Shipping Corporation 233 ITR 546 (Mad.) 11.Further reference was also made to various documents furnished in the paper book running into 426 pages and the following index highlights the documents furnished by the ld. D.R. INDEX S. no. Description Page no. 01 Written submission 1 to 42 02 Case gist- ANN-C1 1 to 4 03 Case gist- ANN-C2 5 to 10 04 Case gist-ANN-C3 11 to 17 05 Online service of order- ANN-1 18 to 24 06 Proposal for revision of order u/s 263-ANN-2 ....
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....ses of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i)an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii)an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such m....
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....ssessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the ld. Pr. CIT taken u/s 263. 15.Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC)has laid down following ratio with regard to provisions of section 263 of the Act: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of re....
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....annot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or 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 his and if he ....
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....e interest of the Revenue and cases where the Assessing Officer conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue. In latter cases, the CIT has to examine the order of the Assessing Officer on merits or the decision taken by the Assessing Officer on merits and then hold and form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not." 19.In the light of the above details of Hon'ble Apex Court and Hon'ble High Courts, before us, Ld. Counsel for the assessee also mentioned about the recent decision of this Tribunal in the case of M/s. Gyan Infrabuild Pvt. Ltd. [2024] 162 taxmann.com 664 wherein also verbatim similar issue came up for consideration and Ld. CIT(A) invoked section 263 of the Act by setting aside the assessment orders framed u/s. 153A r.w.s. 143(3) of the Act without revoking the order of granting approval u/s. 153D of the Act. We find that the ratio laid down by this Tribun....
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....or in the regular books of account, there was no occasion to make the addition because the transactions were duly explained by the assessee. It is quite obvious that if the transactions appearing in the seized material are accounted for in the regular books and the profits for the year have been duly offered to tax, it is not open for the AO to make the additions in the hands of the assessee. We find that Ld. AO after carrying out adequate enquiry has completed the assessments which are neither prejudicial to the interest of the revenue nor are they erroneous in nature. The correctness of the assessment order is further supported by the approval granted by ld. JCIT u/s. 153D of the Act which still remains intact as Ld. PCIT has not revised the said order. 32. Now, once adequate enquiry has been conducted and a permissible view has been taken by the AO no room is left for the Ld. Pr. CIT to give direction to re-conduct the enquiry in the manner he deems fit. The revisionary powers cannot be extended to direct the AO to again enquire/examine the issue which have already been examined in detailed and a plausible view has been taken. It is for the Ld. Pr. CIT to carry out inde....
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..... AO has adopted one of the courses permissible under the law, ld. Pr. CIT cannot assume jurisdiction u/s. 263 of the Act. Relevant part of the decision of this Tribunal in the case of Gyan Infrabuild (P) Ltd.(supra) reads as under: "11. We have heard rival contentions and perused the material placed before us. Search and seizure action u/s 132 and Survey u/s 153A of the Act on 23/02/2018 was carried out at the business premises of Subhash Prasad Yadav Group which included the assessee. Various documents were seized and statements of various persons who were attached with the assessee company were also recorded and this mainly included the statement of Shri Satyendra Kumar Sharma, who is working as Director of the assessee company, and other employees, mainly, Mrs. Muskan Pandey, Shri Hulas Pandey, Shri Atul Kumar Agarwal etc,. Subsequent to search, notice u/s 153A of the Act were issued to the assessee company to which necessary compliances were made and return was filed. However, the returned income as disclosed in the original return filed on 30/09/2015 was again shown as income in the return filed in compliance to notice u/ s 153A of the Act furnished on 02/12/2019. Th....
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....r the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.....
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.... of the fundamental tests propounded in various judgments relevant for judging the action of the ld. Pr. CIT taken u/s 263. 14.Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC)has laid down following ratio with regard to provisions of section 263 of the Act: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed 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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; o....
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....correct 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 his 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 e....
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.... the order of the Assessing Officer on merits or the decision taken by the Assessing Officer on merits and then hold and form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not." 18.In the light of the above, we would like to examine the fact of the instant case. Before us, the first contention made by the ld. Counsel for the assessee is that the impugned revisionary proceedings are not valid in the eyes of law because only the order framed u/s 153A of the Act has been held to be erroneous and prejudicial to the interest of the revenue but the same cannot be held to be justified until and unless the approval given u/s 153D of the Act has also been held to be erroneous and prejudicial to the interest of the revenue. Now, under Chapter 14 of the procedure for assessment, so far as the assessments relating to search cases are concerned, separate procedures have been laid down. Starting from Section 153A for assessments in the case of searc....
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.... and not the order u/s 153D of the Act, as erroneous insofar as prejudicial to the interest of the revenue, can be held to be justified. 19.Before us, the ld. Counsel for the assessee, has referred to plethora of decisions whether the revisionary order u/s. 263 of the Act has been quashed, where only the order u/s 153A of the Act is revised without revising order u/s 153D of the Act. 20.Reliance is placed on the following judicial pronouncements: i. Smt. Abha Bansal v. Principal Commissioner of Income-tax [2021] 132 taxmann.com 231 (Delhi - Trib.) - "9.4 It is evident from the plain reading of the *- aforesaid Explanation that an Order passed on or before or after 1 st Day of June, 1988 by the A.O. shall include (/) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (if) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Co....
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....017 etc., date. 14-2-2018] "28. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl. CIT u/s.l53D of the I.T. Act, therefore respectfully following the above-mentioned decisions of the Coordinate Benches o the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl. CIT U/S.153D of the I.T. Act. We respectfully following the decision of ACIT Vs. Dr. Ashok Kumar, ITA 192 of 2000. We find that in the instant case the original approval 25 ITA No3226-3232.M.17 A.Y.2008 09 to 201415 was granted by Addl. CIT and this assessment order is cannot b< revise without approval of Add. CIT." iii) Dhariwal Industries Ltd. v. CIT [IT Appeal Nos. 1108 to 1113 (Pune) of 2014 dated 23-12-2016] "9. Referring to the decision of the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. Vs. DCIT vide ITA Nos. 584 to 589/H/2015 order dated 04-12- 2015 for A.Yrs. 2005- 06 to 2010-11 he submitted that the Tribunal in the said decision, following various d....
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..... CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. In view of the above decision also, we hold that the revision order under section 263 of the I.T. Act is not sustainable. 21.From going through the above decisions, wherein it has been consistently held that without revising the approval u/s 153D of the Act, the ld. Pr. CIT cannot revise the assessment order u/s 153A of the Act. Even in case of Surendra L. Heera Nandani (supra) it was held that ld. Pr. CIT has no power to revise the order u/s 263 of the Act since the same has been passed with the approval of the Addl. CIT u/s 153D of the Act. 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. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act by revising order u/s 153A r.w.s. 143(3) of the Act without considering that prior approval already accorded to ld. Assessing Officer u/s 153D of the Act and secondly when orders u/s 153A of the Act has been passed after receiving approval u/s 153D of the Act, Ld. PCIT erred in revising order u/s 153A of the A....
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....t that cannot give power to the ld. Pr. CIT to revise the assessment order because the ld. Assessing Officer has conducted reasonable enquiry and taken one of the legally permissible view under the Act. 23.Further, the ld. D/R failed to rebut this fact that the ld. Assessing Officer is not the only person who is involved in completing the assessment and along with him, the ld. JCIT is also part of the assessment proceedings because once the draft assessment order is prepared by the ld. Assessing Officer, he/she has to approach the Joint Commissioner for prior approval, who again examines the seized material with the draft assessment order framed by the ld. Assessing Officer and after being satisfied, either suggests necessary changes or he accords the approval after which, the ld. Assessing Officer passes the final assessment order. 24.We also observe that learned PCIT u/s 263 of the Act before initiating the revisionary proceedings was required to carry out necessary enquiry in support of his assumption that the documents belongs to the assessee or that the ld. Assessing Officer has not enquired. The Hon'ble High Court of Delhi in the case of Income-tax Offic....
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....e in the hands of other assessee, namely, Shri Satyendra Kumar Sharma, who has owned various documents seized during the course of search and has stated to that even some documents are in his own hand writing. The ld. Assessing Officer of the assessee is also the ld. Assessing Officer of Shri Satyendra Kumar Sharma and has framed the assessments in both the cases and after being satisfied with the documents and replies filed before him, he made the addition in the hands of Shri Satyendra Kumar Sharma. This asserts the fact that the ld. Assessing Officer has taken one of the legally permissible view and made addition in the hands of the person, he was of thebelieve, to be subjected to addition. Therefore, the ld. Counsel for the assessee succeeds on the second plea that ld. Pr. CIT erred in assuming jurisdiction in the given case where enquiry has been conducted and the order of the ld. Assessing Officer is not prejudicial to the interest of the revenueas huge additions have been made in the hands of Shri Satyendra Kumar Sharma, and thus one of the limbs of Section 263 of the Act is not fulfilled andrevision of the assessment order cannot be held to be valid and tenable in the eyes ....
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....h is running into 337 pages, we note each of the issues had been duly explained. Thus, we note that the Learned CIT while revising the order under section 263 has completely overlooked the assessee's response as also the order sheet entries made by ld. Assessing Officer in the assessment file of the assessee. We note that the Learned CIT has also overlooked that the Learned ACIT had examined Shri Baban Singh, Director, of M/s Broadson Commodities Pvt Ltd under section 133(6)/131 of the Act which is evident from the Order Sheet entry dated 25/12/2019 of the assessment file. 31.We find that the learned PCIT has failed to appreciate that the learned AO in given circumstances had framed the assessment with proper application of mind by making necessary enquiry and examining the seized material which in ld. Assessing Officer's view were belonging to the assessee and thus learned PCIT had acted without jurisdiction in setting aside the order of the ld AO and holding the same as erroneous being prejudicial to the interest of the revenue. We draw support from the following judicial pronouncements: i. 100 ITD 173 (Mum) Mrs. Khatiza S. Oomerbhoy vs. ITO ii. 100....
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....he Act after getting approval u/s 153D of the Act. c) that when the ld. Assessing Officer has conducted detailed enquiry, examined the seized records, made necessary observations in the assessment order, referred to various statements filed by the assessee and having taken one of the legally permissible view, then in such circumstances, the revisionary powers cannot be exercised just on the ground that adequate enquiry has not been done. d) that revisionary proceedings cannot be held to be justified unless ld. Pr. CIT had carried out independent enquiry specifically dealing with the details in his possession, for the issues raised in the show cause notice u/s 263 of the Act. e) that when the Assessing Officer, based on his observations and examination of records had made addition in the hands of another assessee, the ld. Pr. CIT without revising the assessment order of other assessee, which has been framed by the same Assessing Officer cannot revise the assessment order in the case of the assessee and directing to make the additions as the same would tantamount to double addition. f) that the finding on merit of the ld. Pr. CIT contains various m....
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....-22 are hereby restored. Common grounds of appeals challenging the impugned proceedings are hereby allowed." 20.Now on going through the judicial precedence referred above and also considering the grounds of appeal raised by the assessee and the contentions of ld. D.R., we find that the facts needs to be examined with regard to the following two issues:- (i) Firstly, whether the assessment order in question is erroneous and prejudicial to the interest of revenue on account of no inquiry/ adequate inquiry conducted by the ld. Assessing Officer; and (ii) Secondly, whether the impugned order deserves to be confirmed in the light of Explanation 2 to sub-clause (a) of section 263 of the Income Tax Act, which provides that if the order is passed without making inquiries or verification, which should have been made in the opinion of ld. Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 21.Taking up the first issue as to whether ld. Assessing Officer has conducted adequate inquiry or not, we take the facts from A.Y. 2017-18 since similar type of exercise has been carried out by the ld. Assessing Officer for the remaining y....
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....d by the assessee that this amount is towards the payment made to Ultratech Cement Limited through cheque of Andhra Bank. Similarly, an entry of Rs.7,05,000/- dated 01.09.2016 is explained to be a payment made to Century Textile and Industries for purchase of cement. In this manner, the assessee has given specific replies with supporting documents to the ld. Assessing Officer for the queries raised in the questionnaire for all the years under appeals. Ld. Assessing Officer has gone through these details and after due application of mind has passed the assessment orders after having made certain additions. Like for A.Y. 2017-18, ld. Assessing Officer on observing that assessee has offered Rs.70,00,000/- as income towards unrecorded payments, has examined the said transaction and has initiated the penalty proceedings under section 271AB(1a) of the Act. Ld. Assessing Officer has also disallowed the claim of deduction made under section 80IA of the Act at Rs.2,27,98,640/-. This exercise of the assessee shows that after having carried out the inquiry with reference to each and every seized material, assessment has been completed after making certain addition and, therefore, the view tak....
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....e "erroneous and prejudicial to the interests of the revenue" when Commissioner is of the view that "the order is passed without making inquiries or verification which should have been made". 20.Undoubtedly, the expression used in Explanation 2 to Section 263 is "when Commissioner is of the view," but that does not mean that the view so formed by the Commissioner is not subject to any judicial scrutiny or that such a view being formed is at the unfettered discretion of the Commissioner. The formation of his view has to be in a reasonable manner, it must stand the test of judicial scrutiny, and it must have, at its foundation, the inquiries, and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be. If we are to proceed on the basis, as is being urged by the learned Departmental Representative and as is canvassed in the impugned order, Assessment year: 2014-15 that once Commissioner records his view that the order is passed without making inquiries or verifications which should have been made, we cannot question such a view and we must uphold the validity o....
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....inding that the Assessing Officer has not conducted, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be. 21.That brings us to our next question, and that is what a prudent, judicious, and responsible Assessing Officer is to do in the course of his assessment proceedings. Is he to doubt or test every proposition put forward by the assessee and investigate all the claims made in the income tax return as deep as he can? The answer has to be emphatically in negative because, if he is to do so, the line of demarcation between scrutiny and investigation will get blurred, and, on a more practical note, it will be practically impossible to complete all the assessments allotted to him within no matter how liberal a time limit is framed. In scrutiny assessment proceedings, all that is required to be done is to examine the income tax return and claims made therein as to whether these are prima facie in accordance with the law and where one has any reasons to doubt the corre....
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....and not doubting everything coming to the Assessing Officer's notice in the assessment proceedings cannot be said to be lacking bonafide, and as long as the path adopted by the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section263. In the case of Malabar Industrial Co Ltd Vs CIT [(2000) 243 ITR 83 (SC)], Hon'ble Supreme Court has held that "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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO 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 ITO is unsustainable in law." The test for what is the least expected of a prudent, judicious and responsible Assessing Officer in the normal course of his assessment work, or what constitutes a permissible course of action for the Assessing Officer, is no....
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....ith Explanation 2(a) thereto, with respect to lack of proper inquiries and verifications. The first situation could be this. Even if necessary inquiries and verifications are not made, the Commissioner can, based on the material before him, in certain cases straight away come to a conclusion that an addition to income, or disallowance from expenditure or some other adverse inference, is warranted. In such a situation, there will be no point in sending the matter back to the Assessing Officer for fresh inquiries or verification because an adverse inference against the assessee can be legitimately drawn, based on material on record, by the Commissioner. In exercise of his powers under section 263, the Commissioner may as well direct the Assessing Officer that related addition to income or disallowance from expenditure be made, or remedial measures are taken. The second category of cases could be when the Commissioner finds that necessary inquiries are not made or verifications not done, but, based on material on record and in his considered view, even if the necessary inquiries were made or necessary verifications were done, no addition to income or disallowance of expenditu....
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....ving at to the decision that the order of ld. Assessing Officer is erroneous in so far as prejudicial to the interest of revenue, Explanation 2(a) to sec. 263 of the Act cannot be applied for a valid revisionary proceeding and, therefore, the impugned proceedings are to be held as invalid and without jurisdiction. 27.Before concluding, we also note that the assessment order in question have been passed after getting proper approval under section 153D of the Act by the superior authority to ld. Assessing Officer. However, ld. PCIT has only used his revisionary powers for setting aside the assessment order but has not revised the approval order under section 153D of the Act. In the preceding para, where we have referred to the decision of this Tribunal in the case of Gyan Infrabuild Ltd. (supra) wherein reliance has been placed on the decision of Coordinate Bench Delhi in the case of Smt. Abha Bansal v. Principal Commissioner of Income-tax (supra), decision of Mumbai Tribunal in the case of Surendra L. Heera Nandani v. Pr.CIT (supra), decision of ITAT, Pune in the case of Dhariwal Industries Ltd. v. CIT (supra) and that of Coordinate Bench Hyderabad in the case of Trinity Infraven....