TaxTMI 
TaxTMI 
2026 (1) TMI 676
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....mmissioner of Income has failed to appreciate that such claim is genuine and claim was allowed and accepted in past and subsequent years after verification hence order u/s 263 is illegal and bad in law. 3. That in any view of the matter in the fact and circumstances of the case the Commissioner eared in law and on fact in holding that the assessment order passed by the assessing officer dated 07.11.2019 is erroneous as well as prejudicial to the interest of revenue when the issue was thoroughly examined and adjudicated by the assessing officer before passing the order. 4. That in any view of the matter in the facts and circumstances of the case the order of Commissioner of Income Tax is unjust, illegal and also bad in law because the amount of expenditure of Rs. 22,35,16,844/- in connection with business purposes and in past and future and even during the year claim was accepted after verification of fact. 5. That in any view of the matter in the course of assessment proceeding a detailed questioner was issued to the appellant during the course of assessment proceeding and after satisfying with the reply of the appellant the claim was accepted/allowed hen....
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....IT, the learned Pr.CIT took a fresh view of the assessee's claim for expenses under the head "Bhola Nath Kesarwani Memorial Expenses". The assessment order dated 07/11/2019 was set aside by learned PCIT to be framed again by the Assessing Officer after providing proper opportunity of being heard to the assessee. 4. The present appeal has been filed by the assessee against the aforesaid impugned order dated 22/03/2022 passed under section 263 of the Act. In the course of appellate proceedings in Income Tax Appellate Tribunal ("ITAT" for short), the following particulars and case laws were filed from the assessee's side: - PAPER INDEX SI. No. Particular Pg. No. 1. Written Submission dated 30.09.2024. 1-4 2. Chart showing expenses claimed under head Bhola Nath Memorial expenses for A.Y. 2008-09 to 2016-17. 5 3. Extract copy of schedule of profit and loss account showing claim of said expense under the head shop expenses. 6-11 4. Copy of assessment order for A.Y. 2017-18, 2016-17, 2013-14, 2012-13 & 2011-12 under section 143(3) of the Act confirming that expenses claimed under said head has been accepted by the department. 12-46 5. ....
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....opy of decision Hon'ble Tribunal Amritsar Bench reported in 174 TTJ 9. 246-257 18. Copy of decision Hon'ble Tribunal Amritsar Bench reported in 142 DTR 138. 258-264 19. Copy of decision Hon'ble Tribunal Gowahati Bench reported in 207 TTJ 1109. 265-277 20. Copy of various decision of Hon'ble High Court and other I.T.A.T. Benches. 278-329 5. At the time of hearing before us, the Ld. Counsel for assessee submitted that the Assessing Officer had conducted all relevant inquiries. He drew our attention to the observation recorded by the Assessing Officer in paragraph no. 2.2 and 2.3 of the assessment order (reproduced in foregoing paragraph no. 2 of this order). Further, he contended that detailed submissions were made by the assessee in the course of assessment proceedings. In this regard, he drew our attention to the paper book containing copies of notice issued by the Assessing Officer and copy of replies filed by the assessee before the Assessing Officer during the assessment proceedings. He further submitted that the relevant queries were made by the Assessing Officer and the replies submitted by the assessee during the assessment pro....
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....onsideration a return was filed by declaring an income of Rs. 3,34,12,470/- based on close books of accounts. Thereafter the case was selected for completes scrutiny and in compliances to the notice issued u/s 143(2) and 142(1) of the I.T. Act full compliances was made. The assessing officer has admitted in para 2.1 of the order that voluminous documents an books of accounts were furnished in the office which were studied and examined and place on record. That during assessment proceeding vide notice dated 12.10.2019 specific query was made by then assessing officer regarding expenses claimed under the head Bhola Nath Kesarwani Memorial expense which is reproduced as under :- In P & L A/c under the head administrative expense & sub-head shop expenses (sec.) following non-business are notice, which are not allowable under the I.T. Act. Bhola Nath Kesharwani Memorial Expense Rs. 22,35,168/- Smokeless Tobacco Traders Delhi Rs. 2,00,000/- Donation Rs. 51,000/- Total Rs. Rs. 24,86,168/- That in compliance to notice the assessee vide replied dated 22.10.2019 at page 6 narrated the facts in detail before the assessing officer and submi....
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.... ambit of mistake apparent from record since it is a settled/concluded issue. Copy of notice and reply enclose at page 25-27 That thereafter notice under section 263 of the Act was issued on same issue of claim of expense under the head Bholanath Kesarwani Memorial expense amounting to Rs. 22,35,168.44/- which is not correct at all since said issue has already been examined/adjudicated by the then assessing officer in detail hence on same issue taking different view is not correct and does not come within the definition of revisional proceeding under section 263 of the Act. The said issue was properly examined by the lower authorities and in earlier years also the said expense was accepted / allowed and assessment framed under section 143(3) of the Act. The authorities below have examined the nature of expense claimed and formed a view that said expense was expended for business purpose hence taking different view in the garb of section 263 of the Act, is not correct. In this regard there are plethora decision where it is held that were one of the plausible view has been taken by the assessing officer than taking different view is not correct and is not covered under revis....
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..../-) * AO's order sheet * AG Audit's objection * Notice u/s 154 dated 15.12.2020 (by the AO) * Reply dated 22.12.2020 (filed by the assessee) 2. As per records of the Pr.CIT in proceedings u/s 263 * Show cause notice u/s 263 dated 07.01.2022 (for hearing on 25.01.2022/not responded to) * Another hearing notice dated 25.01.2022 (by the Pr.CIT) * Reply dated 31.01.2022 (filed before the Pr.CIT), alongwith * Copy of reply dated 22.10.2019 filed before the AO (in the original assessment proceeding * Adjournment application dated 01.02.2022 (allowed for 15.02.2022) * Another hearing notice dated 03.02.2022 (not responded thereafter) * Impugned order u/s 263 dated 22.03.2022 3. As per AO's records (in the fresh assessment proceedings) * Notice u/s 142(1) dated 14.01.2023 * Reply dated 11.03.2023 * Fresh assessment order u/s 143(3) r.w.s. 263 & 144B dated 17.03.2023 * CIT(A)'s order dated 20.07.2023 against the original assessment order u/s 143(3) dated 07.11.2019 * Hearing notice u/s 250 dated 14.02.2025 in respect of appeal against fresh assessment order u/s 143(3) r.w.s. 263. 4. * Texts of Section 26....
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....essary to interfere at this stage. It goes without saying that when the matter be taken up by the Assessing Officer on remand, it shall be his duty to take into account all the relevant aspects ....... and pass a reasoned order." 4. [2025] 303 Taxman 328 (SC) Pr.CIT v. M.R. Apparels (P.) Ltd. Dismissing SLP against [2024] 168 taxmann.com 197 (Delhi) Wherein observed that-" ... (para-4) ..... (para-9) The learned counsel for the appellant contends that all material and documents were available with the AO ..... (para-10) Section 263 of the Act is set out below :.... Explanation 2 -... (a) .... (para-11) We find no merit in the appellant's contention ..... The assessment order does not indicate any enquiries in this regard. The learned CIT has rightly held that the Assessment Order was passed without making the necessary inquiries and verification. Thus, in terms of clause (a) of Explanation 2 to Section 263 of the Act, the assessment order is deemed to be erroneous in so far as it is prejudicial to the interests of the revenue. 5. [2018] 95 taxmann.com 366 (SC), ITO v. Deniel Merchants (P.) Ltd. Held that :- " .... (para-5) we find that the Commissioner of I....
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....nal and restore the order dated 25.03.2003 passed by the CIT under Section 263 .... " 8. [2005] 277 ITR 346 (Alld), CIT v. Mannulal Matadeen Allahabad Wherein observed that :- " (para-4) ..... internal audit party ..... Acting on the basis of the said report of the internal audit party the Commissioner of Income-tax examined the records and after coming to the conclusion that the assessment order was erroneous and also prejudicial to the interest of the revenue initiated proceedings under section 263 .... set aside the assessment order and ..... directed the Income-tax Officer to recompute the income of the applicant by disallowing a sum of .... (para-4). .... Irresistible conclusion is that this exercise was done by the applicant just to bring down its taxable income .... there is no escape from the conclusion that the Income-tax Officer had not made necessary enquiries before allowing the deduction .... The Commissioner of Income-tax was, therefore, justified in drawing the proceeding under section 263 ..... " 9. [2005] 272 ITR 309 (Allahabad) CIT v. PT. Lashkari Ram Wherein observed that- "(Page-3) In the assessment order it has also not been dealt that earlier....
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....icer had not examined/verified details so filed by assessee and, thus, Commissioner was justified in setting aside assessment order for limited purpose of examining issue ..... (para-21) .... from the assessment order, it is difficult to infer whether the AO was satisfied with the assessee's replies furnished from time to time or not the assessment order also does not indicate that the AO examined/verified the details furnished by the assessee .... Therefore, we are of the considered view the aforementioned observations do not support the plea of the assessee in the facts and circumstances of the present case. Accordingly, the impugned order passed under section 263 of the Act is upheld .... 13. [2023] 198 ITD 221 (KolKata) Pr. CIT v. Karabi Dealers (P.) Ltd. Wherein ..... since there was no entry in order sheet in assessment proceedings of ..... AO had failed to conduct required verification and examination and had not applied his mind before passing assessment order .... thus, revisionary order passed by Principal Commissioner was to be upheld .... (para-14.6.3) .... Ld. AO has failed to conduct required verification and examination and has not applied his mind befor....
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....plied his mind and taken a conscious decision on a particular matter in issue. It will have no application where the order of assessment does not address itself to the aspect which is the basis for reopening of the assessment, as is the position in the present case. It is in that view inconsequential whether or not the material necessary for taking a decision was available to the Assessing Officer either generally or in the form of a reply to the questionnaire served upon the assessee. What is important is whether the Assessing Officer had based on the material available to him taken a view ....... " III For the proposition that- the Pr.CIT is not precluded from exercising his power u/s 263, just because a rectification notice u/s 154 was previously issued by the AO on the same issue. 15. [2007] 288 ITR 322 (SC) CIT v. Ralson Industries Ltd. Wherein Initiation of a proceeding under section 263 cannot be held to have become bad in law only because an order of rectification was passed under section 154 ..... (para-12) Initiation of a proceeding under Section 263 of the Act cannot be held to have become bad in law only because an order of rectification was passed ..........
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....ar B. Patil Wherein (Page-2) ..... CIT v . Shri Arbuda Mills Ltd. [1998] 231 ITR 50 .... covers the .... questions 19. [2008] 299 ITR 300 (Allahabad) CIT v. Indo Persian Rugs Wherein .... by virtue of insertion of clause (c) in Explanation to section 263 by Finance Act, 1989 with retrospective effect from 1-6-1988, Commissioner has jurisdiction to take proceeding under section 263 in respect of that part of assessment order which was not subject matter of appea...... (para-5) We find that section 263 of the Act had undergone a sea change in the year 1988. Earlier uncertainty regarding the question as to whether the order of the Assessing Officer had merged in appeal or not even where in respect of the part of the assessment order, which was not the subject-matter of appeal has been set at rest by the insertion of clause (c) of the Explanation as inserted by Finance Act, 1989 with effect from 1-6-1988. This clause came up for consideration before the Apex Court in the case of CIT v. Shri Arbuda Mills Ltd.[1998] 231 ITR 501 ..... 'Explanation .... (c) ...... (para-6) .... In this view of the matter, the jurisdiction of the Commissioner of Income-tax to take proceeding....