TaxTMI 
TaxTMI 
2025 (12) TMI 1871
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....essing officer has failed to cause enquiry in the assessment proceedings before completion of assessment. 2.2. The Learned Principal Commissioner failed to appreciate the fact that the assessing officer has called details of the issues involved during the course of assessment proceedings and finalized assessment. 2.3. The Learned Principal Commissioner failed to appreciate that the issues which have been set aside were allowed by appellate forums and latest decisions of the ITAT in appellant own case and the learned Assessing Officer has adopted one of the possible views. 3. The Learned Principal Commissioner erred in setting aside the issue of deduction allowed u/s 36(1)(vii) of the Income Tax Act, 1961. 3.1 The Learned Principal Commissioner erred in holding that the amount of Rs 147.38 crs claimed under section 36(1)(vii) is not a write off. 3.2 The Learned Principal Commissioner erred in holding that an amount Rs 155.55 crs has been claim excessively u/s 36(1)(vii) of the Act. 3.3 The Learned Principal Commissioner failed to consider the fact that the issues have been settled by the Hon'ble Supreme court and latest decisions....
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....lowance of expenditure towards Corporate Social Responsibility - Rs. 10,68,54,396/-. 4. Subsequently, the ld. PCIT on perusal of the assessment records found that the AO has failed to make necessary enquiries or verifications in respect of the following deductions claimed by the assessee: i) Non rural write off claimed u/s.36(1)(vii) of Rs. 155,55,98,616/- ii) Deduction claimed u/s.36(1)(vii) of Rs. 147,38,00,000/- iii) Expense on shares allotted to employees under ESOS of Rs. 31,49,71,853/- iv) Provision for Non Performing Assets (NPA) claimed u/s.36(1)(viia) of Rs.76,13,24,957/-. 5. The assessee gave a detailed reply to the notice u/s.263 of the Act. The ld. PCIT passed an impugned order u/s.263 of the Act dated 29.03.2024 by holding that the order dated 19.04.2021 passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue and set aside the order with the direction to the AO to pass a fresh Assessment order after making necessary inquiries and verification in accordance with Law and also duly considering the issues discussed in the impugned order. 6. Aggrieved by the order of the ld. PCIT, the assessee ....
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....judicial precedents: - - CIT (Central), Ludhiana vs Max India Ltd - [2007] 295 ITR 282 (SC) - PCIT Vs. V-con Integrated Solutions Pvt. Ltd. - [2025] 173 taxmann.com 774 (SC) - CIT Vs. A.R. Builders & Developers P Ltd - [2020] 425 ITR 272 (Mad) - Shri Perinba Raja Ramesh Versus PCIT (Central) Chennai-1 And Shri PaulpandianUthamaraj Winston Versus PCIT (Central) Chennai-1 - ITA Nos. :418 to 421/Chny/2025 And ITA Nos. :422 to 425/Chny/2025 - order dated 03-06-2025. 9. The ld. ARs further submitted that on similar set of facts in assessee's own case the orders passed u/s.263 of the Act for the A.Ys. 2020-21 & 2021 22 in ITA Nos.1478 & 1479/Chny/2025, the co-ordinate bench of the Tribunal vide its order dated 09.09.2025 set aside the orders of the ld. PCIT. The facts and law being the same in the impugned A.Y., following the earlier orders, the impugned order passed u/s.263 of the Act may also be set aside. 10. Per contra the Mr. Bipin. C.N. ld. CIT-DR, submitted that while passing the assessment order the AO has not applied his mind and relied on the order of the Ld. PCIT. Therefore, the action of the ld. PCIT for invoking section 263 of the Ac....
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....is a difference between "lack of enquiry" and "inadequate enquiry". In the present case, it is certainly not a case of "lack of enquiry". The moment the AO issued notice u/s.142(1) / 143(2) of the Act by calling for information, it is the trigger of initiation of enquiry. 9. We find from the assessment order that the ld. PCIT is wrong in holding that "records do not indicate that the AO had obtained the necessary documents before concluding the assessment or had not conducted the enquiry or not applied mind to the issues". Therefore, the action of the ld. PCIT in concluding that the assessment completed by the AO is erroneous as well as prejudicial to the interest of the revenue, is not justifiable. We find that in the following catena of decisions the Hon'ble Supreme Court and Hon'ble High courts have settled the principle relating to the jurisdiction of the PCIT to invoke powers u/s.263 of the Act. -PCIT Vs. V-con Integrated Solutions Pvt. Ltd. - SLP (Civil) Diary No.13205/25 dated 04.04.2025 [2025] 173 taxmann.com 774 (SC) "ORDER 1. Delay condoned. 2. In our opinion, the order passed by the High Court, which upheld the decision of the Tribu....
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....sion Bench of the Bombay High Court, while dealing with the provisions of Section 148 of the Act, held that once a query is raised during the assessment proceedings and assessee has replied to it, it follows that the query was subject matter of consideration of the Assessing Officer while completing the assessment and the same is deemed to have been accepted. The Court also held that it is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of each and every query raised. Therefore, as there is no discussion or finding on the 34 questions raised under Section 142(1) of the Act, vide the communication dated 26.07.2011, the Assessing Officer should be taken as having accepted assessee's explanation. Paragraph 14 of Aroni Commercials Limited (supra) reads as under: "14) We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing ....
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....2 the very issue of taxability of sale of shares under the head capital gain or the head profits and gains from business was a subject matter of consideration by the Assessing Officer during the original assessment proceedings leading to an order dated 12 October 2010. It would therefore, follow that the reopening of the assessment by impugned notice dated 28 March 2013 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceeding leading to the order dated 12 October 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. (emphasis supplied) 12. Therefore, we agree with the Tribunal that the Commissioner has exercised his power under Section 263 of the Act in an arbitrary manner and hence, the impugned order requires to be quashed. The substantial questions of law framed are answered accordingly." 10. The jurisdiction u/s. 263 of the Act can be exercised only when both the following conditions are satisfied: (i) the order of the Assessing Officer should be erroneous and (ii) it s....
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....f give occasion to the Commissioner to pass orders under section 263 of the Act, 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) 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113)." A similar view was taken by Hon'ble Delhi High Court in the case of CIT v. Anil Kumar Sharma [2010 SCC OnLine Del 838], where in it was held that once it is inferred from the record of assessment that AO has applied his mind, the proceedings under Section 263 of the Act would fall in the category of Commissioner having a different opinion. Paragraph 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, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application of mind is discernible from the record, the proceedings under section 263 would fall into the area of the Commissioner having....
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....t think to be prejudicial to the interests of Revenue Administration''. In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. 10. 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 Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer 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 Income Tax Officer is unsustainable in law. It has been h....
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....issioner was passed under section 263 of the Income-tax Act two views on the said word 'profits' existed. In our view the matter is squarely covered by the judgment of this Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 as also by the judgment of the Calcutta High Court in the case of Russell Properties (P.) Ltd. v. A. Chowdhury, Addl. CIT [1977] 109 ITR 229 at 243. 2. At this stage we may clarify that under para 10 of the judgment in the case of Malabar Industrial Co. Ltd. (supra) this Court has taken the view that the phrase "prejudicial to the interest of the revenue" under section 263 has to be read in conjunction with the expression "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 interest of the revenue. For example, when the Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interes....
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....amined the materials or not properly calculated the income of the assessee, when the plausible two views are possible and the assessing officer adopted one of the views, the Principal Commissioner of Income Tax should not interfere with the order passed by the Assessing Officer. 8. In this case, even though there is no transfer of property by excluding the sale deed, but at the same time, the property has been revalued in accordance with law and capital gains tax also paid on the revised value. It is not the case of the department that for the purpose of evading the income tax, the assessee company has wrongly calculated the value of the lands which is less than the market value. Therefore, as pointed out by the Income tax Appellate Tribunal and the reliance placed in the case of CIT Vs. Max Inda Ltd., 295 ITR 282, referred to by the learned counsel, it is very clear that time and again, as held by the Honourable Supreme Court as well as this court, when two views are possible, if the Assessing Officer had taken one of the plausible views, the CIT has no authority to set aside the order of the Assessing Officer and adopt its one of the other views. Therefore, the citation ....