TaxTMI 
TaxTMI 
2025 (9) TMI 1826
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.... The Learned Principal Commissioner erred in invoking the provisions of Section 263 of the Income Tax Act, 1961 and setting aside the Assessment order. 2.1. The Learned Principal Commissioner failed to appreciate the fact that there is no error in the order relating to the issues covered by the notice u/s 263. 2.2. The Learned Principal Commissioner erred in holding that the assessing officer has failed to cause enquiry in the assessment proceedings before completion of assessment. 2.3. 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. 2.4. 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. 2.5. The Learned Principal Commissioner erred in setting aside the order without pointing out any error in the order. 3. Without prejudice to Ground no 2, the Learned Principal Commissio....
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....960/-. Later a notice u/s.143(2) of the Act was issued for scrutiny assessment and notices u/s.142(1) were issued calling for details and documents in support of various claims made by the assessee in the return of income. The assessee submitted the details as and when called for. On going through the details and submissions made by the assessee, the AO completed the assessment u/s.143(3) r.w.s 144B of the Act on 12.09.2022 by making the following additions to the returned income: i) Disallowance u/s.14A r.w. Rule 8D of Rs. 8,79,301/- ii) Disallowance of CSR Expense of Rs. 20,07,10,699/- 4. Subsequently, the ld. PCIT on perusal of the assessment records available in the ITBA system of the Department 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. 228,78,66,294/- ii) Expense on shares allotted to employees under ESOS of Rs. 38,31,93,155/- iii) Provision claimed u/s. 36(1)(viia) of Rs.118,21,01,100/- Therefore, the ld. PCIT passed an order u/s.263 of the Act dated 29.03.2025 by holding that t....
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.... No.: 672/Chny/2020, ITA Nos.:1418 & 1419/Chny/2019 And ITA No.:636/Chny/2020. The Ld.ARs argued that since the AO adopted the view which has been upheld by the Hon'ble Tribunal in the assessee's own case, it is a possible view and there is no error in the order of the AO. The Ld. ARs further argued that the order of the co-ordinate Bench was brought to the notice of the Ld. PCIT and in the impugned order the Ld. PCIT without finding any error in the order of the AO remanded the issues to the AO to verify the claim of the assessee and decide the allowability of the eligible deduction. Hence, the Ld. ARs submitted that there is no reason to invoke Sec.263 of the Act by the Ld. PCIT and hence prayed for set aside the order of the Ld. PCIT. In support of their arguments the Ld. ARs relied on the following 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....
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....doned. 2. In our opinion, the order passed by the High Court, which upheld the decision of the Tribunal, is correct on facts and in law. This case does not involve a failure by the assessing officer to conduct an investigation. Instead, according to the Revenue, it is a case where the assessing officer having made inquiries erred by not making additions. 3. The assessee does not have control over the pen of the Assessing Officer. Once the Assessing Officer carries out the investigation but does not make any addition, it can be taken that he accepts the plea and stand of the assessee. 4. In such cases, it would be wrong to say that the Revenue is remediless. The power under Section 263 of the Income Tax Act, 1961, can be exercised by the Commissioner of Income Tax, but by going into the merits and making an addition, and not by way of a remand, recording that there was failure to investigate. There is a distinction between the failure or absence of investigation and a wrong decision/conclusion. A wrong decision/conclusion can be corrected by the Commissioner of Income Tax with a decision on merits and by making an addition or disallowance. 5. Ther....
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....a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing Officer, the petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No.4/2007 dated 15 June 2007. (The reasons for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice dated 28 March 2013 seeks to reopen the assessment for assessment year 2008-09 was considered by the Assessing Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to reopen assessment for A.Y. 2008-09 is based on mere change of opinion. However, according to Mr. Chhotaray, learned Counsel for the revenue the aforesaid issue now raised has not been considered earlier as the same is not referred to in the assessment order dated 12 October 2010 passed for A.Y. 2008-09. ....
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....itions are satisfied: (i) the order of the Assessing Officer should be erroneous and (ii) it should be prejudicial to the interest of the revenue. These conditions are conjunctive. In the instant case, there was nothing erroneous and prejudicial. An order of assessment passed by the AO should not be interfered with only because another view is possible as held by Hon'ble Supreme Court in the case of Max India Ltd (supra). Further, the power u/s 263 cannot be invoked in the case of inadequate inquiry as held in catena of decisions. The said ratio has been upheld in the following decisions: The Hon'ble Delhi High Court in the case of CIT v. Sunbeam Auto Ltd. [2009 SCC OnLine Del 4237], held that if the AO has not provided detailed reasons with respect to each and every item of deduction etc. in the assessment order, that by itself would not reflect a non-application of mind by the AO. It was further held that merely inadequacy of enquiry would not confer the power of revision under Section 263 of the Act on the Commissioner. The relevant paragraph of the said decision reads as under:- "We have considered the rival submissions of the counsel on the oth....
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.... record, the proceedings under section 263 would fall into the area of the Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal do not warrant interference of this court. That being the position, the present case would not be one of "lack of inquiry" and, even if the inquiry was termed inadequate, following the decision in Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) (page 180) : "that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter." No substantial question of law arises for our consideration." In Ashish Rajpal as well, Hon'ble Delhi High Court was of the view that the fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. The decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd., enunciates the meaning and intent of the phrase 'prejudicial to the in....
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.... taken by the Income Tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. (See 'Rampyari Devi Saraogiv CIT[(1968) 67 ITR 84(SC)] and in ''Tara Devi Aggarwalv.CIT[(1973) 3 SCC 482:1973 SCC (Tax) 318:(1973) 88 ITR 323].) [Emphasis supplied]" The Hon'ble Supreme Court in the case of CIT v. Paville Projects (P) Ltd. [2023 SCC OnLine SC 371], while relying upon Malabar Industrial Co. Ltd., has discussed the sanctity of two-fold conditions for the purpose of invoking jurisdiction under Section 263 of the Act. The relevant paragraph of the said decision reads as under:- "Learned counsel appearing on behalf of the assessee has heavily relied upon the decision of this Court in the case of Malabar Industrial Co. Ltd.(supra). It is true that in the said decision and on interpretation of Section 263of the Income Tax Act, it is observed and held that in order to exercise the jurisdiction under Section 263(1) of the Income ....
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....d as an erroneous order prejudicial to the interest of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law. According to the learned Additional Solicitor General on interpretation of the provision of section 80HHC(3) as it then stood the view taken by the Assessing Officer was unsustainable in law and therefore the Commissioner was right in invoking section 263 of the Income-tax Act. In this connection he has further submitted that in fact 2005 amendment which is clarificatory and retrospective in nature itself indicates that the view taken by the Assessing Officer at the relevant time was unsustainable in law. We find no merit in the said contentions. Firstly, it is not in dispute when the Order of the Commissioner was passed there were two views on the word 'profit' in that section. The problem with section 80HHC is that it has been amended eleven times. Different views existed on the day when the Commissioner passed the above order. Moreover the mechanics of the section have become so complicated over the years that two views were inherently possible. Therefore, subsequent amendment in 2005 even though retrospective will not attract the p....
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....of the other views. Therefore, the citation above referred to reported in 295 ITR 282 is squarely applicable to the facts of the present case and the Principal Commissioner of Income Tax could not substitute a lawful view taken by the Assessing Officer." (* emphasis applied by us) 12. In the present case, the facts indicate that queries were raised by the AO and the assessee replied for the same in respect of all the three issues. The facts also indicate that all the 3 issues are decided in favour of the assessee in its own case by the co-ordinate bench (supra). Further, from the impugned order it can be seen that the Ld. PCIT has not recorded any error in the order of the AO, rather he has only remanded the issue to the AO to verify the claim of the assessee and decide the allowability. In para 6.1 of the impugned order he has concluded as follows with regard to the claim of deduction u/s 36(1)(vii): "However, the assessee has claimed that the Hon'ble ITAT, has decided the issue in its favour in its own case for AY 2015-16 to 2017-18. Therefore, on the basis of the foregoing discussion, the Assessing Officer is directed to verify the claim of the assessee, consider ....