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2019 (6) TMI 1608 - ITAT MUMBAIRevision u/s 263 - assessee was a beneficiary of accommodation entry - Reopening of assessment - distinguishing the order passed after proper inquiry and without inquiry - reassessment has been completed twice and no adverse opinion was recorded by both the officer - assessee contended that the assumption of jurisdiction under section 263 is wrong, when the transaction has been verified twice; therefore, the assessment order passed under section 143(3) cannot be revised - HELD THAT:- PCIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the ld PCIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the ld. PCIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the ld. PCIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. Revenue has argued that the newly inserted Explanation 2(a) to sec. 263 of the Act is applicable on the facts of the present case. Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted in JYOTI FOUNDATION [2013 (7) TMI 483 - DELHI HIGH COURT] If that be the case, then the ld. PCIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by ld. PCIT, thus prejudicing the independent application of mind of the AO. In our considered view this could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. As held in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1976 (11) TMI 1 - SUPREME COURT] that there must be a point of finality in all legal proceedings and the stale issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. Clause (a) of Explanation to section 263 states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provision shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by ld PCIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case -in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. Turning to the fact of the present case again, AO has accepted the explanations of the assessee, with regard to the transaction MSPL. The ld. PCIT has not identified any material that the explanations given by the assessee were wrong or incorrect. In our view the AO was satisfied with the explanations given by the assessee and did not make any addition. Hence, in our view, it cannot be held that the assessing officer did not carry out adequate enquiry or verification which should have been done. Thus, we are of the view that the assessing officer has taken a plausible view in the facts and circumstances of the case. PCIT has not brought any material on record by making enquiries or verifications to substantiate his inferences. He has also not shown that the view taken by him is not sustainable in law. PCIT has passed the impugned revision orders only to carry out fishing and roving enquiries with the objective of substituting his views with that of the AO. Hence we are of the view that the ld. PCIT was not justified was not correct in law in holding that the impugned assessment orders were erroneous. PCIT has failed to show that the impugned assessment orders passed by the assessing officer were not only erroneous but also prejudicial to the interests of the revenue. It is a well established proposition that both the above said conditions are required to be satisfied before invoking the revisional powers given under section 263 of the Act. In the instant case, we are of the view that the ld. PCIT has failed to show that both the conditions exist in the instant case. Accordingly we set aside the revision orders passed by ld. PCIT. - Decided in favour of assessee.
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