2012 (5) TMI 787 - AT - Income Tax

Difference between No Enquiry and Inadequate Enquiry - Revision by Commissioner u/s 263 - CIT(A) had issued show-cause notice u/s 263 wherein the CIT(A) had asked the assessee to show- cause as to why the assessment order passed u/s 143(3) was not liable to be set aside as the AO had not conducted enquiry adequately which had led the assessment order to be erroneous and prejudicial to the interest of revenue. It was the submission by the ld. A.R. that the assessee had provided all the details which were the foundation for the show-cause notice u/s 263 in the course of original assessment. AO conducted the enquiries and then the order was passed. It was the submission that the order passed by ld. CIT u/s 263 is bad in law and liable to be quashed. HELD THAT - AO is not just a tax collector. He has to do the duty as an Officer who is responsible for assessing the correct income. To prove an enquiry inadequate enquiry CIT has to show that the enquiry and the opinion formed on the basis of such enquiry is fallacious. In the present case the inquiry was made documents were called for examination and opinion had been formed by the AO while passing the original assessment order. This has not been shown to be fallacious. Thus the order passed u/s 263 is unsustainable in law in so far as inquiry has been done by the AO when passing the original assessment order. Decision in the case of GEE VEE ENTERPRISES VERSUS ADDITIONAL COMMISSIONER OF INCOME-TAX DELHI I AND OTHERS 1974 (10) TMI 29 - DELHI HIGH COURT relied upon. The impugned revision order stands quashed.

Summary

Issues:
1. Validity of order passed under section 263 of the Income Tax Act, 1961 for the assessment year 1999-2000.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata challenged the order passed under section 263 of the Income Tax Act, 1961 for the assessment year 1999-2000. The appellant contended that the original assessment had been completed under section 143(3) r.w.s. 147 and that the Assessing Officer had conducted the necessary inquiries. The Commissioner of Income Tax, Kolkata-X VI set aside the assessment order under section 263, directing the Assessing Officer to conduct further inquiries regarding the assets shown in the balance-sheet and the possibility of a 'Benami' nexus. The appellant argued that all details were provided during the original assessment, and the order under section 263 was unjustified. The respondent, on the other hand, claimed that the Assessing Officer had not conducted adequate inquiries, citing the decision of the Delhi High Court in Gee Vee Enterprises.

Upon reviewing the submissions, the Tribunal observed that the Assessing Officer had indeed conducted inquiries during the original assessment process. Various letters exchanged between the Assessing Officer and the assessee demonstrated that details were submitted, clarifications were sought, and inquiries were made regarding assets, advances, and cash flow statements. The Tribunal emphasized that the Assessing Officer's duty is to assess the correct income based on the evidence examined. The Tribunal distinguished between no inquiry and inadequate inquiry, noting that in this case, the inquiry conducted was not erroneous or inadequate. The Tribunal referenced the Delhi High Court decision in Gee Vee Enterprises, which highlighted the importance of conducting inquiries but did not mandate a specific outcome. Consequently, the Tribunal concluded that the order under section 263 was unsustainable as the Assessing Officer had performed the necessary inquiries during the original assessment.

In a separate judgment, another member of the Tribunal concurred with the decision to quash the revision order under section 263. The member emphasized that the Assessing Officer had conducted sufficient inquiries, requested specific details and documents, and formed an opinion based on the evidence available. The member stressed that the conclusions drawn from the inquiries are subjective and within the Assessing Officer's domain. The member reiterated that the revision proceedings cannot challenge the Assessing Officer's conclusions unless there is a lack of inquiries. Therefore, the member agreed that the revision order was not justified as there was no deficiency in the inquiries conducted.

In conclusion, the appeal was allowed, and the order passed under section 263 for the assessment year 1999-2000 was quashed by the Appellate Tribunal ITAT Kolkata.