2015 (10) TMI 2371 - AT - Income Tax

Revision u/s 263 - Assessing officer has accepted VDIS claim without enquiry - Held that - It is a matter of fact that the Assessing officer being an adjudicating officer has to form an opinion on the basis of evidence, which he has duly done. If the Ld. CIT on the same set of evidence forms an opinion, it being a question of fact, does not given him jurisdiction to revise the same u/s 263 of the Act. This is certainly a case of difference of opinion between Assessing officer and CIT. The only contention of the CIT seems that the Assessing officer should have made further enquiries / investigation, which he has not done. However, for assuming jurisdiction u/s 263, one has to keep in mind the distinction between lack of inquiry and inadequate enquiry. If there was an enquiry, even inadequate, that would not by itself give occasion to the CIT to pass order u/s 263, merely because he has a different opinion in the matter. It is only in case of lack of inquiry that such a cause of action could be open. Assessing officer called for action, assessee replied to the Assessing officer, Assessing officer accepted and even in the office note meant for internal purposes he mentions that the assessee has substantiated the jewellery seized. In view of these evidences, this is not a case of lack of inquiry either. In view of the above analysis, we do not find any error in the order of Assessing officer. Hence, we set aside the order of Ld. CIT made u/s 263 of the Act as the order of the Assessing officer is not found to be erroneous. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of proceedings under Section 263 of the Income Tax Act, 1961.
2. Examination of the Assessing Officer's (AO) acceptance of the assessee's explanation regarding seized jewelry.
3. Legality of the Commissioner of Income Tax's (CIT) direction for a fresh assessment.

Detailed Analysis:

1. Validity of proceedings under Section 263 of the Income Tax Act, 1961:
The CIT invoked Section 263, asserting that the AO's order was erroneous and prejudicial to the interests of the Revenue. The CIT's primary contention was that the AO accepted the assessee's explanation regarding jewelry found during a search without proper inquiry. The assessee argued that the AO had conducted a thorough examination and submitted relevant documents, including VDIS certificates and wealth tax returns. The tribunal held that the AO had indeed considered the evidence and formed an opinion, which does not constitute an error just because the CIT disagrees. The tribunal emphasized that an order can only be revised under Section 263 if it is both erroneous and prejudicial to the interests of the Revenue, which was not the case here.

2. Examination of the Assessing Officer's (AO) acceptance of the assessee's explanation regarding seized jewelry:
The AO had accepted the assessee's explanation for the jewelry found during the search, which included claims of jewelry declared under the VDIS scheme and Istri Dhan as per CBDT Circular No. 1916. The CIT argued that the AO did not verify whether the jewelry declared under VDIS was still held by the assessee's wife at the time of the search. The tribunal noted that the AO had asked for details and received explanations from the assessee, including VDIS certificates and wealth tax returns. The AO's acceptance of these explanations, after due consideration, does not render the order erroneous. The tribunal reiterated that a difference in opinion between the AO and CIT does not justify revision under Section 263.

3. Legality of the Commissioner of Income Tax's (CIT) direction for a fresh assessment:
The CIT directed the AO to conduct a fresh assessment, arguing that proper inquiries were not made. The tribunal found that the AO had indeed conducted inquiries and considered the evidence presented by the assessee. The tribunal highlighted that the CIT's jurisdiction under Section 263 is limited to cases where there is a lack of inquiry, not merely inadequate inquiry. Since the AO had made inquiries and formed an opinion based on the evidence, the CIT's direction for a fresh assessment was deemed unwarranted. The tribunal cited relevant judicial precedents, including the Supreme Court's decision in Malabar Industrial Co. Ltd. v. CIT, to support its conclusion that the AO's order was neither erroneous nor prejudicial to the interests of the Revenue.

Conclusion:
The tribunal set aside the CIT's order under Section 263, affirming that the AO's original assessment was valid and based on proper inquiry and consideration of evidence. The appeals of the assessee were allowed, and the direction for a fresh assessment was annulled.