9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 1608 - AT - Income TaxRevision u/s 263 - assessee was a beneficiary of accommodation entry - Reopening of assessment - di stinguishing 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- -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.
Issues Involved:
1. Legality of the order passed under Section 263 of the Income Tax Act, 1961. 2. Validity of the reassessment proceedings under Section 147/148 of the Income Tax Act. 3. Adequacy of the Assessing Officer's inquiry into transactions with Minaxi Suppliers Pvt. Ltd. (MSPL). 4. Whether the Principal Commissioner of Income Tax (PCIT) was justified in revising the assessment order. Detailed Analysis: 1. Legality of the Order Passed Under Section 263 of the Income Tax Act, 1961: The assessee challenged the order passed under Section 263 by the Principal Commissioner of Income Tax (PCIT), arguing that the PCIT erred in revising the assessment order without assigning any specific and discerning reasons. The PCIT's order was contested on the grounds that the assessment order was neither erroneous nor prejudicial to the interests of revenue. The Tribunal noted that for the exercise of jurisdiction under Section 263, the order must be both erroneous and prejudicial to the interests of revenue. The Tribunal concluded that the PCIT failed to show that the assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interest of revenue, thereby setting aside the revision orders passed by the PCIT. 2. Validity of the Reassessment Proceedings Under Section 147/148 of the Income Tax Act: The reassessment proceedings were initiated based on information that the assessee was a beneficiary of accommodation entries from MSPL. The Tribunal observed that the AO had issued notices under Section 148 and conducted inquiries as per the reopening reasons. The Tribunal found that the AO had completed the reassessment proceedings after examining the details provided by the assessee, including the nature of transactions with MSPL. Therefore, the Tribunal held that the reassessment proceedings were validly conducted. 3. Adequacy of the Assessing Officer's Inquiry into Transactions with Minaxi Suppliers Pvt. Ltd. (MSPL): The PCIT's primary contention was that the AO did not conduct sufficient inquiries into the genuineness of transactions with MSPL. However, the Tribunal noted that the AO had issued notices under Section 142(1) and received detailed submissions from the assessee, including documentary evidence such as bank statements, income tax returns, and affidavits from MSPL. The Tribunal emphasized that the AO had applied his mind and was satisfied with the explanations provided by the assessee. The Tribunal concluded that the AO had conducted adequate inquiries and verification, and the assessment order could not be termed erroneous merely because the PCIT had a different opinion on the adequacy of the inquiry. 4. Whether the Principal Commissioner of Income Tax (PCIT) Was Justified in Revising the Assessment Order: The Tribunal held that the PCIT's revision order under Section 263 was not justified. The Tribunal highlighted that the PCIT did not bring any material on record to show that the AO's findings were incorrect or unsustainable in law. The Tribunal reiterated that for an order to be revised under Section 263, it must be shown to be both erroneous and prejudicial to the interests of revenue. Since the AO had conducted proper inquiries and the PCIT failed to demonstrate any error in the AO's order, the Tribunal set aside the PCIT's revision order. Conclusion: The Tribunal allowed the appeal of the assessee, setting aside the revision orders passed by the PCIT under Section 263. The Tribunal concluded that the AO had conducted adequate inquiries into the transactions with MSPL and that the reassessment proceedings were validly conducted. The PCIT's revision order was deemed unjustified as the PCIT failed to show that the assessment order was erroneous and prejudicial to the interests of revenue.
|
