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2023 (5) TMI 1292 - AT - Income TaxRevision u/s 263 - assumption of jurisdiction by CIT presuming and merely on basis of audit objection and lack of enquiry by the AO - HELD THAT - From the order of the PCIT passed u/s 263 it is observed that in the show cause notice he raised certain issues and made observations to which the assessee gave reply in seriatim followed by legal submissions but not a word thereupon has been mentioned by the Ld. PCIT. This is contrary to the law laid down in PCIT vs. Delhi Airport Metro Express Pvt. Ltd. 2017 (9) TMI 529 - DELHI HIGH COURT wherein the Hon ble Jurisdictional High Court held that for purposes of exercising jurisdiction u/s 263 the conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal enquiry. In fact if the Ld. PCIT is of the view that the AO did not undertake any enquiry it becomes incumbent on him to conduct such enquiry. Nothing of the sort has been done by the Ld. PCIT in the case of the assessee before us. In Synergy Waste Management (P) Ltd. 2016 (6) TMI 23 - ITAT DELHI is held that if an AO acting in accordance with law makes a certain assessment the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. Section 263 does not visualise a case of substitution of the judgment of the Commissioner for that of the AO. In our opinion this cannot be done as in the show cause notice the Ld. PCIT has nowhere mentioned to invoke the Explanation 2 to Section 263. Likewise the assessee cannot take a plea of assumption of jurisdiction by the Ld. PCIT on the basis of audit objection without there being any material in the record to substantiate the plea. We are of the view that the Ld. AO made enquiries and after applying his mind he completed the assessment under section 143(3) of the Act accepting the income declared by the assessee in its return. Appeal of assesee allowed.
Issues Involved:
The appeal challenges the order of the Ld. Pr. Commissioner of Income Tax, Delhi-4 under section 263 of the Income Tax Act, 1961 for the Assessment Year 2016-17. Jurisdiction under Section 263: The main issue raised was the jurisdiction under section 263, with the assessee contending that the assessment order was not erroneous or prejudicial to the interest of revenue. The Ld. PCIT cancelled the assessment order and directed a fresh assessment, leading to a dispute regarding the proper application of the law. Condonation of Delay: The appeal was filed late by 114 days, and the assessee sought condonation of delay, which was granted after considering the Hon'ble Supreme Court's order. Assessment Proceedings and Scrutiny: The assessee, a real estate developer, filed its return for AY 2016-17 declaring income. The case underwent scrutiny, and the Ld. AO completed the assessment under section 143(3) after detailed scrutiny. However, the Ld. PCIT cancelled the assessment order, prompting the appeal. Contentions of the Parties: The Ld. AR argued that detailed replies were filed addressing the observations of the Ld. PCIT, but those were not considered on merits. The Ld. PCIT's order was deemed unsustainable and contrary to facts and legal principles. References were made to legal precedents to support the arguments. Legal Interpretation and Enquiry: The tribunal analyzed the assessment proceedings and noted that the Ld. AO had conducted a thorough enquiry, considering the replies and evidence submitted by the assessee. It was emphasized that the adequacy of enquiry is subjective and does not automatically warrant revisional jurisdiction. Minimal Enquiry Requirement: The tribunal highlighted the necessity for a minimal enquiry before concluding that the AO's order is erroneous and prejudicial to revenue. The failure to conduct such an enquiry was noted as a flaw in the Ld. PCIT's decision. Explanation 2 to Section 263: The newly inserted Explanation 2 was referenced by the Ld. DR to support the Ld. PCIT's order. However, the tribunal observed that the Explanation was not invoked in the show cause notice, indicating a lack of proper legal basis for its application. Decision and Conclusion: After reviewing the facts and legal principles, the tribunal concluded that the Ld. AO had conducted enquiries and completed the assessment under section 143(3) appropriately. Therefore, the assumption of jurisdiction under section 263 by the Ld. PCIT was deemed improper, leading to the cancellation of the impugned order and allowing the appeal in favor of the assessee.
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