9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 316 - AT - Income TaxRevision u/s 263 - no query raised by the AO with regard to bad debts written off and advances written off by assessee - inadequate v/s no enquiry by the AO - Held that - As per contents of the notice issued by the AO u/s. 142(1) this is seen that learned DR is correct in saying that there is no query raised by the AO with regard to bad debts written off and advances written off but as per the two replies dated 18.01.2016 and 21.11.2016, the details about these write offs were submitted by the assessee and this is the submission of the learned AR of the assessee that these submissions are in reply to oral queries of the AO. Hence, it is seen that details were filed by the assessee before the AO in course of assessment proceedings in replies filed before him and this is the submission of the learned AR of the assessee that the reply on this account of write off is with reference to oral queries of the AO and we find no reason or basis to doubt this submission. Hence, it is seen that in the facts of the present case, queries are raised by the AO and reply was filed by the assessee. This may be a case of inadequate enquiry but this is not a case of no enquiry. This is by now a settled position of law that for inadequate enquiry by the AO, the CIT cannot invoke section 263 and only if no query is made by the AO in the course of assessment proceedings and because of that, certain claim of the assessee for deduction stands allowed without enquiry then such an assessment order is erroneous as well as prejudicial to the interest of revenue. Hence, it is not a case of no enquiry by the AO and therefore, ld. Pr. CIT is not justified to invoke his revisional powers u/s. 263 - decided in favour of assessee.
Issues Involved:
1. Legality and validity of the order under section 263. 2. Justification for invoking section 263. 3. Adequacy of the Assessing Officer's (AO) enquiry. 4. Applicability of prior judicial precedents. Detailed Analysis: 1. Legality and Validity of the Order under Section 263: The assessee contested the order under section 263, arguing it was "bad in law and not based on facts or legal position." The appellant emphasized that no new facts or findings were introduced to justify invoking section 263, claiming the order should be set aside on these grounds alone. 2. Justification for Invoking Section 263: The Principal Commissioner of Income Tax (Pr.CIT) noted that the assessee had debited amounts under "Bad Debts Written off" and "Advance Written off" in the Profit & Loss Account. The Pr.CIT observed these advances appeared capital in nature and thus, prima facie, could not be allowed to be written off. The Pr.CIT issued a notice under section 263, which the assessee responded to, but the Pr.CIT was not satisfied and deemed the assessment order erroneous and prejudicial to the revenue's interest, directing the AO to re-examine the facts and law de novo. 3. Adequacy of the AO's Enquiry: During the hearing, the assessee's AR provided copies of notices and submissions made during the assessment proceedings, asserting that the AO had made oral queries which were responded to in writing. The Tribunal noted that while the AO's notice under section 142(1) did not specifically query the write-offs, the assessee did provide details in response to oral queries. The Tribunal concluded that this constituted inadequate enquiry rather than no enquiry. According to established legal principles, the CIT cannot invoke section 263 for inadequate enquiry, only for no enquiry. 4. Applicability of Prior Judicial Precedents: The Tribunal referred to the case of Infosys BPO Ltd. vs. CIT, where it was held that if the AO has applied their mind and taken a possible view, the order cannot be deemed erroneous merely because the CIT disagrees. The Tribunal found that in the present case, the AO had indeed considered the submissions regarding the write-offs, thus applying his mind. Consequently, the Tribunal ruled that the Pr.CIT was not justified in invoking section 263. Conclusion: The Tribunal concluded that the AO had made sufficient enquiries and applied his mind to the write-offs claimed by the assessee. Therefore, the Pr.CIT's invocation of section 263 was not justified. The Tribunal quashed the order passed by the Pr.CIT under section 263 and allowed the appeal filed by the assessee.
|
