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2019 (9) TMI 549 - AT - Income TaxRevision u/s 263 - Reopening of assessment u/s 147 - HELD THAT - Documents available on record and realized that though submission of DR is correct to the effect that the AO in the assessment order did not make any discussion in regard to the query made by him and the explanation submitted by the assessee thereto, however from the statutory notices and questionnaire issued by the AO and replies thereto by assessee and documents available on record, it is undoubtedly clear that the AO thoroughly examined and verified the material facts and documents and all the issues raised in the questionnaire including cash deposit in saving bank account No.11321388010 with State Bank of India, Zira, relevant for passing the assessment order u/s 143(3)/147 and therefore it cannot be said that the AO has not made any enquiry and thus such decision of the ITO cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. CIT issued the notice dated 14.03.2017 u/s 263(1). Though the assessee specifically replied the aforesaid notice as well, however the Pr. CIT, without considering the material available on record, facts and circumstances of the case and contentions of the assessee, cancelled the entire original assessment order dated 20.07.2014 with a direction to the A.O. to the frame the assessment fresh after giving due opportunity to the assessee. Pr. CIT neither make any exercise for examining the record nor gave plausible reason(s) as to why the assessment order is erroneous and prejudicial to the Revenue while coming to the conclusion before initiating and concluding the proceedings u/s 263 therefore, on this aspect as well, the order under challenge cannot sustain. As the original assessment order is based upon detailed enquiry, therefore the Ld. Pr. CIT could not have assumed jurisdiction under the law to revise the Assessment Order in this case, hence we do not have any hesitation to quash the impugned order as the same is unjustifiable and suffers from perversity and impropriety, consequently the same is quashed. Appeal filed by the assessee stands allowed.
Issues Involved:
1. Validity of invoking Section 263 of the Income Tax Act, 1961. 2. Examination of the assessee’s financial transactions and their tax implications. 3. Assessment of the alleged commission income and its treatment. 4. Adequacy of the Assessing Officer's inquiry and documentation. Issue-Wise Detailed Analysis: 1. Validity of invoking Section 263 of the Income Tax Act, 1961: The Principal Commissioner of Income Tax (Pr. CIT) invoked Section 263, questioning the assessment order dated 02.07.2014, alleging it was erroneous and prejudicial to the interest of the Revenue due to inadequate inquiry by the Assessing Officer (AO). The Pr. CIT argued that the AO failed to properly assess the commission income purportedly earned by the assessee. However, the tribunal noted that the AO had indeed conducted detailed inquiries, issued several notices, and received comprehensive replies from the assessee, thus fulfilling the requirements of a thorough assessment. The tribunal cited various High Court judgments, emphasizing that an order cannot be deemed erroneous merely because the AO did not explicitly document every inquiry and response in the assessment order. 2. Examination of the assessee’s financial transactions and their tax implications: The case involved scrutiny of the assessee’s financial transactions, particularly the cash deposits of ?1,16,37,157/- in the State Bank of India account, which were explained as funds collected from farmers for purchasing tractors directly from Mahindra and Mahindra. The assessee provided detailed explanations, bank statements, demand drafts, and invoices to substantiate these transactions. The AO had issued multiple notices and questionnaires, to which the assessee responded with supporting documents, explaining the nature and source of the transactions. 3. Assessment of the alleged commission income and its treatment: The Pr. CIT contended that the assessee earned a commission of ?30,000/- per tractor, totaling ?10,20,000/-, which was not properly assessed. However, the assessee argued that this amount represented a discount provided directly to farmers by Mahindra and Mahindra, and not commission income. The tribunal found that the AO had considered these explanations and supporting documents during the assessment process. The tribunal also noted that affidavits provided by third parties corroborated the assessee’s claims, although the Pr. CIT dismissed them as self-serving. 4. Adequacy of the Assessing Officer's inquiry and documentation: The tribunal examined whether the AO's inquiry was adequate and whether the lack of detailed documentation in the assessment order constituted an error. It was established that the AO had conducted a thorough inquiry, as evidenced by the numerous notices and detailed replies from the assessee. The tribunal referenced several High Court rulings, which held that an AO is not required to document every detail in the assessment order, and the presence of inquiry and satisfactory responses in the record suffices. The tribunal concluded that the AO had applied his mind to the issues and made a reasoned assessment, thus the order was neither erroneous nor prejudicial to the Revenue. Conclusion: The tribunal quashed the Pr. CIT’s order under Section 263, affirming that the original assessment was based on detailed inquiries and proper application of mind by the AO. The appeal filed by the assessee was allowed, and the impugned order was deemed unjustifiable, suffering from perversity and impropriety. The tribunal emphasized that mere differences in opinion or inadequate documentation do not warrant revision under Section 263, provided the AO has conducted a thorough and reasoned inquiry.
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