2019 (12) TMI 144 - AT - Income Tax

Revision u/s 263 - revenue authorities namely Pr. CIT / CIT is vested with the supervisory powers of suo-moto revision of any order passed by the AO - HELD THAT - Nothing on record would establish the fact that these submissions were not available in the case records and it is also not the allegations of Ld. Pr.CIT. Therefore, the aforesaid action u/s 263 could not be triggered only on the basis of mere apprehension / doubts. Another apprehension raised by Pr.CIT was the fact that order sheet entries were not properly maintained. However, we are not convinced with the reasoning / logic since the no fault could be found on the part of assessee with respect to maintenance of order sheet entries. The same was the responsibility of AO and the assessee could not be made to suffer and go through the entire exercise of assessment proceedings merely because there was certain lapse of this kind on the part of AO. Therefore, the exercise of jurisdiction on this basis could not be held to be justified. We find that the assessee was directed to file various details vide notice dated 15/06/2016, against which two replies were filed by the assessee and the same were subject matter of consideration by Ld. AO. After satisfying himself with the details furnished by the assessee, the assessment was framed. The Ld. Pr.CIT finding shortcomings in the verification made by AO, set-aside the order and directed AO to framed assessment de-novo. As already noted by us, AO had appreciated the details submitted by the assessee and chose not to make any additions on the basis of details furnished by the assessee. Therefore, the order could not be branded as erroneous or prejudicial to the interest of the revenue simply because the revisional authority felt that further verifications should have been done in the matter and more aspects were to be considered while framing the assessment. If that be so, there would be no end to assessment proceedings and the matter would never attain finality. CIT, in our opinion, could not be clothed with unbridled power to undo each and every assessment merely because, in his opinion, further verifications were required to be made unless it was shown that the order under consideration was not passed in accordance with law. Therefore, we are of the considered opinion that revisional jurisdiction u/s 263 as exercised by Ld. Pr.CIT vide order dated 19/03/2019 could not be held to be sustainable under law. By quashing the same, we restore the original order framed by AO u/s 143(3).

Summary

Issues Involved:
1. Validity of revisional jurisdiction exercised under Section 263 of the Income Tax Act, 1961.
2. Determination of whether the assessment order was erroneous and prejudicial to the interest of the revenue.

Detailed Analysis:

1. Validity of Revisional Jurisdiction under Section 263:
The core issue is whether the Principal Commissioner of Income Tax (Pr. CIT) was justified in invoking Section 263 to revise the assessment order. Section 263 grants the Pr. CIT the power to revise any order passed by the Assessing Officer (AO) if it is deemed erroneous and prejudicial to the revenue. The judgment references several precedents, including Malabar Industrial Co. Ltd. v/s CIT and CIT v/s Vikas Polymers, which clarify that an order cannot be revised merely because there is a different possible view. The order must be erroneous and prejudicial to the revenue. The judgment also highlights that the Commissioner cannot substitute his judgment for that of the AO unless the AO’s decision is not in accordance with the law.

2. Determination of Erroneous and Prejudicial Order:
The Pr. CIT argued that the AO did not verify certain details, such as project-wise profitability, compliance with Section 43CA, and payment under Section 194C. The Pr. CIT contended that the AO completed the assessment based on limited records, which made the assessment order erroneous and prejudicial to the revenue. However, the Tribunal found that the AO had issued a detailed questionnaire and received comprehensive responses from the assessee, which included various financial details and documents. The Tribunal noted that the AO had reviewed these submissions and was satisfied with the details provided, leading to the conclusion that the assessment was not erroneous.

Specific Observations and Findings:
- The Tribunal emphasized that the AO had exercised his quasi-judicial power in accordance with the law and had made a conscious decision based on the details provided by the assessee.
- The Tribunal rejected the Pr. CIT’s argument that the absence of order sheet entries and unsigned submissions invalidated the assessment, stating that these procedural lapses were the AO’s responsibility and did not justify revisional jurisdiction.
- The Tribunal also noted that the Pr. CIT’s concerns were based on mere apprehensions and doubts rather than concrete evidence of error or prejudice to the revenue.

Conclusion:
The Tribunal concluded that the revisional jurisdiction exercised by the Pr. CIT was not sustainable under the law. The original assessment order was restored as it was found to be neither erroneous nor prejudicial to the interest of the revenue. The appeal was allowed, and the original order framed by the AO under Section 143(3) was reinstated.

Final Order:
The appeal was allowed, and the revisional order dated 19/03/2019 was quashed. The original assessment order was restored. The judgment was pronounced in the open court on 15th November 2019.