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2021 (3) TMI 1163 - AT - Income TaxRevision u/s 263 - AO made no extensive verification of all the documents and had made no requisite enquiries thereon - HELD THAT - PCIT does not in any manner suggest as to what enquiries the ld. AO should have conducted. In fact, the ld. PCIT does not bring out any basis for arriving at the conclusion as to how the order of the ld. AO dated 02/05/2018 in granting reliefs to the assessee is erroneous. We find that the ld. PCIT had merely directed the ld. AO to directly withdraw the reliefs given by him in the order dated 02/05/2018 in respect of five issues as tabulated. We find that this action of the ld. PCIT is grossly unsustainable in the eyes of law in view of the fact that the impugned grievance of the ld. PCIT is that the ld. AO had not carried out proper enquiries on the aforesaid 5 issues as tabulated supra. While it is so, how and on what basis the ld. PCIT comes to a conclusion that those five issues deserve to be decided against the assessee by way of withdrawal of relief. At best, the ld. PCIT could have only directed the ld. AO to conduct enquiries even if he is of the opinion that enquiries were not carried out properly by the ld. AO. The entire action of the ld. PCIT goes to prove that the entire issue has been addressed with a pre-conceived notion in order to reach a pre-conceived destination by forgetting the legal tenets, factual verifications, verification of documents carried out by the ld. AO, improperly applying provisions of Explanation-2 to Section 263, not respecting the judicial hierarchy by ignoring the order of this Tribunal dated 14/01/2019 wherein the Tribunal had already quashed the assessment order dated 15/03/2016 but also granting relief to the assessee on merits on each of the five issues that were subject matter of revision proceedings, thereby proving his highhandedness. Hence, it could be safely concluded that proper and requisite enquiries were indeed carried out by the ld. AO while passing the order dated 02/05/2018 giving effect to the order of the ld. CIT(A) dated 28/06/2017 and hence, the ld. PCIT grossly erred in invoking revisionary jurisdiction u/s.263 of the Act on the ground that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue because proper enquiries were not carried out by the ld. AO. No hesitation in quashing the revision order passed by the ld. PCIT u/s.263 - Decided in favour of assessee.
Issues Involved:
1. Legality of passing the revisionary order in the name of a deceased person. 2. Assumption of jurisdiction under Section 263 by the Principal Commissioner of Income Tax (PCIT). 3. Verification of details by the Assessing Officer (AO) in the order dated 2nd May 2018. 4. Determination of whether the AO's order was erroneous and prejudicial to the revenue's interest. 5. Merits of the addition against the assessee without proper opportunity for a hearing. 6. Consideration of the subject matter by the Income Tax Appellate Tribunal (ITAT) in its order dated 14.01.2019. 7. Jurisdiction and limitation issues related to the order passed under Section 263. Detailed Analysis: 1. Legality of Passing the Revisionary Order in the Name of a Deceased Person: The assessee argued that the PCIT erred in passing the revisionary order in the name of a deceased person, making it illegal and bad in law. This issue was not pressed further by the assessee during the hearing. 2. Assumption of Jurisdiction under Section 263 by the PCIT: The PCIT assumed jurisdiction under Section 263 to set aside the AO's order dated 2nd May 2018. The assessee contended that the PCIT acted against the law as the subject matter involved in the order dated 2nd May 2018 was already considered and decided by the ITAT on 14.01.2019. The ITAT noted that the issues raised in the additional grounds were purely legal and did not involve verification of fresh facts. The Tribunal found that the PCIT's action was not justified as the issues had already been considered and decided by the CIT(A) and ITAT, making the invocation of Section 263 invalid. 3. Verification of Details by the AO: The assessee argued that the AO had verified the details while passing the order dated 2nd May 2018. The ITAT found that the AO had indeed carried out extensive verification of the issues and documents before giving effect to the CIT(A)'s order dated 28.06.2017. The Tribunal noted that the AO had conducted third-party verifications and issued necessary notices, confirming that proper verification was done. 4. Erroneous and Prejudicial to the Interest of the Revenue: The PCIT held that the AO's order was erroneous and prejudicial to the revenue's interest. However, the ITAT found that the PCIT's conclusion was based on borrowed satisfaction from the AO's proposal and lacked independent application of mind. The Tribunal emphasized that the PCIT did not specify what additional inquiries or verifications were required, making the invocation of Section 263 unjustified. 5. Merits of the Addition Against the Assessee Without Proper Hearing: The assessee contended that the PCIT decided the merits of the addition without giving a proper opportunity for a hearing. The ITAT noted that the PCIT's action was not only procedurally flawed but also demonstrated judicial indiscipline. The Tribunal highlighted that the PCIT's decision disregarded the binding nature of the ITAT's previous order and the judicial hierarchy. 6. Consideration by ITAT in its Order Dated 14.01.2019: The ITAT had already considered and decided the issues involved in the AO's order dated 2nd May 2018 in its order dated 14.01.2019. The Tribunal quashed the assessment order dated 15.03.2016 and granted relief to the assessee on merits. The ITAT found that the PCIT's invocation of Section 263 was invalid as the issues had already been adjudicated by the Tribunal. 7. Jurisdiction and Limitation Issues Related to the Order Passed Under Section 263: The ITAT noted that the PCIT's order under Section 263 was based on a proposal from the AO, indicating a lack of independent application of mind. The Tribunal emphasized that the PCIT must initiate revision proceedings based on his own examination of records, not merely on the AO's proposal. The ITAT also highlighted that the assessment order dated 15.03.2016, which was the basis for the order dated 2nd May 2018, had already been quashed, making the revision proceedings under Section 263 void ab initio. Conclusion: The ITAT quashed the revision order passed by the PCIT under Section 263 for multiple reasons, including the lack of independent application of mind, improper verification claims, judicial indiscipline, and the binding nature of the ITAT's previous order. The Tribunal allowed the additional grounds raised by the assessee and dismissed the original ground related to the legality of passing the order in the name of a deceased person as not pressed. The appeal of the assessee was partly allowed.
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