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2022 (1) TMI 1116 - AT - Income TaxRevision u/s 263 by CIT - AO had not verified and inquired incriminating documents / evidences found and impounded /seized during the course of search and seizure action u/s 132 which was already available with him and Annual financial statement of the assessee during the course of assessment proceeding u/s 143(3) r.w.s 153A and not made proper inquiry or verification finalized the order of assessment u/s143(3) rws153A - HELD THAT - As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessees own group cases and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessees own group cases 2021 (9) TMI 1331 - ITAT SURAT the order passed by ld PCIT under section 263 of the Act should be quashed. We find enough potency in the rebuttal provided by the learned counsels, which was to the effect that the lack of inquiry by the Assessing Officer was not the basis formulated by the Commissioner to invoke the jurisdiction u/s 263 of the Act. It is pertinent to mention here that there was as such no allegation of no enquiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. Therefore, the notices issued for examination of the issues during the assessment proceedings and submission and verification of the same has not been shown to be fallacious. In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) speaks of inquiry before assessment and gives immense power to the A.O. for conducting enquiry. Therefore, the A.O. u/s 142(1)(ii) (iii) can ask the assessee almost any information which he think necessary for passing assessment and even if Ld. Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. Therefore, the very initiation of proceeding u/s. 263 of the Act by the Ld. Pr. C.I.T. is in violation of the settled position in law. Therefore, in our view, the plea of the learned CIT-DR does not help the case of the Revenue in as much as what is required to be examined, at this stage is the validity of assumption of jurisdiction by the Commissioner u/s 263 of the Act on the basis of the error and prejudice brought out by him. The efficacy of the action of the Commissioner has to be tested only with respect to the basis adopted by him and cannot be further supplemented by the Revenue on any other new point. Thus, we find no merit in the submissions put forth by the learned CIT-DR, which is hereby rejected.
Issues Involved:
1. Initiation of proceedings under Section 263 of the Income Tax Act, 1961. 2. Assumption of jurisdiction under Section 263. 3. Violation of principles of natural justice. 4. Allegation of the assessment order being merely a 'change in opinion.' 5. Non-verification of incriminating documents/evidence by the Assessing Officer. 6. Validity of assessment proceedings under Section 143(3) read with Section 153A. 7. Setting aside the assessment order without specifying errors or prejudice to revenue. 8. Direction for fresh assessment without proper justification. Issue-wise Detailed Analysis: 1. Initiation of Proceedings under Section 263: The appellants challenged the initiation of proceedings under Section 263 by the Principal Commissioner of Income Tax (PCIT). The PCIT had initiated these proceedings based on the observation that the Assessing Officer (AO) had not conducted proper inquiries or verification regarding certain issues, thus rendering the assessment order erroneous and prejudicial to the interests of the revenue. 2. Assumption of Jurisdiction under Section 263: The appellants contended that the PCIT erroneously assumed jurisdiction under Section 263. They argued that the AO had already conducted adequate inquiries and verifications during the assessment proceedings under Section 143(3) read with Section 153A, and that the PCIT's action was merely a difference in opinion rather than identifying any actual error or prejudice. 3. Violation of Principles of Natural Justice: The appellants argued that the PCIT violated the principles of natural justice by not mentioning the specific grounds for initiating action under Section 263 in the show cause notice. This omission, they claimed, rendered the order void ab initio. 4. Allegation of the Assessment Order being Merely a 'Change in Opinion': The appellants asserted that the PCIT's order under Section 263 was based on a mere change in opinion regarding the assessment order passed under Section 143(3) read with Section 153A. They maintained that the AO's order was not erroneous, and the PCIT's action was unreasonable and uncalled for. 5. Non-verification of Incriminating Documents/Evidence by the Assessing Officer: The PCIT observed that the AO had not properly examined various incriminating documents seized during search and seizure operations. The appellants countered this by stating that all relevant details and explanations had been duly submitted and considered by the AO during the assessment proceedings. 6. Validity of Assessment Proceedings under Section 143(3) read with Section 153A: The appellants contended that the entire proceedings were invalid as the assessment order under Section 143(3) read with Section 153A had already been framed after due inquiry. They argued that the PCIT's action to set aside the assessment order was without proper justification. 7. Setting Aside the Assessment Order without Specifying Errors or Prejudice to Revenue: The appellants argued that the PCIT set aside the assessment order without pointing out specific errors or demonstrating how the order was prejudicial to the interests of the revenue. They contended that the PCIT's action was arbitrary and lacked a factual basis. 8. Direction for Fresh Assessment without Proper Justification: The appellants challenged the PCIT's direction to the AO to make a fresh assessment without providing a clear rationale for how the original order was erroneous and prejudicial to the revenue. They argued that the PCIT's order was not supported by adequate reasons. Judgment: The Tribunal found merit in the appellants' submissions, noting that the issues raised by the PCIT had already been examined and adjudicated in a similar group case (Shri Bhavesh D. Paghdal and others). The Tribunal observed that the AO had conducted adequate inquiries and verifications during the assessment proceedings, and the PCIT's action was based on a mere difference in opinion rather than identifying any actual error or prejudice. The Tribunal held that the PCIT's order under Section 263 was not justified and quashed the order, allowing the appeals filed by the appellants. Conclusion: The Tribunal quashed the orders passed by the PCIT under Section 263, holding that the AO had conducted adequate inquiries and verifications during the assessment proceedings. The Tribunal found that the PCIT's action was based on a mere difference in opinion and lacked a factual basis, thereby allowing the appeals filed by the appellants.
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