2022 (11) TMI 317 - AT - Income Tax

Revision u/s 263 by CIT - Deduction u/s 54F - details of purchase/investment in property and construction expenses were not submitted - HELD THAT - The principles laid down by the courts are that the Learned CIT cannot invoke his powers of revision under section 263 if the AO has conducted enquiries and applied his mind and has taken a possible view of the matter. If there was any enquiry and a possible view is taken, it would not give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. The consideration of the Commissioner as to whether an order is erroneous in so far it is prejudicial to the interests of Revenue must be based on materials on record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded. AO has issued a notice dated 03-01-2019 u/s 142(1) of the Act to the assessee, wherein he, inter alia, raised queries on documents in support of deduction and exemption claimed, Confirmations of unsecured loans creditors taken during the year, copy of capital account for AY 2017-18, 2016-17.A.R submitted that the assessee has furnished relevant details to the assessing officer viz., details of construction expenses, copy of gift deed, confirmation from various creditors. All the details so furnished. AO has issued another notice dated 09-07-2019 and 22-07-2019 u/s 142(1) of the Act, wherein also identical details were called for. The Ld A.R submitted that the assessee has uploaded the relevant details in the e-portal. According to Ld A.R, the assessee has furnished all the details relating to the above said three issues to the assessing officer and they are very much available in the e-portal of the department. We notice that the Ld PCIT has not considered these documents at all before arriving at the conclusion that the AO has not conducted proper enquiries. We have also perused the various case laws cited by Ld PCIT and notice that they lay down the principles governing the proceedings u/s 263 of the Act. On a perusal of the various details furnished by the assessee to the assessing officer, we notice that the assessee has furnished necessary details before the AO with regard to the above said three issues. Accordingly, we are of the view that the AO has conducted enquiries in proper manner and that there was proper application of mind on the part of the AO in respect of all the three issues and that he has taken a possible view in respect of the same. Accordingly, we are of the view that the impugned revision order passed by Ld PCIT is not sustainable in law on all the three issues. Accordingly we quash the impugned revision order passed by Ld PCIT. Appeal filed by the assessee is allowed.

Summary

Issues:
Challenging validity of revision order passed by Ld PCIT, Proper examination of assessment record by Ld PCIT, Conduct of proper enquiries by AO, Application of mind by AO, Principles governing proceedings u/s 263 of the Act.

Analysis:
The appeal before the Appellate Tribunal ITAT Jodhpur challenged the revision order passed by Ld PCIT-1, Jodhpur for the assessment year 2017-18. The Ld PCIT initiated revision proceedings under section 263 of the Act, considering issues related to deduction claims, unexplained gifts, and loans. The Ld PCIT found the assessment order erroneous and prejudicial to revenue due to lack of enquiries by the AO on these issues. The Ld PCIT set aside the assessment order directing further enquiries. The assessee contended that proper enquiries were conducted by the AO through notices issued under section 142(1) and replies provided, available on the income tax portal. The Ld PCIT's decision was challenged based on the argument that Explanation 2 to section 263 was not applicable.

The Ld PCIT's view was that the AO did not conduct proper enquiries, leading to the initiation of revision proceedings. The Appellate Tribunal referred to legal interpretations by the Hon'ble Supreme Court and High Courts regarding the scope of section 263. It was emphasized that the Commissioner cannot invoke revision powers if the AO has conducted enquiries and applied his mind, even if a different opinion is held. The Tribunal analyzed the facts of the case, noting that the assessee had provided necessary details to the AO in response to queries raised. The Tribunal found that the AO had conducted proper enquiries and applied his mind, taking a possible view on the issues. Consequently, the Tribunal held that the revision order by Ld PCIT was not legally sustainable on all three issues, leading to the quashing of the revision order.

In conclusion, the Appellate Tribunal allowed the appeal filed by the assessee, emphasizing the importance of proper examination of assessment records, conduct of thorough enquiries by the AO, and application of mind in reaching decisions. The Tribunal's decision highlighted the necessity for the Commissioner to base revision orders on materials on record and not initiate proceedings for fishing expeditions in concluded matters. The principles governing section 263 proceedings were reiterated, emphasizing the need for legal sustainability and proper application of law in revising assessment orders.