2024 (5) TMI 487 - AT - Income Tax

Validity of Revision u/s 263 - assessment order passed u/s 147 r.w.s 143(3) set aside - as per CIT order AO passed u/s 147 r.w.s. 143(3) was erroneous and prejudicial to the interest of revenue because there was a report of the investigation wing that the assessee had received accommodation entry and that It was, therefore, unaccounted income of the assessee - HELD THAT - A perusal of the revision order passed by the ld. Pr. CIT shows that the ld. Pr. CIT has not pointed out any error or discrepancy in the explanations and details furnished by the assessee and without examining such evidence and without counter questioning the assessee on the relevant points and even without considering the submission of the assessee furnished in reply to the show-cause notice, the ld. Pr. CIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the AO. Pr. CIT, taking shelter in Explanation 2 to Section 263(1) of the Act, held that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue on the ground of lack of enquiry, which, in our view, is a general observation and no specific observation has been made in respect of any of the details or evidence furnished by the assessee and as to why the ld. Pr. CIT was not satisfied about such details/replies furnished by the assessee. Simply because the ld. Pr. CIT felt that the Assessing Officer should have made further enquiries on the same issue or that the case was to be examined from some another angle, the same, in our view, cannot be a valid ground to set aside the assessment order. If such an action is allowed by the ld. Pr. CIT in his revision jurisdiction then, there would be no end to litigation and there would not be any finality to the assessment. The Explanation 2 to Section 263(1) of the Act does not give unbridled powers to the ld. Pr. CIT to simply set aside the assessment order by saying that the Assessing Officer was required to make further enquiries without pointing out as to what was lacking in the enquiries made by the Assessing Officer and why the ld. Pr. CIT was not satisfied with the reply and evidence furnished by the assesse As decided in Usha Polychem India (P) Ltd 2023 (5) TMI 419 - CALCUTTA HIGH COURT where Principal Commissioner involved revision jurisdiction under section 263 in case of assessee on basis of an information received from Dy. Director (Investigation) regarding huge amount of unaccounted funds received in bank account of assessee, since a reassessment proceeding was already invoked and completed on basis of same information, impugned revision was unjustified - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the revision order passed u/s 263 of the Income Tax Act by the Principal Commissioner of Income Tax (Pr. CIT).

Summary:

Condonation of Delay:
The assessee's appeal was time-barred by 158 days. The delay was attributed to the sudden sickness and injury of the initially engaged Chartered Accountant (CA), Shri Pawan Kumar Agarwal, who failed to file the appeal in time. The assessee promptly approached a new counsel upon realizing the delay. The Tribunal, referencing the principles laid down by the Hon'ble Supreme Court in the case of *Collector Land Acquisition vs. Mst. Katiji & Others*, condoned the delay, emphasizing a liberal approach towards "sufficient cause" for delay to ensure substantial justice.

Validity of Revision Order u/s 263:
The assessee filed a return declaring an income of Rs. 46,26,890/-, which was accepted upon scrutiny u/s 143(3) and later reassessed u/s 147/143(3) without any changes. The Pr. CIT exercised revision jurisdiction u/s 263, citing discrepancies and the receipt of an accommodation entry from M/s Swiss Progressive Products Pvt. Ltd. amounting to Rs. 80 lakhs. The Pr. CIT deemed the assessment order erroneous and prejudicial to the interest of revenue, directing a fresh assessment.

The Tribunal noted that the Assessing Officer (AO) had conducted thorough inquiries during the reassessment proceedings, including issuing notices u/s 133(6) to the share subscribers and verifying the transactions. The Tribunal held that the Pr. CIT did not point out any specific errors in the AO's inquiries or the evidence provided by the assessee. The Tribunal emphasized that the Pr. CIT's revision jurisdiction u/s 263 requires concrete findings of error and prejudice to revenue, not merely a different opinion on the adequacy of the AO's inquiries.

The Tribunal cited various judgments, including the Hon'ble Supreme Court's decision in *Malabar Industrial Co. Ltd. vs. CIT*, which stipulates that an order cannot be deemed erroneous and prejudicial to the interest of revenue merely because the AO adopted one of the permissible views. The Tribunal concluded that the Pr. CIT's order lacked specific findings and was based on general observations, thus it was not sustainable.

Conclusion:
The Tribunal allowed the appeal, setting aside the Pr. CIT's revision order u/s 263, and emphasized the necessity of specific findings of error and prejudice to revenue for invoking revision jurisdiction.