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2017 (6) TMI 870 - AT - Income TaxRevision u/s 263 - no proper enquiry conducted by AO with respect to the documents found during the course of search at the premises of M/s ABL - lack of inquiry or inadequate inquiry - Held that - A perusal of the documents on record reveal that the questionnaire was issued to the assessee during the course of assessment proceedings for the years 2005-06 to 2011-12. The first questionnaire was issued to the assessee by the Assessing Officer on 27.11.2012. The assessee gave detailed reply to the questionnaire on 11.12.2012 and 14.12.2012. The reply of the assessee is at page No. 6 to 10 of the paper book. A perusal of the reply reveals that questions were raised by the Assessing Officer with respect to document found/ impounded during the course of search at the premises of M/s ABL. Thereafter, another questionnaire was sent to the assessee by the Assessing Officer on 28.02.2013. The assessee vide communication dated 06.03.2013 gave detailed reply to the Assessing Officer answering the queries raised by the Assessing Officer. In the second questionnaire, the Assessing Officer had raised further queries with respect to the documents seized from the premises of M/s ABL. Thus, from the documents on record, it is evident that Assessing Officer had made enquiries during course of assessment proceedings with respect to the document seized/ impounded from the premises of M/s ABL. We find merit in the submissions of the ld. AR that it is not a case of no enquiry . Undisputedly, the present case is not the one which suffers from lack of enquiry . At the best the present case can be one of those where there was inadequate enquiry . Under such circumstances, the Commissioner of Income Tax cannot exercise his revisional jurisdiction. - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under section 263 of the Income Tax Act, 1961. 2. Adequacy of enquiries conducted by the Assessing Officer (AO). 3. Scope of the Commissioner of Income Tax's (CIT) revisional jurisdiction. 4. Legitimacy of remitting the case back to the AO for further enquiries. Issue-Wise Detailed Analysis: 1. Validity of the order passed under section 263 of the Income Tax Act, 1961: The assessee appealed against the CIT's order dated 27.03.2015, which set aside the assessment orders for the years 2009-10 to 2011-12, passed under sections 143(3) read with 153C and 143(3) of the Act. The CIT invoked revisional jurisdiction under section 263, claiming the assessment orders were erroneous and prejudicial to the interest of Revenue. The CIT directed the AO to frame assessments after making proper enquiries. The assessee argued that the CIT did not have a firm opinion on the escapement of income and that the CIT's directions led to a roving and fishing enquiry. 2. Adequacy of enquiries conducted by the Assessing Officer (AO): The assessee contended that the AO had made detailed enquiries during the assessment proceedings, as evidenced by the questionnaires issued on 28.02.2013 and the responses provided by the assessee. The AO had specifically asked about the documents seized during the search at M/s ABL's premises, and the assessee had provided detailed replies. The assessee argued that it was not a case of "no enquiry" but, at best, a case of "inadequate enquiry." The CIT cannot invoke revisional jurisdiction merely because the AO did not pass an elaborate order detailing the enquiries made. 3. Scope of the Commissioner of Income Tax's (CIT) revisional jurisdiction: The CIT can invoke section 263 if the assessment order is erroneous and prejudicial to the interest of Revenue. However, if the AO has taken one of the possible views after conducting enquiries, the CIT cannot direct the AO to re-conduct the enquiry in a particular manner. The Hon'ble Bombay High Court in CIT V/s. Nirav Modi held that if queries were raised and responded to during assessment proceedings, the absence of mention in the assessment order does not imply non-application of mind by the AO. The Tribunal found that the AO had made enquiries, and the CIT's direction to re-examine the same material was not justified. 4. Legitimacy of remitting the case back to the AO for further enquiries: The assessee argued that the CIT had enlarged the scope of enquiry beyond the reasons given in the show cause notice under section 263. The CIT directed the AO to conduct further enquiries, which the assessee claimed was not permissible. The Tribunal agreed, stating that the CIT cannot direct the AO to conduct roving and fishing enquiries. The Tribunal also noted that the AO had issued two questionnaires and received detailed replies, indicating that the AO had applied his mind and conducted enquiries. Conclusion: The Tribunal concluded that the AO had made enquiries during the assessment proceedings, and the CIT's invocation of section 263 was not justified. The Tribunal set aside the impugned order and allowed the appeals of the assessee, emphasizing that revisional jurisdiction cannot be exercised for inadequate enquiry when the AO has applied his mind and taken a possible view. The Tribunal's decision was pronounced on 17th April 2017.
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