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2018 (6) TMI 1052 - HC - Income TaxRevision u/s 263 - Whether the order of AO is erroneous nor prejudicial to the interest of the revenue? - Held that - The scope of the Commissioner s power of revision u/s 263 would be applicable, when the AO conducts no inquiry or improper inquiries or does not apply his mind to the legal issues arising out of the material on record - and if the AO has conducted proper inquiries and come to legal conclusions which are plausible, the Commissioner would not be justified in invoking revisional jurisdiction directing further inquiries or taking a different view AO had examined two issues - with respect to introduction of the capital, the assessee had pointed out that he was an NRI for over two years and he had made foreign remittances over a period of time. With respect to the unsecured loan of ₹ 3.87 crores received from his brother also, the assessee had provided necessary details which were called upon by the AO - thus for the inquiries carried out by the AO and the detailed answers given by the assessee - hence AO have carried out such detailed inquiries - thus it was not open for the Commissioner to thereafter reopen the issues on mere apprehension and surmises - Without any material without any basis, the CIT could not have remanded the proceedings to the AO to carry out further inquiries in order to ascertain whether the remittances were genuine or were in the nature of hawala transactions - His principle thrust was to the effect that assessee did not produce the precise bank details of the foreign remittances even before him. There is nothing on the record to suggest that he called upon the assessee to do so and the assessee failed or refused to do so - thus we find no error in the view of the Tribunal reversing view of the Commissioner - Decided in favor of assessee.
Issues Involved:
1. Whether the Appellate Tribunal was justified in holding that the order of the Assessing Officer was neither erroneous nor prejudicial to the interest of the Revenue. 2. Whether the Assessing Officer conducted a full and complete inquiry regarding the introduction of fresh capital and unsecured loans. Detailed Analysis: 1. Justification of the Appellate Tribunal's Decision: The core issue was whether the Appellate Tribunal was justified in law in holding that the Assessing Officer's order was neither erroneous nor prejudicial to the interest of the Revenue. The Tribunal concluded that the necessary material was on record, and the Assessing Officer had considered this material before making a decision. The Tribunal held that the Commissioner of Income Tax (CIT) had wrongly invoked powers under section 263 of the Income Tax Act, 1961, as there was no basis for revising the assessment order. The Tribunal emphasized that the CIT could not exercise revisional powers merely to take a different view when the Assessing Officer had already made a plausible legal conclusion after conducting proper inquiries. 2. Inquiry by the Assessing Officer: The respondent-assessee was subjected to block assessment proceedings for the period 01.04.1996 to 25.07.2002. The two main issues were the introduction of ? 82.16 lacs in the capital account and the receipt of ? 3.78 crores as a loan from the assessee's brother. The Assessing Officer had called upon the assessee to explain these amounts, and the assessee provided multiple replies and documents. The Assessing Officer accepted the assessee's contentions without detailed discussion in the assessment order, implying satisfaction with the explanations provided. The CIT, however, believed that the Assessing Officer's failure to make additions on these two issues rendered the assessment order erroneous and prejudicial to the Revenue's interest. The CIT issued a notice under section 263 of the Act, arguing that the Assessing Officer had not carried out proper inquiries into the transactions. The CIT remitted the matter back to the Assessing Officer for further inquiries. Tribunal's Findings: The Tribunal found that the Assessing Officer had indeed conducted detailed inquiries. The assessee had provided comprehensive replies and supporting documents, including balance sheets, bank statements, and confirmations from the loan provider. The Tribunal noted that the CIT's concerns were speculative and not based on any concrete evidence. The Tribunal concluded that the CIT's order directing further inquiries was unwarranted, as the Assessing Officer had already made a reasoned decision based on the available material. Legal Precedents: The judgment referenced several legal precedents to support its conclusions: - Sunbeam Auto Ltd. (332 ITR 167): Distinguished between "lack of inquiry" and "inadequate inquiry," emphasizing that mere inadequacy of inquiry does not justify revisional action under section 263. - DG Housing Projects Ltd. (343 ITR 329): Stated that a finding of an erroneous order is necessary for the exercise of jurisdiction under section 263. - Jawahar Bhattacharjee (341 ITR 434): Held that failure to conduct normal inquiries or apply mind to relevant material warrants revisional jurisdiction. - Arvind Jewellers (259 ITR 502): Clarified that section 263 cannot be invoked to correct every mistake or error, only those that are erroneous and prejudicial to the Revenue's interest. Conclusion: The High Court upheld the Tribunal's decision, concluding that the Assessing Officer had conducted proper inquiries and made plausible legal conclusions. The CIT's revisional powers under section 263 were not justified in this case. The appeal by the Revenue was dismissed, and the question was answered in favor of the assessee.
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