2021 (10) TMI 404 - AT - Income Tax

Revision u/s 263 - assessment order passed by AO u/s 153A/143(3) sought to be set aside for reframing the assessment in terms of supervisory jurisdiction - Bogus purchases - HELD THAT - PCIT himself has not alleged a lack of inquiry in the matter; but has averred that adequate inquires were not carried out in the matter. We do not understand the purport of such observations. PCIT has not spelt out as to what inquiry was lacking in the action of the AO. PCIT himself has not done any minimal inquiry to ascertain the alleged error of inadequacy in inquiries. It appears that the PCIT has merely directed the AO to make further inquiries to find out whether some error has been committed or not. In our view, before giving such general directions, it was incumbent upon the PCIT to show that the view taken by the AO is wholly unsustainable in law - revisional powers cannot be exercised in a perfunctory manner for directing some further and fuller inquiry made to merely find out if the earlier view taken is erroneous or not. In the instant case, an inquiry has been carried out and defense of the assessee was affirmed by the Assessing Officer as well as the JCIT. We thus see no scope for review for the purposes of making some unspelt inadequate inquiry . Thus, the ingredients for issuing show-cause notice under Section 263 of the Act are found absent - revisional order passed under Section 263 of the Act is bad in law - Decided in favour of assessee.

Summary

Issues:
1. Revisional order passed by PCIT under Section 263 of the Income Tax Act, 1961 challenged by the assessee.
2. Allegation of non-examination of arranging bogus purchase bills by the assessee.
3. Jurisdiction of PCIT to set aside the assessment order passed by the AO.
4. Adequacy of inquiries made by the Assessing Officer.
5. Validity of the revisional order under Section 263 of the Act.

Analysis:
1. The appeal was filed by the assessee against the revisional order of the PCIT under Section 263 of the Income Tax Act, challenging the direction to the AO to pass the assessment order de novo for AY 2012-13. The PCIT found the assessment order erroneous and prejudicial to revenue due to non-examination of bogus purchase bills. The assessee contended that the PCIT's assumption of jurisdiction was unfounded as the assessment order was based on proper inquiries.

2. The PCIT invoked revisional powers under Section 263 based on alleged non-examination of bogus purchase bills by the assessee. The PCIT directed the AO to reframe the assessment after further inquiries. The assessee defended its position, stating that the Assessing Officer had properly examined the issue, and the reopening of assessment was unwarranted. The assessee argued that the assessment was not erroneous as the Assessing Officer had considered all relevant facts.

3. The Tribunal considered the submissions and evidence presented by both sides. It was noted that the Assessing Officer had conducted inquiries into the transactions with the supplier company and was satisfied with the genuineness of the purchases. The PCIT's show-cause notice lacked specific details on the alleged inadequacy of inquiries. The Tribunal found that the PCIT had not demonstrated any unsustainable view taken by the Assessing Officer, leading to the conclusion that the revisional order lacked legal basis.

4. The Tribunal concluded that the PCIT's order under Section 263 was unjustified as the Assessing Officer and JCIT had already examined the issue and affirmed the assessee's defense. The Tribunal emphasized that revisional powers should not be exercised in a perfunctory manner and quashed the revisional order. The appeal of the assessee was allowed, and the revisional order was set aside.

5. The Tribunal's decision highlighted the importance of proper inquiries by tax authorities and the necessity for revisional powers to be exercised judiciously. The judgment underscored the requirement for revisional orders to be based on legal grounds and supported by substantial evidence of errors or inadequacies in the original assessment process.