2024 (12) TMI 1263 - AT - Income Tax

Revision u/s 263 - assessee has not shown the cash deposit in the bank account of the assessee and in PPF account of his minor son - HELD THAT - We are of the considered view that the assessing officer had made specific enquiries during the assessment proceedings to which specific reply was furnished by the assessee along with supporting documentary evidences and all such evidences were duly examine and considered by the assessing officer before completing the assessment proceedings u/s 143(3) of the Act. The power of revision can be exercised where no enquiry, as required under the law is done. Admittedly the AO asked the assessee to furnish the necessary details from time to time which were duly furnished by the assessee and after considering the same the assessing officer has completed the assessment. We find that in the case of CIT vs Sunbeam Auto 2009 (9) TMI 633 - DELHI HIGH COURT has held that the AO in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Whether there was application of mind before allowing the expenditure in question has to be seen. If there was any inquiry, even inadequate, that would not by itself give occasion to the CIT to pass orders u/s 263 of the Act, merely because he has different opinion in the matter. Hon ble Delhi High Court in the case of Anil Kumar Sharma 2010 (2) TMI 75 - DELHI HIGH COURT has held that there is a distinction between lack of enquiry and inadequate enquiry. If there was any enquiry, even inadequate, that would not by itself give occasion to the commissioner to pass orders u/s 263 of the Act. Considering the facts of the case in hand, in the light of the judicial decision discussed above, we set aside the assessment order of the PCIT and restore the assessment order of the assessing officer dated 21-12-2017 framed u/s 143(3) of the Act - Appeal of the assessee is allowed.

Issues Involved:

1. Jurisdiction under Section 263 of the Income Tax Act, 1961.
2. Erroneous and prejudicial nature of the assessment order.
3. Principles of natural justice and opportunity to the assessee.
4. Adequacy of inquiry conducted by the Assessing Officer.

Detailed Analysis:

1. Jurisdiction under Section 263 of the Income Tax Act, 1961:

The primary issue in this case revolves around the jurisdiction assumed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961. The assessee contended that the PCIT erred in invoking this jurisdiction, arguing that the assessment order dated 21-12-2017 was neither erroneous nor prejudicial to the interest of the revenue. The PCIT had assumed jurisdiction on the grounds that the Assessing Officer (AO) did not properly verify the source of cash deposits and certain share transactions, thus rendering the assessment order erroneous and prejudicial to the revenue.

2. Erroneous and Prejudicial Nature of the Assessment Order:

The PCIT's contention was that the AO failed to inquire about cash deposits amounting to Rs. 8,35,000/- and did not investigate the assessee's involvement in manipulated share transactions of penny stocks. The PCIT argued that this lack of inquiry made the assessment order erroneous and prejudicial to the revenue. However, the tribunal noted that the AO had conducted specific inquiries during the assessment proceedings, and the assessee had provided detailed replies and supporting documentary evidence. The tribunal emphasized that an order cannot be deemed erroneous unless it is not in accordance with the law, and mere differences in opinion between the PCIT and AO do not justify revision under Section 263.

3. Principles of Natural Justice and Opportunity to the Assessee:

The assessee argued that the order under Section 263 was passed without providing a reasonable and sufficient opportunity to present their case, thus violating the principles of natural justice. The tribunal acknowledged the importance of these principles and noted that the PCIT should have ensured that the assessee was given a fair chance to respond to the issues raised before passing the revision order.

4. Adequacy of Inquiry Conducted by the Assessing Officer:

The tribunal examined whether the AO had conducted adequate inquiries during the assessment proceedings. It was observed that the AO had indeed made inquiries and considered the evidence provided by the assessee. The tribunal referred to judicial precedents, highlighting that there is a distinction between "lack of inquiry" and "inadequate inquiry." If there was any inquiry, even if deemed inadequate by the PCIT, it would not justify invoking Section 263 merely because the PCIT held a different opinion. The tribunal cited the decision of the Hon'ble Delhi High Court, which held that the AO is not required to provide detailed reasons for each item in the assessment order, and a difference of opinion does not warrant revision.

Conclusion:

The tribunal concluded that the conditions for invoking Section 263 were not met, as the assessment order was not erroneous in law, and the AO had conducted necessary inquiries. Consequently, the tribunal set aside the order of the PCIT dated 30-03-2021 and restored the assessment order dated 21-12-2017. The appeal of the assessee was allowed, and the tribunal emphasized the need for material evidence to justify the exercise of revisionary powers under Section 263. The decision underscores the importance of adhering to legal standards and ensuring that revisions are based on substantive grounds rather than mere differences in opinion.

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