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TMI Blog2013 (7) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... in DG HOUSING PROJECTS LTD case [2012 (3) TMI 227 - DELHI HIGH COURT] has clearly made out distinction between the orders where no enquiry has been made by AO from the cases of inadequate enquiry. Therefore, where the AO had made an enquiry and taken a possible/ permissible view then the said order cannot be treated as erroneous and prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law - Since the order passed u/s 263 disallowed therefore, consequential disallowance made in the order passed in pursuant is not sustainable - appeals of the assessee allowed. - ITA No.3994/Mum/2005, ITA No. 687/Mum/ 2009 - - - Dated:- 30-4-2013 - Shri R. S. Syal, AM And Shri Vijay Pal Rao, JM,JJ. For the Appellant : Shri Dinesh B. Vyas For the Respondent : Shri Ashish Agrwal ORDER Per: Vijay Pal Rao (JM):- Both these appeals by the assessee pertain to Assessment Year 2000-2001. The appeal in ITA No. 3994/Mum/2005 is directed against the revision order dated 31.3.2005 of the Commissioner of Income Tax passed under section 263 of the Income Tax Act. Whereas the appeal in ITA No. 687/Mum/009 is directed against the order dated 29.10.2008 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. First we take up the appeal against the revision order passed under Section 263 of Income Tax Act. The Learned Senior Counsel of the assessee has submitted that in the original assessment order passed under Section 143 (3), the Assessing Officer has examined the issue of advance written off of Rs.50 lack and after considering the reply of the assessee the Assessing Officer accepted the said claim. In support of his contention, he has referred the notice issued by the AO dated 6th February 2003, in which query no. 6 was raised regarding furnishing the details of advance written off of Rs.50 lack. The learned Senior Counsel has referred the reply dated 26th February 2003 and submitted that in response to the query, the assessee has explained that the advance written off amounting to Rs.50 lack represents the advance paid to the Indusind Media Communications Limited. The advance was given for purchase of 126 episode of the Programme "Juke Box". However, the arrangement could not be proceeded with and the advance was unrecoverable. The Learned Senior Counsel has submitted that when the Assessing Officer after considering the reply to specific query, accepted the claim of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t similar issue has been considered and decided by this Tribunal by holding that from the details filed by the assessee it can be inferred that the Assessing Officer not only enquired into this issue but also got satisfied with the assessee's reply. Resorting to the provisions of section 263 in such situation could have been possible only on the CIT showing that the assessment order was erroneous on such aspect. Once the Assessing Officer took either perfectly correct or a possible view, the assessment order cannot be erroneous and prejudicial to the interests of Revenue. 5. On the other hand the Learned DR has relied upon the order of the Commissioner passed u/s 263 and submitted that the Commissioner has pointed out that the Assessing Officer has not conducted any enquiry on the issue and therefore, it is a case of lack of enquiry and non application of mind on the part of the Assessing Officer which rendered the assessment order erroneous so far as prejudicial to the interests of Revenue. 6. We have considered the rival submissions as well as relevant material on record. There is no dispute that the original assessment order was passed u/s 143(3) and subsequently, the CIT pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee submitted vide its reply dated 26.02.2003 as under. "6. The Advanced wire off amounting to amounting to Rs. 50 lacs represents advance paid to Indusind Media Communications Limited., In Centre, 49/50, MIDC, 12th Road, Andheri (East), Mumbai 400 093. The advance was given for purchase of 126 episodewith and the advance "Juke Box." However, the arrangement could not be proceeded with and the advance was unrecoverable. " 8. It is manifest from the query raised by the Assessing Officer and reply submitted by the assessee that the Assessing Officer conducted an enquiry and after considering the reply of the assessee has accepted the claim. Though in the assessment order passed u/s 143 (3) the AO has not discussed this issue however, once specific query was raised and the assessee submitted the reply and after considering the assessee's reply, the Assessing Officer has accepted the claim of the assessee then it cannot be said that there was no enquiry at all on this issue. There is no quarrel that a lack of enquiry by itself renders the order erroneous and prejudicial to the interest of revenue but there must be a distinction between a lack of enquiry and inadequate enquiry in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to show and state that the order of the Assessing Officer is erroneous. 9. The Hon'ble High Court has clearly made out distinction between the orders where no enquiry has been made by AO from the cases of inadequate enquiry. Therefore, where the Assessing Officer had made an enquiry and taken a possible/ permissible view then the said order cannot be treated as erroneous and prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. As it is evident from the facts as well as record that in the case of assessee the amount was given for purchase of episode from the vendor therefore, the said advance was given by the assessee in ordinary course of business as both the parties are in the same business. Once the amount given during the ordinary course of business becomes irrecoverable the claim of business loss is very much a possible allowable claim. Therefore, when the Assessing Officer after conducting an enquiry accepted the claim of the assessee and the decision of the Assessing Officer is one of the possible permissible views, then in the light of the settled proposition of the law the said order of the Assessing Officer cannot be te ..... 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