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TMI Blog2016 (9) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... er without recording a contrary finding. This will be contrary to Section 263 of the Act. Therefore, in view of the factual matrix of the case and respectfully following the ratio of the various judicial pronouncements as discussed above, we are of the considered opinion that the impugned action of the Ld. CIT u/s 263 of the Act was patently illegal and is liable to be quashed. The proceedings u/s 263 of the Act are accordingly quashed. - ITA No.-3024/Del/2013 - - - Dated:- 28-7-2016 - SHRI G.D. AGRAWAL, HON BLE VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee : Sh. Salil Kapoor, Adv., Ms. Ananya Kapoor, Adv. For The Revenue : Sh. Ravi Jain, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: This appeal has been preferred by the assessee against the order dated 13/03/2013 passed by the Ld. Commissioner of Income Tax (Central)-III, New Delhi for AY 2007-08. 2. The facts of the case are that the original return of income was filed on 31/07/2007 declaring an income of ₹ 8,35,640/-. Subsequently, action u/s 132 of the Income Tax Act, 1961 was taken in the Dawat Group of Cases including the assessee on 10/02/2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade any enquiry on the issue of applicability of the provisions of Sec. 2(22)(e) of the Act and hence it was a clear case of lack of enquiry and that the failure on the part of the AO to make the necessary enquiries had made the assessment order both erroneous as well as prejudicial to the interest of the Revenue. The issue was restored to the file of the AO to decide the issue afresh. 3. Aggrieved the assessee is now in appeal before the ITAT and has raised the following grounds of appeal: 1. That the notice issued under section 263 of the Income Tax Act, 1961 and the order passed under that section are illegal, bad in law and without jurisdiction. 2. That the order under section 263 of the Income Tax Act, 1961 is bad in law and without jurisdiction as the CIT has failed to appreciate that no incriminating material was found during the course of search as such the Assessing Officer has no jurisdiction to add amount of ₹ 1,74,000/- as deemed dividend under section 2(22)(e) while filing assessment under section 153A. 3. That the Commission of Income Tax has in view of the facts and circumstances of the case, has erred in law and on facts in holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the view taken by the Assessing Officer is a possible view and as such there is no legal infirmity in the order and is beyond the purview of section 263. 11. That all the facts and circumstances of the case and the material available on record have not been properly considered by the Commissioner of Income Tax while passing the order under section 263. The impugned order is illegal, arbitrary and bad in law. 12. That the appellant craves leave to add, amend, alter and / or modify the grounds of appeal of the said appeal. 4. The Ld. AR submitted that the special audit report was obtained in the case of LT Foods Ltd. and not in the case of the assessee and hence the Ld. CIT was wrong in concluding that it was ignored by the AO since it was never a part of the record of the assessee. It was also submitted that the report of the special auditor was received much after the completion of the assessment of the assessee and hence it was impossible for the AO to have considered the same. The Ld. AR also submitted that the amount given by a Company for the safe custody of cash to its Directors or senior employees is neither a loan nor an advance so as to come with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 7. It will be expedient to reiterate the governing principles laid down by the Hon ble Courts with regard to the exercise of power by the Commissioner under the provisions of Section 263 of the Act. The power of suo moto revision exercisable by the Commissioner is undoubtedly supervisory in nature. The opening words of Section 263 empower the Commissioner to call for and examine the record of any proceedings under the Act. A bare reading of Section 263 also makes it clear that the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the revenue. If one of them is absent - if the order of the Assessing Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but it is prejudicial to the revenue - recourse cannot be had to Section 263(1) of the Act [See Malabar Industrial Co. Ltd. vs. CIT, (2000) 243 ITR 83 (SC)]. 8. As regards the scope and ambit of the expression erroneous , a Division Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes to the conclusion that the earlier finding of the AO was erroneous and prejudicial to the interest of the revenue and that a fresh determination of the case is warranted. There must be material to justify the Commissioner's finding that the order of the assessment was erroneous insofar as it was prejudicial to the interest of the revenue. 10. It is also trite that there is a fine, though subtle distinction, between lack of inquiry and inadequate inquiry . It is only in cases of lack of inquiry that the Commissioner is empowered to exercise his revisional powers by calling for and examining the records of any proceedings under the Act and passing orders thereon. In Gabriel India Ltd. (supra), it was expressly observed:- The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income- tax Officer was not only erroneous but was prejudicial to the interest of the revenue. Thus, while the AO is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo moto revisional powers unless supported by adequate reasons for doing so. 12. The Hon ble Madras High Court held in the case of CIT v Valliammal (D.) (1998) 230 ITR 695 (Mad) that assessment order made after considering all fact and information cannot be revised. Where the assessee had furnished the requisite information and the Assessing Officer had completed the assessment after considering and the facts but the commissioner revised the assessment order on the ground that the Assessing Officer had not made proper enquiries, the Tribunal was held justified in reversing the order of the commissioner and restoring that of the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income- tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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