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TMI Blog2019 (12) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO is neither erroneous nor prejudicial to the interest of Revenue, therefore, we quash the order passed by ld PCIT under section 263 of the Act. - ITA No.791/Kol /2019 - - - Dated:- 18-12-2019 - Shri A. T. Varkey, JM And Dr. A.L. Saini, AM For the Appellant : Shri K. M. Roy, FCA For the Revenue : Dr. P. K. Srihari, CIT(DR) ORDER PER DR. A. L. SAINI, AM: The captioned appeal filed by the assessee, pertaining to Assessment Year 2014-15, is directed against the order passed by ld. Principal Commissioner of Income Tax-9, Kolkata, under section 263 of the Act, dated 27.03.2019. 2. By way of this appeal, the assessee has challenged the correctness of the order passed by the ld Principal Commissioner of Income Tax ( in short, PCIT ), under section 263 of the Act, dated 27.03.2019. The grounds of appeal raised by the assessee are as follows: 1. That the order is unsustainable in the eyes of law as A.O has conducted necessary enquiry and has adopted one of the possible course of action. 3. The facts of the case which can be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borty amounting ₹ 16,57,666/- was raised during assessment proceedings and to which assessee duly complied. 6. However, the ld. Pr. CIT rejected the contention of the assessee and held that it is a fit case for invoking provisions u/s.263 of the I.T. Act. Thus, ld PCIT set aside the order of AO and restored back to the file of the Assessing Officer for making a fresh assessment and examine the followings: (a) to make verification of the genuineness of the claim of labour charges of ₹ 26,25,000/-, and (b) to inquire into the issue of introduction of capital by one of the partners, Smt. Manushree Chakraborty. 7. Aggrieved by the order of the Pr. CIT, the assessee is in appeal before us. 8. The ld. Counsel for the assessee submitted that assessee has furnished details of labour charges incurred for the purpose of business and sufficient evidences regarding capital introduced by the partner. During the scrutiny assessment, the AO issued notice under section 143(1) of the Act and in response to said notice, the assessee submitted to AO the documents and evidences which were required for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . 11. Taking note of the aforesaid dictum of law laid down by the Hon ble Apex Court, let us examine whether order passed by the AO is erroneous and prejudicial to the interest of Revenue. The ld Counsel submitted before us order sheet of the assessing officer which was maintained by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Manushree Chakraborty, we note that as per order sheet of the Assessing Officer, the assessee`s AR appeared before the Assessing Officer and explained the introduction of capital with relevant evidences, Vide order sheet dated 14.06.2016. The assessee s AR also produced the partnership deed and Balance Sheet before the Assessing Officer and discussed the capital introduced by Smt. Manushree Chakraborty (one of the partners) and having discussed the matter in detail, the Assessing Officer passed the order. Therefore, order passed by the Assessing Officer on this count cannot be said that there was a lack of enquiry on his part. The Assessing Officer examined the capital introduced by partner and labour charges and having examined the relevant documents, he came to the conclusion that capital introduced by the partner is genuine, therefore it is not a case of lack of enquiry on the part of the Assessing Officer. Based on the factual position narrated above, we are of the view that Assessing Officer has scrutinized every aspect of capital introduced by partner and labour charges by conducting ten hearings, therefore the allegation of the ld DR that AO has not examined the capital in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of scrutiny assessment u/s. 143(3) is to confirm that the taxpayer has not understated the income or has not computed excessive loss or had not underpaid the tax in any manner. To confirm the above, the Assessing officer carried out a detailed scrutiny of the return of income, as deemed fit, and satisfied himself regarding various claims, deductions etc. made by an assessee in the return of income. The Ld. PCIT has subjected the assessment order to proceeding u/s. 263 of the Act mainly on the ground that the order passed by the A.O. amounts to inadequate scrutiny of labour charges and capital introduced by partner. After conducting ten hearings and discussing the matters with the A.R. on several dates and receiving requisite information/evidences in response to notices u/s.142( 1) of the Act, the Ld. A.O. was satisfied on his own perceptions about the correctness or otherwise of the capital introduced and labour charges. Therefore, the exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Ld. A.O. by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s. 143(3) of the Act. Therefore, certainly it is not a case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Assessing officer vis-a-vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue. 9. Viewed in this perspective, and having noted that the Commissioner has subjected the assessment order mainly on the ground that the Assessing officer did not reach the right conclusions as a result of his enquiry, the impugned revision order is indeed unsustainable in law. It is not a case in which adequate enquiries has not been carried out. At the cost of repetition, we state that after thorough examinations of the details and documents and explanations submitted by the Ld. A.R. of the assessee (in respect of labour charges and capital introduced), as per requisitions sought by the A.O. and as deemed fit for computing the true taxable income, the assessment was completed u/s. 143(3) of the Act, therefore, it is not a case of inadequate scrutiny hence the order passed by the AO is neither erroneous nor prejudicial to the interest of Revenue, therefore, we quash the order passed by ld PCIT under section 263 of the Act. 16. In the result, the appeal filed by the assessee is allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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