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TMI Blog2021 (6) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and produced relevant evidence and offered explanation in pursuance of the notices issued and after considering those materials and explanation, the assessing officer has come to a certain conclusion, though it has not been mentioned explicitly in the assessment order. The ld. PCIT is not agreed with the conclusion reached by the assessing officer. CIT during the revisions proceedings, the assessee again furnished the details of commission payments and the services rendered by Karsan D Bhanushali and Deepak Dama. However, the ld. PCIT instead of giving his finding held that the claim needs to be verified. The Ld. PCIT has not deal with the explanation given by the assessee in the course of section 263 proceedings. Thus, in view of the above mentioned factual and legal discussions section 263 does not empower the ld. PCIT to take action on these facts to arrive at the conclusion that the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. Since, on the basis of the material on record and the said explanation and evidence was considered by the assessing officer and a particular view was taken, the mere fact that different vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings are incomplete in nature merely on the ground that the confirmations do not contain the details of cheque number, bank branch name address. The learned CIT has erred to hold that the confirmations are incomplete in nature without appreciating the supporting documents like Financials Bank statements of the loan parties. 5. The learned CIT has erred to treat the orders as erroneous and prejudicial to revenue on issue of advance given to Shri Amrutbhai I. Patel and to hold that the ITO has not examined the purpose for which the appellant has given advance of ₹ 50.00 Lakh to Shri. Amrutbhai I. Patel. 6. The learned CIT has erred to treat the orders as erroneous and prejudicial to revenue on issue of purchase of machinery claim of additional depreciation to held that the ITO has not examined the proof of the machinery having been purchased, installed and put to use by the appellant during the year. 7. The learned CIT has erred to treat the orders as erroneous and prejudicial to revenue issue of sundry creditors generally without specifying circumstances of each party and to hold that the ITO has not examined the issue of sundry creditors being paid in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, we are proceeding to deal with the facts qua ground No. 5 8 only. 3. Brief facts of the case are that assessee is partnership firm engaged in the business of Stone crushing selling of crushed stone, filed its return of income for assessment year 2014-15 on 28.09.2014 declaring taxable income of ₹ 81,38,470/-. The case was selected for scrutiny vide notice dated 23.09.2015, issued under section 143(2) of the Act for a limited scrutiny under Computer Assisted Scrutiny System (CASS). The assessment was completed under section 143(3) of the Act on 23.12.2016. The Assessing Officer (AO) while passing the assessment order, made addition in the Gross Profit by taking view that the Gross Profit for the post survey cannot be accepted blindly for fair justification of Gross Profit, the Gross Profit is estimated by adopting the Gross Profit Ratio as disclosed by partner of assessee in pre-survey period. The AO after issuing show cause notice and considering the submissions of the assessee on various issues made addition of 1.21 % of Gross Profit, being one half of pre-post survey period was added for any discrepancy to cope up any whole thereby added ₹ 3,17,113/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order erroneous as well as prejudicial to the interest of the Revenue. The Ld. PCIT while referring various decisions in his order setaside the assessment order and directed to pass fresh assessment order after giving opportunity to the assessee. Aggrieved by the order of Ld. PCIT the assessee has filed present appeal before this Tribunal. 5. We have heard the submission of Ld. Authorised Representative (AR) of the assessee and Ld. Senior Departmental Representative (Sr. DR) for the Revenue and perused the material available on record. 6. Ground No.5 relates to advances given to Amrutbhai I. Patel. The ld.AR of the assessee submits that Ld. PCIT in his finding has held that AO has not examined the purpose for which the assessee has given advance of ₹ 50 lakhs to Amrutbhai I. Patel. In the show cause notice, the Ld. PCIT himself has referred advance has been claimed to have been given for property. However, copy of agreement, date of advance and the present status has not been examined. The Ld.AR for the assessee submits that during the assessment, all details related to advance given to Amrutbhai I. Patel was provided to the AO vide reply/latter dated 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and confirmation of parties. The ld.AR for the assessee further submits that before the Ld. PCIT all details were again furnished in the revision proceedings including the services provided by both the parties. Nothing has been found wrong by the Ld. PCIT. There is no finding of Ld. PCIT against those documents furnished by the assessee. The Ld. PCIT concluded that commissions claim needs to be verified by calling further record. The ld.AR for the assessee submits that the AO has taken a sustainable view. The view taken by the AO cannot be substitute by the Ld. PCIT. Without giving any finding that order passed by AO is erroneous and prejudicial to the interest of the Revenue, the assessment order cannot be revised. To support his submission, the ld.AR of the assessee relied upon the same decisions which were relied on ground no.5. The ld. AR for the assessee also furnished the copy of the assessment order passed by assessing officer under section 143(3) rws 263 dated 27.12.2018. 8. The ld.AR further submits that the case was selected limited scrutiny under CASS. The CBDT in its circular no.20 of 2015 dated 29.12.2015 issued certain instruction to Assessing Officer s for confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT/CIT under this section can enhance or modify the assessment including direction for fresh assessment. The ld. CIT-DR further submitted that Explanation 2 was inserted w.e.f 01.06.2015 by Finance Bill by virtue of which the assessment order passed by AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue, if, in the opinion of Ld. PCIT or Ld.CIT, the order is passed without making enquiry or verification which should have been made, the order is passed allowing any relief without enquiry into the claim, the order has not been made in accordance with direction of instruction issued by CBDT or the order has not been passed in accordance with the decision which prejudicial to assessee, rendered by Jurisdictional High Court or Supreme Court in case of assessee or any other assessee. The Ld. CITDR submitted that the scope of Explanation 2, was examined by Mumbai Tribunal in Crompton Grieves Limited in ITA No.1994/Mum/2013 in order dated 01.02.2016 and held that Explanation 2 to 263 is declaratory and clarificatory in nature and inserted to provide clarity on the issue as to which order passed by the AO shall constitute erroneous and prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. On perusal of reply dated 21.09.2016 filed by assessee in response to the show cause notice dated 04.08.2016, copy of which is duly acknowledged by assessing officer, the assessee furnished the details of loan and advances to DGVCL and Amrutbhai I Patel. The assessee also mentioned in the reply that loan to Amrutbhai Patel was given as advance for property. The assessee further vide reply dated 25.11.2016 explained that advance given to Amrutbhai Patel was return back in the next year and furnished the copy of ledger account. On perusal of ledger account and bank statement of Amrutbhai Patel, we find that the advance of ₹ 50.00 lacks was return back to the assessee. Thus, the assessee has substantiated its contention, which we find in order. Accordingly the assessment order is not erroneous on this issue. 11. So far as issue with regard to commissions payments is concerned, there is no reference about this issue in the assessment order. The ld.AR for the assessee before us submitted all evidence and contribution of both the parties was provided to the assessing officer vide reply through letter dated 16.12.2016 along with the copy of sales register, Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous, he simply asked the ITO to re-examine the matter, which was not permissible. 13. The Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 832 held that a bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of the jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. 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 interests of the revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as prejudicial to the interests of the revenue. It was further emphatically stated that when an ITO adopts one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. 15. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., vs PCIT (2019) 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. (emphasis added by us). Further, Hon'ble Madras High Court in CIT Vs Mepco Industries Ltd., (2007) 207 CTR 462 (Madras) held that when two views are possible on an issue and it is not the case of the Commissioner that the view taken by Assessing Officer is not permissible in law, Commissioner cannot invoke his jurisdiction under section 263 of the Act. (emphasis added by us) 16. The Hon ble Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come to a certain conclusion, though it has not been mentioned explicitly in the assessment order. The ld. PCIT is not agreed with the conclusion reached by the assessing officer. 17. At the cost of repetition we may refer that before Ld. PCIT during the revisions proceedings, the assessee again furnished the details of commission payments and the services rendered by Karsan D Bhanushali and Deepak Dama. However, the ld. PCIT instead of giving his finding held that the claim needs to be verified. The Ld. PCIT has not deal with the explanation given by the assessee in the course of section 263 proceedings. Thus, in view of the above mentioned factual and legal discussions section 263 does not empower the ld. PCIT to take action on these facts to arrive at the conclusion that the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. Since, on the basis of the material on record and the said explanation and evidence was considered by the assessing officer and a particular view was taken, the mere fact that different view can be taken, should not be the basis for an action under section 263 and it cannot be held to be justified, we ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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