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TMI Blog2021 (7) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order erroneous causing prejudice to the interest of revenue. If the CIT simply declares an assessment order falling within the ken of section 263 just on his whims without any specific foundation for such a belief, the revision will not pass the test of judicial scrutiny. Simply put, in no situation - where the AO conducts proper enquiry; reply is filed by the assessee; and the claim of assessee is accepted can the CIT invoke section 263 without indicating lacunas in the AO s enquiry or fallacy either in the assessee s reply or in the action of the AO in accepting such reply leading to under assessment of income, thereby causing prejudice to the interest of revenue. Adverting to the facts of extant case, we find that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions of the assessment order being erroneous and prejudicial to the interest of revenue. As such, we are satisfied that the ld. CIT was not justified in setting aside the assessment order. - Decided in favour of assessee. - ITA No.1224/PUN/2017 - - - Dated:- 6-7-2021 - Shri R.S. Syal, Vice President And Shri Partha Sarathi Chaudhury, Judicial Member For the Assessee : Mrs. Deepa Khare For the Revenue : Shri Shivraj B. Morey ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order dated 24.03.2017 passed by the ld. CIT u/s 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) in relation to the A.Y. 2012-13. 2. Succinctly, the factual matrix of the case is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. 3. We have heard both the sides through Virtual Court and gone through the relevant material on record. The ld. CIT held the assessment order to be erroneous and prejudicial to the interest of the revenue as, in his opinion, the AO did not conduct due and proper enquiry on the five items. We espouse all the five items for consideration ad seriatim. 4. The first item is Trade payable standing at ₹ 12.16 crores. The assessee s reply - as reproduced in the impugned order - categorically elaborates the query made by the AO in his notice u/s 142(1) on this score and the details furnished by it during the course of assessment proceedings. The second item is Advances receivable from customers `Short term borrowings . The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d debts and also the policy under which the bad debts were written off were given to the AO during the course of the assessment proceedings. 5. From the above discussion, it is overt that all the five points raised by the ld. CIT for revising the assessment order were duly enquired into by the AO and the assessee also furnished its reply to each one of them. 6. Broadly there can be three situations justifying the revisionary exercise. First, where the AO passes an order without making enquiry on certain point(s), which are vital for assessment. The mere fact of not making enquiry justifies revision. 7. Second, where the AO makes/causes enquiry on certain point(s) but the assessee does not reply to the same and assessment order is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically demonstrate the existence of the twin conditions for a valid invocation of section 263. The CIT cannot simply say that the AO has not verified the relevant issues. He will have to pin point where the assessment order lacked and how the AO went wrong on facts or in law. The second way is where the AO does not discuss the issue in the assessment order and accepts the claim of the assessee without making any addition on that score. Ordinarily, no discussion is warranted in an assessment order on the points on which the AO gets satisfied and chooses not to make any addition. It is for the obvious reason that an assessment entails making enquiries on all the items of income, expenses, assets and liabilities of an assessee. Expecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using prejudice to the interest of revenue. If the CIT simply declares an assessment order falling within the ken of section 263 just on his whims without any specific foundation for such a belief, the revision will not pass the test of judicial scrutiny. Simply put, in no situation - where the AO conducts proper enquiry; reply is filed by the assessee; and the claim of assessee is accepted can the CIT invoke section 263 without indicating lacunas in the AO s enquiry or fallacy either in the assessee s reply or in the action of the AO in accepting such reply leading to under assessment of income, thereby causing prejudice to the interest of revenue. 9. Adverting to the facts of extant case, we find that it falls in the afore discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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