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TMI Blog2021 (11) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,54,390/- and Rs. 9,91,49,440/- respectfully for the two assessment years involved and the assessment was completed u/s 153A read with Section 143(3) of the Act for assessment year 2016-17 at the returned income and u/s 143(3) for assessment year 2017-08 at an income of Rs. 10,06,43,151/-. Thereafter, the ld. PCIT noted that there was mis-match in the amounts reflected against certain items in the financial statements of the assessee and that reflected in the details furnished by the assessee during assessment proceedings, for the two years involved. The mis-match related to the following : Assessment year 2016-17 Nature As reflected in Profit & Loss Account/Balance Sheet As reflected in detail filed during assessment Difference --------- --------------------------- ----------------- --------------- (Rs.) (Rs.) (Rs.) Sales 354,89,20,000/- (inclusive of Excise Duty) 360,32,95,532/- (list of sales > 5lacs) 5,77,66,719/- Trade Receivables 1278.77 lacs 2159.08 lacs 880.31 lacs Assessment year 2017-18 Nature As reflected in Profit & Loss Account/Balance Sheet As reflected in detail filed during assessment Difference --------- ---------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vis details filed in these regards during the assessment proceedings differ a lot and a reconciliation of these details are called for ascertaining that whether these details are inclusive/exclusive of indirect taxes, etc.. Details of sales return have to be also verified with the concerned parties' ledger accounts. Receivables/payables with respect to the capital goods, advances received from buyers, advances paid to suppliers, etc. as submitted above also need in-depth verifications and reconciliations . The assessee's submission itself demonstrates that various requisite verifications, enquiries, reconciliations, etc as required to be done have not been done by the AO. The assessment record shows that the accounting treatments of Sales and Receivables/payables have not been examined and verified by the AO. Had it been done during the assessment proceedings, such details would have been filed before the AO. The submission of the assessee filed before me needs verification after consequential enquiry, If any, on the above mentioned issues. According to me, the proper submission would have been done during the assessment proceedings clarifying the above anomalies. Thus, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous. That without doing so and setting aside the order to the AO asking him to make enquiries was not within the purview of Section 263 of the Act. The ld. DR on the other hand relied on the order of the Pr. CIT. 5. We have heard both the parties, gone through the documents referred to before us and have also carefully gone through the order of the Ld.PCIT . 6. We are in agreement with the Ld.Counsel for the assessee that there was no finding of error by the Pr.CIT in the orders of the AO for both the years and the revisionary jurisdiction exercised was not in accordance with law. 7. The assessee we find had explained that there was no error as noted by the Ld.Pr.CIT and had even furnished a reconciliation to substantiate his explanation but the Ld.Pr.CIT simply restored the matter to the AO to examine the assessee's explanation, without examining and inquiring into the assessee's explanation himself. The Ld.Pr.CIT therefore has not arrived at a finding of error but has in fact restored it to the AO to arrive at the finding. 8. In both the present cases, the error noted by the Pr. CIT was that of the AO having not inquired into the difference in the amount of sales, trade rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of the Act, of a clear finding of error in the order of the AO by the Ld.PCIT is completely lacking in the present cases. 13. It is a settled proposition of law that for assuming revisionary jurisdiction u/s 263 of the Act there has to be a clear finding of error by the PCIT/CIT in the order so sought to be revised. And this finding has to be arrived at after conducting necessary inquiry if required. In cases of inadequate inquiry there has to be a finding that the inquiry made was erroneous. And this can happen only when the PCIT/CIT himself conducts an inquiry and verification and establishes therefrom the error made by the AO, making his order unsustainable in law. The finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further inquiries without a finding that the order is erroneous. Various courts have interpreted the provisions of section 263 as above, to which our attention was drawn by the Ld.Counsel for the assessee as under: CIT vs Goetze(India) Ltd.361 ITR 505 "This distinction must be kept in mind by the CIT while exercising jurisdiction under Section 263 of the Act and in the absence of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by Ld Pr. CIT, thus prejudicing the independent application of mind of the AO. Definitely, that could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd Vs. ITO (1977)(106 ITR 1) that there must be a point of finality in all legal proceedings and the stale issues should not be reactivitated beyond a particular stage and the laps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no fresh loan. Similarly, the other replies of the assessee filed during the course of assessment and in response to notice u/s 263 of the Act have been totally ignored. No enquiry has been made by the ld. PCIT. It was incumbent for the ld. PCIT to make some minimum independent enquiry to reach to the conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue. The reliance is rightly placed on the decisions of Delhi High Court in ld. PCIT v. Delhi Airport Metro Express Pvt. Ltd. (supra) and Income Tax Officer v. DG Housing Projects Limited (supra). The Hon'ble Delhi High Court in Delhi Airport Metro Express Pvt. Ltd. (supra) has made the following observation: "10. For the purposes of exercising jurisdiction under Section 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interests of Revenue had to be preceded by some minimal inquiry. In fact, if the ld. PCIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the LD. PCIT to conduct such inquiry." 31. The ld PCIT has not referred to Explanation 2 of section 263 of the Act which has been inserted with effect from 01.06 ..... 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