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TMI Blog2021 (11) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the case of PCIT vs., M/s. Brahma Centre Development Pvt. Ltd. [ 2021 (7) TMI 347 - DELHI HIGH COURT] we hold that the Ld. PCIT was not justified in assuming the jurisdiction under section 263 of the I.T. Act, 1961. We, therefore, set aside the Order of the Ld. PCIT and allow the grounds raised by the assessee on this issue. So far as various decisions relied on by the Ld. D.R. are concerned, we are of the considered opinion that these are distinguishable and not applicable to the facts of the present case especially when the case of the assessee which was selected for limited scrutiny was never converted to full scrutiny and the assessee had submitted all the details as called for by the A.O. from time to time for the reasons for which the case was selected for limited scrutiny. The grounds raised by the assessee are accordingly allowed. - ITA.No.534/Del./2021 - - - Dated:- 14-10-2021 - Shri R.K. Panda, Accountant Member And Shri Amit Shukla, Judicial Member For the Assessee : Shri Kapil Goel, Advocate And Shri Sandeep Goel, Advocate For the Revenue : Smt. Sushma Singh, CIT-DR ORDER PER R.K. PANDA, A.M. This appeal filed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd income derived from this investment, however, the A.O. has not examined the fair market value of investment. He, therefore, was of the opinion that the order passed by the A.O. on 15.12.2017 under section 143(3) of the I.T. Act, 1961 appears to be erroneous in so far as it is prejudicial to the interests of revenue. He, therefore, issued a show cause notice to the assessee to explain as to why the order passed by the A.O. should not be set aside. 2.4. It was submitted by the assessee that the A.O. after considering the various written submissions filed by the assessee from time to time has completed the assessment. Relying on various decisions, it was submitted that the order of the A.O. is neither erroneous nor prejudicial to the interest of Revenue as the parameters laid down by the Hon ble Supreme Court have never been crossed and no loss to the Revenue has ever caused due to the same. It was also submitted that the provisions of Section 56(2)(viia) of the I.T. Act, 1961 is grossly inapplicable to the transactions subjected for revisional powers under section 263 of the I.T. Act, 1961. The A.O. had already examined the valuation provided by the assessee company during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Act including section 263 of the Act and is further based on non existing, incorrect and erroneous facts that is wrong/incorrect assumption made by Ld PCIT in Show cause notice dated 15.05.2018 (also on 14.02.2020) and impugned order u/s 263 that no inquiry is made in assessment proceedings on issue of valuation of shares acquired by assessee is factually incorrect as glaring and manifest from assessee's reply in assessment dated 01.12.2017 (annexure 2 thereof) which despite being pointed clearly to Ld PCIT has been overlooked and glossed over for reasons best known to La' PCIT in impugned order passed u/s 263. Ergo impugned order passed u,/s 263 based on incorrect . erroneous and non existing fact deserves to be quashed. 2. That in the given facts order of Ld P CIT passed u/s 263 of the Act is passed without authority of law and is ultra vires to the provisions of the Act including section 263 of the Act as mandatory jurisdictional fact of underlying assessment order to be i) erroneous and ii) prejudicial to interest of revenue is no where established to be cogently present in instant case which is clear from seminal fact that shares acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of Ld PCITpassed u/s 263 of the Act is passed without authority of law and is ultra vires to the provisions of the Act including section 263 of the Act as impugned order is passed in biased/premeditated manner. 7. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal. 3.1. Learned Counsel for the Assessee referring to the assessment order submitted that the case was selected for limited scrutiny and was never converted to full scrutiny. Referring to the Office Note attached to the assessment order, he submitted that the case was selected for scrutiny for the following reasons : 1. Low income in comparison to very high investments. 2. Low income in comparison to high loans/ advances/investment in shares. 3. Large increase in investment in unlisted equities during the year. 3.2. He submitted that the A.O. has made due enquiries before completing the assessment and the Revenue has not proved anything to be wrong. Referring to the reply given before Ld. PCIT, copy of which is placed at Pages 6 and 8 of the paper book, he submitted that he has never stated that the reply given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin his domain which cannot be interdicted by a superior officer while exercising powers under Section 263 of the Act only on the ground that if he had appraised the said material, he would have come to a different conclusion. He accordingly submitted that the issue stands decided in favour of the assessee by the recent decision of the Hon ble Delhi High Court in the case of PCIT vs., M/s. Brahma Centre Development Pvt. Ltd., (supra) and, therefore, the order of the PCIT is to be set aside and the grounds raised by the assessee should be allowed. 4. The Ld. D.R. on the other hand heavily relied on the order of the Ld. PCIT. He submitted that in the instant case the Ld. PCIT has recorded a finding that it is a case of lack of enquiry for which he resorted to revisional powers as per the provisions of Section 263 of the Act. He submitted that Explanation-2 has been inserted in Section 263 of the I.T. Act by the Finance Act, 2015 w.e.f. 01.06.2015. He also relied on the following decisions : 1. Jalgaon People s Co-op Bank Ltd., vs., PCIT [2021] 127 taxmann.com 243 (Pune-Tribu.). 2. Vedanta Ltd., vs., CIT [2021] 124 taxmann.com 435 (Bombay). 3. Babulal S. Solanki vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... high investments. 2. Low income in comparison to high loans/ advances/investment in shares. 3. Large increase in investment in unlisted equities during the year. 5.1. We find the A.O. vide notice dated 142(1) dated 03.08.2017 has asked the assessee, inter alia, to furnish the following details : 8. Please furnish detail justification of low income in comparison to high loans/advances/ investments in shares and explain the reason thereof. 9. Please furnish detail and justification of low income in comparison to very high investments. 10. Please furnish details of large increase in investments in unlisted equities during the year. Also file details of funds deployed for such investment. 5.2. We find the assessee vide reply dated 01.12.2017 had filed the details of investment for the A.Y. 2015-2016 as per the Annexure. The summary sheet of list of investment appearing at Page No.27 reads as under : 5.3. We find before the Ld. PCIT the assessee had filed the date-wise chart of notice issued by the A.O. as well as the submission of the assessee to such notice as per Para- 2.2 of the reply dated 20.07.2020 which reads as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 Assessment Order u/s 143(3) passed 15-12-2017 This is the order sought to be brought under revisional jurisdiction 5.4. Further the submission of the Learned Counsel for the Assessee that limited scrutiny was never converted to full scrutiny could not be contradicted by the Ld. D.R. 5.5. We find a somewhat identical issue had come-up before the Hon ble Delhi High Court in the case of PCIT vs., M/s. Brahma Centre Development Pvt. Ltd., (supra). In that case the order under section 143(3) was passed on 31.01.2017 and 27.09.2017 for the A.Ys. 2012-13 and 2013- 14 wherein the A.O. accepted the interest earned by the assessee against the fixed deposits were adjusted i.e., deducted from the value of the inventory and not credited to the P L A/c. The Ld. PCIT noted that the Tax Auditor in the Report filed in Form No.3CD had observed that interest earned on fixed deposits pertain to Other Income and had not been credited to the P L A/c. The interest earned on fixed deposits in A.Y. 2012-13 was ₹ 9,47,04,585/- whereas in A.Y. 2013-14, the interest earned on fixed deposits was ₹ 4,32,91,517/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure 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 inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open. In Gabriel India Ltd.'s case (supra), law on this aspect was discussed in the following manner : . . . From a reading of sub-section (1) of section, it is clear that the power of suo motu revision can be exercised by the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. 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 Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. ****** We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation on that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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