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TMI Blog2021 (2) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... to direct a re-enquiry as he is of a different view. We are of the considered opinion that the assessment order dated 26.12.2018 is neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee. - N. K. Billaiya , Member ( A ) And Amit Shukla , Member ( J ) For the Appellant : Rakesh Gupta and Kamal Piyush , Advs For the Respondents : Kipgen , CIT-DR ORDER Per N. K. Billaiya, Accountant Member This appeal by the assessee is preferred against the order of the Principal Commissioner of Income Tax [Appeals], Delhi - 7 dated 31.03.2021 framed u/s. 263 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] pertaining to Assessment Year 2016-17. 2. The sum and substance of the grievance of the assessee is that the Ld. PCIT erred in assuming jurisdiction u/s. 263 of the Act and further erred in holding the assessment and rectification order passed u/s. 143(3) and 154/143(3) of the Act as erroneous and prejudicial to the interest of the Revenue. 3. Representatives were heard at length. Case records carefully perused. 4. Briefly stated, the facts of the case are that for the year under consideration, the assessee filed its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d furnished similar details. Such details are exhibited at pages 365 to 441 of the paper book. 12. The aforementioned factual matrix clearly establish that specific queries were raised by the Assessing Officer during the course of assessment proceedings, to which specific replies were filed by the assessee/loan creditors alongwith complete documents in support of the transactions. 13. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83, has laid down the following ratio: A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised during the course of scrutiny by the AO, which was answered to the satisfaction of the AO, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the AO called for interference and revision. In the instant case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were I.T. assessees and the unsecured loan taken from M/s. Stutee Chit Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. 64. Since in the instant case the A.O. after considering the various submissions made by the assessee from time to time and has taken a possible view, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer 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 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. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, 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 and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Hence the provisions of section 263 of the Act were not applicable to the instant case and, therefore, the commissioner was not justified in setting aside the assessment order. 17. In our considered opinion, for exercising power u/s. 263 of the Act, there should be material on record which would satisfy the ld. PCIT in a prima facie manner that the order is not only prejudicial to the interest of the Revenue but also erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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