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TMI Blog2022 (6) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had provided the aforesaid information/documents during the assessment proceedings, however, but the same are not sufficient to enable the AO to verify the genuineness of sundry creditors. Similarly, the statement of Reconciliation of 26AS filed by the Appellant is also not sufficient to show that the contract fee has been offered to tax correctly. Clearly, the Assessing Officer has not undertaken necessary inquires/verification during assessment proceedings. The Assessment Order is also silent on these issues and therefore, does not support the contentions of the Appellant. We are also not inclined to accept the contention advanced on behalf of the Appellant that provisions of Clause (a) of Explanation 2 to Section 263 of the Act support the case of the Appellant. The expression without making inquiries or verification used in Clause (a) of Explanation 2 to Section 263 of the Act, has to be read in conjunction with the words that follow this expression which should have been made . In the case before us, the Assessing Officer has failed to carry out necessary inquiries and verification in relation to the issues identified for limited scrutiny which should have been made i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment records, the PCIT noticed that the Appellant has claimed credit of entire amount of tax deducted at source form Professional Receipts and Contract Receipts without offering to tax the entire amount of such Professional Receipts and Contract Receipts. According to the PCIT, the aforesaid facts were not considered by the Assessing Officer while passing the Assessment Order. Accordingly, a show-cause notice under Section 263(1) of the Act was issued to the Appellant. In response to the same, the Appellant filed written submission, dated 25.11.2019. However, the PCIT not being satisfied with the explanations and submissions of the Appellant passed order, dated 20.03.2020, under Section 263 of the Act setting aside the Assessment Order by invoking the provisions of the Clause (a) of Explanation 2 to Section 263 of the Act on the ground that the Assessing Officer had failed to carry out necessary inquiry or verification before passing the Assessment Order. The relevant extract of the order passed by the PCIT is as under: 8. Non-verification of reconciliation and lack of proper enquiry by the Assessing Officer had resulted in completion of assessment u/s 143(3) dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 19; or [4] The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person Clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. Hence, what is relevant for clause (a) of Explanation 2 to Section 263 is whether the Assessing Officer has passed the order after carrying out enquiries or verification, which a reasonable and prudent officer would have carried out or not. Therefore, the order passed by the Assessing Officer is not only erroneous but also prejudicial to the interest of Revenue Hence in my considered view it is a fit case for invoking provisions of Section 263 of Income tax Act 1961 13. In view of the foregoing discussion the order passed u/s 143(3) dated 29.06.2017 for the AY 2015-16 is thus held to be erroneous and prejudicial to the interest of revenue and the same is set-aside u/s 263 of the Act to the Assessing Officer to make the order de novo after conducting necessary verification/en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the Assessment Order has not been passed without making inquiries provisions of Clause (a) of Explanation 2 to Section 263 are not attracted. As many as six responses were filed during the assessment proceedings which were considered by the assessing officer. Though the Assessment Order is silent on the issues raised by the PCIT, it does not mean that the same issues were not inquired into or verified by the Assessing Officer. In conclusion, the Ld. Authorized Representative of the Appellant submitted that the PCIT had reviewed the order passed by the Assessing Officer in the garb of exercising powers of revision under Section 263 of the Act, and therefore, the order passed by the PCIT is liable to be set aside. 7. Per Contra, the Learned Departmental Representative submitted that the Assessment Order was erroneous in so far as it was prejudicial to the interest of Revenue and therefore, the PCIT was justified in setting aside the same. He furnished a copy of the letter/reply, dated 09.05.2017, filed by the Appellant during the assessment proceedings. Taking us through the same, he submitted that the Appellant has not filed any reconciliation in respect of professional/co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly, the Assessing Officer has not undertaken necessary inquires/verification during assessment proceedings. The Assessment Order is also silent on these issues and therefore, does not support the contentions of the Appellant. We are also not inclined to accept the contention advanced on behalf of the Appellant that provisions of Clause (a) of Explanation 2 to Section 263 of the Act support the case of the Appellant. The expression without making inquiries or verification used in Clause (a) of Explanation 2 to Section 263 of the Act, has to be read in conjunction with the words that follow this expression which should have been made . In the case before us, the Assessing Officer has failed to carry out necessary inquiries and verification in relation to the issues identified for limited scrutiny which should have been made in the facts and circumstances of the present case. 9. In view of the above, the PCIT was legally justified in exercising powers of revision under Section 263 of the Act in the facts and circumstances of the present case. Accordingly, we uphold the order, dated 20.03.2020, passed the PCIT under Section 263 of the Act. 10. In result present appeal is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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