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TMI Blog2022 (12) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... . The case of the assessee finds support from the decision of D.G. Housing Projects Ltd.[ 2012 (3) TMI 227 - DELHI HIGH COURT] In the case of CIT vs. Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] as held that in order to invoke the jurisdiction u/s 263(1) of the Act there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as prejudicial to the interest of the revenue. The Hon ble court has held that an erroneous order must be an order which is not in accordance with the law or which has been passed by the AO in undue haste without making any enquiry. The Hon ble Court has further held that the order is said to be prejudicial to the interest of revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. The Hon ble Court held that such a decision of Income Tax Officer cannot be held to be erroneous simply because he has not made elaborate discussion in that regard in the assessment order. Appeal of the assessee is allowed. - I.T.A. No. 192/Kol/2022 - - - Dated:- 14-12-2022 - Shri Rajpal Yadav , Vice - President ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be revised/modified or set aside which according to the Ld. PCIT, was not replied by the assessee. Thereafter the Ld. PCIT revised the order framed u/s 143(3) dated 28.12.2018 by observing and holding as under: 4. I have considered the facts of the case and details available on record. The assessee has failed to completely disclose its true and correct income by non-furnishing of details as required under provisions of I.T. Act, 1961. The A.O. has passed the assessment order without making enquiries or verification which should have been made in the instant case. Clause (a) of Explanation - 2 to Section 263(1) is attracted in this case. Accordingly, it is held that the assessment order is erroneous insofar as it is prejudicial tothe interest of the revenue. 5. Hon ble Delhi High Court in the case of GEE VEE Enterprise vs. Addl.CIT reported in 99 ITR 375, 386 (Del) has held that the CIT may consider the order of the Assessing Officer to be erroneous not only if it contain some apparent error of reasoning or of law or of fact on the face of it but also because the Assessing Officer has failed to make enquiries which are called for in the circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the basis of the pleading and evidence which come before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 9. Further to this it is noticed that there is no appeal right available to the Revenue from the order of assessment passedby Assessing Officer and i.e. why revisionary powers have been given to the Commissioner and such-power were held to be of; wide amplitude by the Hon ble Supreme Court in the case of CIT v. Shree Manjunathesware Packing Products Camphor Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therewith all the documents along with party-wise details of unsecured loans, copies of confirmations, PANs, balance sheets and bank statements etc. The Ld. A.R contended that AO after having conducted detailed enquiry/investigation/verification by issuing notices u/s 133(6) of the Act requiring the lenders to furnish the evidences to prove these transactions which were duly responded by the lenders and after accepting the contentions of the assessee with regard to these loans , framed the assessment u/s 143(3) of the Act. The Ld. A.R referred to documents filed before the AO during the course of assessment proceeding which are also filed in the paper book from page 14 to 76. The Ld. A.R. ,while taking us through the explanation(2) to Section 263 of the Act, submitted that the conditions as envisaged in (a) (b) mandate that if the order is passed without proper verification or enquiries then the revisionary jurisdiction of the Ld. PCIT can be invoked as the same renders the assessment framed u/s 143(3) as erroneous insofar as prejudicial to the interest to the revenue but since the AO has framed the assessment after making detailed enquiry and proper examination of evidences filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 348 (Andhra Pradesh HC) CIT Vs Amit Corpn ([2012] 21 taxmann.com 64 (Gujarat HC).) CIT Vs Jain Construction Co ([2013] 34 taxmann.com 84)(Raj. HC) Malabar Industrial Co. Ltd vs CIT [2000] 109 Taxman 66 (SC) CIT Vs J.P. Goel (HUF) [2000] 113 Taxman 229 (Calcutta HC) CIT Vs Reconstruction Co [2008] 175 Taxman 165 (Gujarat HC) CIT Vs Sunbeam Auto Ltd [2010] 189 Taxman 436 (Delhi HC) CIT Vs Rajiv Agnihotri [2011] 13 taxmann.com 18 (Punjab HC) CIT Vs Anil Kumar Sharma [2010] 194 Taxman 504 (Delhi HC) CIT Vs Hindustan Marketing Advertising Co. Ltd [2011] 196 Taxman 368 (Delhi HC) CIT Vs International Travel House Ltd [2010] 194 Taxman 324 (Delhi HC) The Ld. A.R. submitted that in absence of any findingsin the revisionary order passed u/s 263 of the Act to the effect that the assessment order is erroneous and prejudicial to the interest of the revenue, the exercise of jurisdiction u/s 263 is invalid and thus not sustainable. The ld AR argued that where in the Ld. PCIT s opinion the AO has carried out inadequate enquiry, then the Ld. PCIT has to conduct verification/enquiry in order to find out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver from earlier years after duly deducted and depositing tax at source. We have also perused and examined the contents of the notices issued u/s 142(1) and the various quarries raised by the AO dated 14.09.2018 and 29.08.2018 and find that in the annexure-1 to notice dated 14.09.2016, the details in respect of loans creditors such as names, addresses, confirmations, bank statements etc. were called for which were submitted/furnished by the assessee before the AO vide written submissions dated 26.11.2018 vide para No. 13. We note that the assessee furnished the full details of loans along with confirmations in Annexure-13 and also filed ITRs, PANs, confirmations, audited balance sheets, and copies of bank accounts of the lenders justifying the genuineness of the transactions and proving the identity and creditworthiness of the loan creditors. We note that the assessee is a non-banking finance company engaged in the business of trading and investment in shares and securities and also providing inter-corporate loan facility and brokering the intercorporating loans. We also note that the AO in order to independently verify the loan transactions has issued notices u/s 133(6) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word 'erroneous' includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. [Para 11] In cases of wrong opinion or finding on merits, the Commissioner has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. The Commissioner cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the Commissioner can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record. Nothing bars/prohibits the Commissioner for collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. [Para 17] In the instant case, the findings recorded by the Tribunal are correct as the Commissioner has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the Commissioner is that 'order passed by Assessing Officer may be erroneous'. The Commissioner had doubts about the valuation and sale consideration received but the Commissioner should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the assessee computation figures but he had reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Andhra Pradesh has held that the AO is not required to give detailed reasons in the assessment order and once it is clear that there was an application of mind by the AO, the Commissioner cannot invoke his powers u/s 263 of the Act, merely because he entertains a different opinion in the matter. Similarly where the AO taken the possible view after examining the issues in the assessment proceedings , the recourse can not be had to the provisions of section 263 of the Act because the ld PCIT harbor another view. In the case of CIT vs. Max India Ltd. (supra) the Hon ble Supreme Court has held that where two views are possible and the AO has taken one of the plausible views, the assessment so framed by the AO cannot be termed as erroneous insofar as prejudicial to the interest of the revenue. The Hon ble Apex Court has considered the earlier decision passed by the Co-ordinate Bench in the case of Malabar Industrials Co. (supra). In the case of the assessee since the AO has taken one of the two possible view on all the issues after examining them during assessment proceedings to which the PCIT does not agree and therefore the revisionary proceedings cannot be justified and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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