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TMI Blog2022 (12) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been lawful to make mere detailed inquiries or because he did not write specific reasons of accepting the explanation. As for learned PCIT's observations regarding accepting the explanation without appropriate evidence , there is nothing to question the bonfides of the Assessing Officer or to elaborate as to what should have been 'appropriate' evidence. The fact remains that the specific issue raised, in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the Assessing Officer. Merely because the AO did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263 , and non-mentioning of these reasons do not render the assessment order erroneous and prejudicial to the interest of the revenue . Appeal of the assessee is allowed. - ITA No.194/JP/2022 - - - Dated:- 15-11-2022 - DR. S. SEETHALAKSHMI, JM AND SHRI RATHOD KAMLESH JAYANTBHAI, AM Assessee by : Sh. Vedant Agarwal (Adv.) Revenue by: Sh. Sanjay Dhariwal(CIT) ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, a co-operative society, was engaged in marketing of agricultural products to its members and declared total income of Rs. 17,54,030/- and also claimed Rs. 55,01,990/- under Chapter-VIA deduction as per section 80P of the Income Tax Act, 1961 for the year under consideration. 4. On culmination of the assessment proceeding, the PCIT-2, Jaipur has called for and examined the case record. The PCIT found that the case was selected for limited scrutiny through CASS and completed at assessed income at Rs. 17,54,030/-. On examination of the assessment record, it is observed that the deduction of interest income of Rs. 51,29,967/- has been claimed u/s. 80(P)(2)(d). The interest of Rs. 51,29,967/- on FDR received from Sikar Kendriya Sahakari Bank Limited has been claimed and the same was allowed by the AO, which is not allowable u/s.80(P)(2)(d) of the Act. The PCIT found that it is factually apparent that the AO has not verified the issue while completing the assessment. In view of this position, it appears that the assessment order passed u/s. 143(3) of the Act, passed on 25.11.2019 is erroneous in so far as it is prejudicial to the interest of the revenue as the interest of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of the revenue. Thus, the order passed u/s 143(3) on 25.12.2019 is erroneous and prejudicial to the interest of the revenue. 12. I have gone through the assessment order and case records and submission filed by the assesse, in the facts and circumstances of the case I find that the powers of revision are inherent and PCIT/CIT can use these powers if it notices that any order passed by the AO is not in conformity with the law. In reaching such conclusion, I am aided by the following judicial rulings: 1. The Hon'ble Supreme Court in the case of Malabar Industrial Limited V/S CIT 243 ITR has held that An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind . 2. In case of TTK LIG Ltd., v/s. ACIT(Mad) 51 DTR 228 it has been held that Order would be erroneous if it is based on an incorrect assumption of facts or an incorrect application of law or nonapplication of mind or based on no or insufficient materials 3. Delhi High Court in Gee Vee Enterprises v. Additional Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been passed by the Assessing Officer in a routine and perfunctory manner without examining the issue of deduction u/s 80P(2)(d) of the Act. The order has thus resulted in wrong deduction of income to the assesse. The order of the Assessing Officer is therefore liable to revision under the clause (a), (b) (c) of Explanation (2) to section 263 of the Income Tax Act. Hence, the assessment order is set aside as discussed above on the issue of deduction allowed u/s 80P(2)(d) of the Act. 5. Aggrieved, from the said order of the PCIT, assessee has preferred this appeal on the grounds raised here in above. The ld. AR of the assessee submitted a detailed paper book and the same is extracted here in below:- S. No. Particulars Page No. 1 Copy of notice dated 10-10-2019 19-11-2019 issued under section 142(1) of the Act 1-4 2 Copy of reply filed with ACIT, Circle Sikar dated 11-11-2019. 5-6 3 Copy of Assessment order passed u/s 143(3) dated 25-11 2019. 7-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit loss a/c are also submitted in support of our submission. Sir, deduction of Rs. 50,000/- is covered u/s 80P(2)(c) (ii), which allow is general deduction of Rs. 50,000/-. Therefore we humbly submit that kindly accept the deduction claimed by the assessee. Based on the above arguments the ld. AR of the assessee submitted that the ld. AO has already based on the submission of the assessee has taken a view which is plausible view the same is not subjected to proceeding u/s. 263 and he has strongly opposed the action u/s. 263 of the Act. The ld. AR of the assessee also serviced the decision of the jurisdictional high court the court has considered the allowability of the deduction u/s. 80(P)(2)(d) and he also serviced the decision of the coordinate bench of this tribunal in the case of Shahpura Gram Seva Shakari Samiti Ltd. also considered the issue and thus, based on this precedent the view taken by the ld. AO is plausible view and the same cannot be a subject of proceeding u/s. 263 of the Act. 6. Per contra, the ld DR is heard who has relied on the findings of the PCIT and has submitted the compilation of case law vide his submission dated 05.09.2022 the same is reite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO. The ld. Pr. CIT evidently did not place on record any apparent error on the part of the AO so as to substantiate that order passed by the ld. AO is prejudicial to the interest of revenue. He only mentioned that the AO has not applied his mind to the issue in proper manner. He has not pin pointed any of the enquiry which is required to be made is not made by the ld. AO. and he has to examine the issue on merits. There is no further defect found from the record from the material that has been collected by the ld. AO to verify the point raised in the limited scrutiny. The decision and contentions raised by ld. DR are all related to the fact that the ld. AO either has not examined the issue and the related enquiry on the issue apparently not done or not done to the extent it was required to be examined based on the facts. Since, in this case ld. AO has clearly conducted the enquiry and revenue did not pin point the error on the part of the assessing officer the order passed after due application of mind cannot be subjected to proceeding u/s. 263 of the Act. The ITAT Mumbai bench in the Mrs. Khatiza S. Oomerbhoy addressed this issue elaborately after referring to number of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Officer allows the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 9. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and revenue did not demonstrate the error remain on the part of the ld. AO. In fact, when the ld. AO has conducted the required enquiry and not violated any of the conditions mentioned for revision of order as required by Explanation 2of Section 263 of the Act, the order passed by the Assessing Officer could not be deemed to be erroneous so as to be prejudicial to the interests of the revenue. For this it is relevant to extract the Explanation 2 of section 263 which the ld. DR has heavily relied upon: Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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