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TMI Blog2022 (12) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and has applied his mind while concluding the assessment accepting the income returned by the assessee. We see merit in the submission of the ld AR that the license is given to P S Associates vide partnership deed and there was no requirement for a separate license deed to be entered in this regard. The entire premise on which the PCIT has exercised the revisionary power is that the AO should have conducted further enquiries. PCIT has not brought anything on record to shown adverse effect of the lack of enquiry or any material to show that there been an error in the order that is prejudicial to the interest of the revenue. The views of the ld. PCIT as given in the order u/s.263, in our opinion, is not the right reason for exercising revisionary powers u/s. 263 as the error envisaged by Section 263 of the Act is not one that depends on possibility as a guess work, but it should be actually an error either of fact or of law. PCIT is not justified in setting aside the order of the AO and accordingly we hold that the order of the PCIT u/s. 263 is without jurisdiction and liable to be quashed. Appeal of the assessee is allowed. - ITA No.491/Bang/2022 - - - Dated:- 19- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced by the appellant during various instances during the assessment proceedings and having applied his mind and considering the facts the order of assessment has been passed. Hence on the very same issue no action can be taken under Section 263 of the Act as the actions of the Assessing Officer is pursuant to applying his mind to the matter and in accordance with law. 6. The learned Principal Commissioner of Income tax, failed to appreciate that since the appellant is one of the partner in the Firm i.e. M/s. P.S. Associates, the liquor license is in the name of the appellant and was running the said liquor retail business in the name of Vijaylakshmi Wines, was completely managed by the said Firm i.e. M/s. P.S. Associates and consequently the entire purchases and sales are recorded in the books of M/s. P.S. Associates, on the facts and circumstances of the case. 7. The learned Principal Commissioner of Income-tax, further failed to appreciate that the Firm i.e. P.S. Associates has consolidated the profit and loss account of the respective liquor shops and taken the net profit or loss of a particular liquor shop, for which separate profit and loss account have been maintaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given the said license on lease to be used in the partnership firm for an agreed percentage in the profits of the partnership firm. The assessee filed the return of income for AY 2017-18 on 29.11.2017 declaring total income of Rs.3,67,310. The case was selected for scrutiny under CASS for verification of low income from TCS receipts liquor and Cash deposits during the year and a notice u/s. 143(2) was duly served on the assessee. During the course of hearing the AO called for various details in relation to the liquor business and the cash deposits. The assessee filed the required details before the AO and the assessment was completed u/s. 143(3) accepting the returned income by the assessee. 3. The PCIT on verification of assessment records was of the view that the order of the AO is erroneous and prejudicial to the interests of the revenue for the following reasons:- 1. Failed to verify the sources of cash deposits made, account # 00000064191958615 held by the assessee with Kanakatte Br. of SBI and bring the unexplained deposit therein to tax. 2. Failed to examine the low profits/income declared from the liquor business and accepting without proper enquiry. 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iel India Ltd. (1993) 203 ITR 108 7. The ld. DR submitted that the reason for invoking the revisionary power by the PCIT is that the AO has not verified the lease deed whereby the license in the name of Vijayalakshmi Wines was given on lease to the partnership firm. The ld. DR also submitted that 1% profit margin agreed by the assessee in terms of partnership deed has not been properly verified by the AO. The ld. DR therefore supported the order of the PCIT in invoking the revisionary power u/s. 263. 8. We heard the rival submissions and perused the material on record. We notice that the AO during the course of assessment has called for the relevant details pertaining to the reasons for which notice u/s. 143(2) was issued. We also notice that in the order of assessment, the AO has brought out clear findings with regard to various details submitted by the assessee during the course of assessment. The relevant part of the AO s order is extracted as below:- 4. In response to the above, assessee submitted his response in e-filling portal. The assessee in response to cash transactions 2016 has submitted that Rs.34,28,160/- was deposited in cash in to his bank account number 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of Vijayalakshmi Wines are accounted in the books of account of partnership firm, P S Associates, since the license has been given to the partnership firm vide partnership deed executed on 10.11.2015. 10. Before proceeding further, it is apposite to take note of the relevant extract of section 263 and the Explanation (2) to section 263 of the Act, which read as under :- Revision of orders prejudicial to revenue. 263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer 89[or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, 90[including,- **** Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer 94[or the Transfer Pricing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That would not vest the Commissioner with power to 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 a 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 the 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. 12. There is no dispute that u/s. 263 of the Act, the PCIT does have the power to set aside the assessment order and send the matter for a fresh assessment if he is satisfied that further enquiry is necessary and the assessment order is prejudicial to the interests of the Revenue. However, in doing so, the PCIT must have some material which would enable to form a prima facie opinion that the order passed by the AO is erroneous, insofar as it is prejudicial to the interests of the Revenue. In the present case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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