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TMI Blog2019 (12) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... part of sale then corresponding debit of TCS was to be claimed in the Profit Loss Account. There is no revenue loss. In view of these facts and circumstances, we find that the AO has made due enquiries and had taken a plausible view, hence, same, cannot be disturbed by Pr.CIT in the name of verification. Since the AO has made during enquiry and examined the issues, hence, invocation of Expln 2 of section 263 is not justified as same is applicable where the AO had not made enquiry and applied his mind which should have been done in the opinion of Pr.CIT. However, the Pr. CIT has not done any enquiry and not suggested what enquiries were to be carried out, therefore, Explanation 2 of section 263 is not applicable. Appeal of the assessee stands allowed. - I.T.A No.586/AHD/2018 - - - Dated:- 12-12-2019 - SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUTANT MEMBER Assessee by : Shri Rasesh Shah, CA Revenue by : Shri Srinivas T. Bidari, CIT(D.R.) O R D E R PER O. P. MEENA, AM: 1. This appeal by the Assessee is directed against the order of learned Principal Commissioner of Income-Tax-2, Surat (in short the Pr.CIT ) dated 20.03.2018 pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of disallowance of Rs. 56,67,517. However, Pr.CIT observed that reply in the matter appears to be correct but requires details verification. Thus, after considering reply to show-cause notice, the Pr. CIT observed to the order passed by the AO is erroneous as well as prejudicial to the interest of revenue because assessment order passed without making inquiries and verification therefore, clause (a) (b) of the Explanation 2 of section 263 are clearly applicable. Therefore, the order was considered to be erroneous and prejudicial to the interest of the revenue hence, was set-aside to the file of the AO with a direction to frame the assessment denovo after giving due opportunity to the assessee. 3. Aggrieved with order, the assessee filed this appeal before Tribunal. The learned counsel for the assessee vehemently contended that the AO has duly verified and applied his mind to issue under consideration; therefore, the order of the AO is not erroneous and prejudicial to the interest of the revenue. The learned counsel for the assessee submitted that the Pr. CIT can assume jurisdiction under section 263 of the Act only if the order of the AO is erroneous as far as it is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined by the AO. Further, the Pr. CIT himself stated that in respect of explanation to TCS accounting method, that the reply of the assessee appears to be correct. Thus, the Pr. CIT was also satisfied but he set-aside issue for verification. Therefore, invocation of clause (a) (b) of Explanation 2 of section 263 is not applicable. It was submitted that erroneous order means the assessment that deviate from law and not in accordance with law. If the AO acting in accordance with law makes certain assessment, the same cannot be termed as erroneous. 4. In support of his contentions, the ld. Counsel for the assessee relying on plethora of decisions, including the decisions of the Hon ble Supreme Court in Malabar Industrial Co. Limited (243 ITR 83); and CIT V/s. Max India Ltd. 2007] 295 ITR 282 (SC), ITO V. DG Housing Projects Limited [2012] 343 ITR 329 (Del), DIT v. Jyoti Foundation [2013] 357 ITR 388 (Delhi), CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi), CIT v. Gabriel India (P) Ltd. 203 ITR 108 (Bom) and A2Z Maintenance And Engineering Service Ltd. v. CIT [I.T.A.No. 2438/DEL/2012(DelHC). The learned counsel for the assessee submitted as a set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 263(1) in the following words : A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo-moto-moto 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(1) of the Act.- --- There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. 9. Similar view has been in the case of CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi) wherein the Hon'ble High Court held that inadequacy of enquiry will not give jurisdiction to Commissioner under section 263. In this case the Hon'ble High Court has held as under: (Head note) : Section 263 of the Income-tax Act, 1961 - Revision - Of order prejudicial to interest of revenue - Assessment year 2001-02 - Whether if while making assessment, Assessing Officer has made an inadequate enquiry , that would not, by itself, give occasion to Commissioner to pass order under section 263, merely because he has different opinion in matter, it is only in cases of 'lack of inquiry' that such a course of action would be open - Held, yes - Assessee-company was engaged in business of manufacturing and supplying auto parts - In assessment for relevant assessment year, it had been allowed deduction of expenditure incurred on tools and dyes as revenue expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and facts of the present case, what has to be seen is whether the AO has made enquiries about issue under consideration. The Learned Counsel of assessee has drawn our attention to point no. 8 of reply dated 22.12.2015 (PB-22-23) by which the details of TCS/TDS claimed by the assessee in the return of income were filed and TCS not claimed in the return of income{point no. 9] The AO vide questionnaire dated 19.11.2015 (PB-25- by which details of TDS/TCS and prepared 26AS statement were asked for. Thus, the assessment order passed after making enquiries and verification. The learned counsel for the assessee further, referred Paper Book Page No. 70 to 74 which is copy of balance sheet and notes on accounts, and submitted that the assessee has done regrouping and recasting of various schedules. The learned counsel for the assessee drawn our attention to Paper Book Page No. 63 which is forming part of audited notes on account and submitted that as per note No. 9, it mentioned that Previous year's figures have been regrouped and /or rearranged whenever necessary. The learned counsel for the assessee also referred Paper Book Page No. 72 to 74 which is reconciliation of liabilities no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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