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TMI Blog2023 (3) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ualise a case of substitution of the judgment of the Principal CIT for that of the Assessing Officer who passed the order unless the decision is held to be wholly erroneous. As noted in various judicial precedents highlighted above, the Principal CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-visit the entire assessment and determine the income himself at a higher figure. Now on the issue that the Ld. AO passed a cryptic order and did not discuss in detail regarding assessee s submissions on various queries raised vide the various notices, in our view it is a well settled position of law that if from the assessment records, it is evident that the Ld. AO has made due enquiries in response to which assessee has filed its submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total tax effect (see note below) 3. The brief facts of the case are that the Principal CIT observed that the assessee had deposited demonetised cash of Rs. 27 lakhs in two of its bank accounts in four instalments on different dates. The Principal CIT issued notice under section 263 of the Act on the ground that the AO has not verified the cash deposit during the demonetization period nor sought any explanation while finalising the assessment under section 143(3) of the Act. The Principal CIT took the submissions of the assessee on record and passed an order holding that the assessing Officer has passed an order which is erroneous and prejudicial to the interest of revenue and accordingly set aside the same. 4. The assessee is in appeal before us against the aforesaid order passed by Principal Ld. CIT(Appeals). Before us, the counsel for the assessee submitted that Ld. PCIT erred in holding that no enquiries were made by the A.O. to verify the cash deposits, during the course of assessment proceedings. The case of the assessee was selected for scrutiny under CASS for verifying cash deposited during the demonetization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various High Courts in this regard. 6.1 Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.), made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 on the ground of inadequate inquiry 12. .. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the wellaccepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 6.3 The Mumbai ITAT in the case of Sh. Narayan Tatu Rane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06.05.2016 examined the scope of enquiry under Explanation 2(a) to section 263 in the following words: 20. Further clause (a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 14th March 2016. The respondent company received unsecured loans from M/s. GeorgettTradecom Pvt Ltd and M/s. PurbaAgro Food Pvt Ltd amounting to Rs. 2.49 Crore and the Assessing Officer allowed these unsecured loans. The Principal Commissioner of Income-tax invoked section 263 of the Act, 1961 for revising the assessed income of the respondent assessee. It was noticed by the PCIT that the unsecured loans obtained by the respondent assessee are shown as investment in the name of the assessee in the share application as well as in the balance sheet of the respective companies. The PCIT passed an order under section 263 of the Act directing the Assessing Officer to pass fresh assessment order under section 143(3) of the Act, 1961 on the aspect of unsecured loans shown by the respondent assessee. The Hon ble Supreme Court made the following observation while deciding in favour of the assessee: Thus, the Tribunal has considered in detail the aspect of revisional power to be exercised by the PCIT in the facts of the case and has given a finding of facts that the Assessing Officer has made inquiries in detail and after applying mind, accepted the genuineness of loans rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servations: Having heard learned counsel for the parties and having perused the documents on record, we see no reason to interfere with the view of the Tribunal. The question whether the income should be taxed as business income or as arising from the other source was a debatable issue. The Assessing Officer has taken a plausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could be conclusively held that income arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed 6.8 The Supreme Court in the case of Principal Commissioner of Income-tax--8 Mumbai v. Sumatichand Tolamal Gouti [2019] 111 taxmann.com 287 (SC) held that where High Court upheld Tribunal's order holding that AO had made detailed enquiries while allowing assessee's claim for deduction of business expenditure and, thus, revisional order passed by Commissioner was not sustainable, SLP filed against High Court's order was liable to be dismissed. The facts of this case were tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding paragraphs. Therefore, this is not a case where no enquiry was made by the AO during the course of assessment proceedings. Further, we also observe that the assessee also duly filed his reply in response to the notice issued by the AO and various details like Certificates from Lakshmi Vilas bank and Certificate from Allahabad Bank, bank statements of Lakshmi Vilas bank and Allahabad Bank, cash book for financial year 2016-17, VAT returns for financial year 2016-17, VAT audit report for financial year 2016-17 etc. were submitted before the AO in response to this query regarding the cash deposits made by the assessee during the demonetisation period. We further observe that it is also not the case of the Principal CIT that the AO has taken a view which is legally impermissible. Therefore, from the above facts, we are of the considered view that the AO had made enquiries into the aspect of cash deposit in the bank accounts of the assessee during demonetization period, and after due consideration of the response filed by the assessee, accepted the contention of the assessee and did not make any addition to the returned income. Accordingly, in our view, this is not a case where no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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