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TMI Blog2024 (8) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... neous and prejudicial to the interest of the revenue. Therefore, we set aside the order of the PCIT and restore that of the AO. PCIT was of the opinion that the AO has not made any enquiry in respect of loan taken from M/s Vardhman Financial Services Pvt Ltd amounting to Rs. 1 crore. This is factually incorrect as explained hereinabove. AO has raised specific query to which the assessee had filed specific reply alongwith supporting documentary evidences mentioned hereinabove. Therefore, it cannot be said that the AO has not made any enquiry. This, in itself, makes the assumption of jurisdiction by the PCIT bad in law. Assessee appeal allowed. - SHRI SAKTIJIT DEY, VICE PRESIDENT, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For the Appellant : Shri Suraj Bhan Nain, Adv, Shri Mahrsusrur Rahman, CA For the Respondent : Shri Subhra Jyoti Chakraborty, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the ld. PCIT, Hisar dated 17.02.2020 pertaining to A.Y. 2015-16. 2. The sum and substance of the grievance of the assessee is that the PCIT erred in assuming jurisdiction u/s 263 of the Income-tax Act, 1961 [the Act, for short], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y enquiry. This, in itself, makes the assumption of jurisdiction by the PCIT bad in law. 13. The root cause for initiation of the impugned proceedings is the review of scrutiny case by the JCIT, Hisar Range, Hisar and the same reads as under: 14. A plain reading of section 263 of the Act would show that the PCIT may call for and examine the record of any proceedings under this Act whereas in the case in hand, we find that it was the JCIT who recommended the PCIT to initiate the proceedings u/s 263 of the Act for which it can be safely concluded that the PCIT did not apply his mind. Even the recommendation of the JCIT is based upon erroneous facts as mentioned elsewhere. Complete enquiry was made by the Assessing Officer during the course of original assessment proceedings. 15. In the light of the afore-stated facts the Hon'ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83, has laid down the following ratio: A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, 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-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 conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not 9 feel satisfied with the conclusion. It may be said in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income- tax Officer to re- examine the matter. That, in our opinion, is not permissible. Hence the provisions of section 263 of the Act were not applicable to the instant case and, therefore, the commissioner was not justified in setting aside the assessment order. 17. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessing 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 14 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 CIT to pass orders under s. 263 of the Act, merely because he has d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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