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TMI Blog2025 (2) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... eous in so far it is prejudicial to the interest of the revenue u/s 263 which, we are afraid is not permissible as per the mandate of law. Outsourcing of the jurisdiction under Section 263 by the Pr. CIT to the A.O. is not permissible as per the settled position of law. Rather, we will mince no words in observing, that the setting aside of the matter to the file of the A.O for carrying out necessary verification and arriving at a conclusion as to whether or not the order so passed by him is erroneous, thus, would lead to a situation wherein the jurisdiction to revise the order u/s. 263 of the Act would impliedly get vested with the A.O. CIT had failed to bring the proceedings initiated by him under Section 263 of the Act to a logical end, i.e. the assessment order passed by the A.O u/s. 143(3) as per him was found to be erroneous in so far it was prejudicial to the interest of the revenue, and rather, had aborted in the mid-way the very process for arriving at the aforesaid view, thus, the same had resulted to setting-aside of the assessment order to the file of the A.O - for verifying as to whether or not the assessment order is found to be erroneous in so far it was prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that while for the assessee was required to deduct/collect Tax at Source of Rs. 1,50,47,809/- on payments of Rs. 67,13,17,723/-, but it had deducted/collected an amount of Rs. 1,00,45,864/- and deposited the same in the government treasury, as under: Nature of payment/ Section under which TDS is to be deducted Total amount on which tax required to deducted (in Rs.) or collected (in Rs.) Amount of tax Amount of was deducted or collected (in Rs.) Amount of TDS which should be deducted (in Rs.) Interest other than interest on securities/ 194A(10%) 1,01,71,337/- 9,09,592/- 10,17,133/- Payment to contractors/194C(2%) 43,99,73,290/- 57,08,637/- 87,99,465/- Commission or brokerage/194H(5%) 6,76,22,248/- 25,49,503/- 33,81,112/- Fees for professional or technical services/ 194) (10%) 34,95,469/- 2,91,823/- 3,49,546/- Profits & gains from the business of trading in alcoholic liquor, forest produce, scrap/206C (1%) 6,77,55,321/- 5,23,958/- 6,77,553/- Profits & gains from the business of trading in alcoholic liquor, forest produce, scrap/206C(1%) 8,23,00,058/- 62,351/- 8,23,000/- Total 67,13,17,723/- 1,00,45,864/- 1,50,47,809/- Accordingly, the Pr. CIT held a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and afresh adjudication after providing an adequate opportunity of being heard and considering the submissions of the assessee. For the sake of clarity, the observations of the Pr. CIT are culled out as under: "5. In view of the above facts, a show cause e-notice u/s 263 dated 04.10.2024 was issued to the assessee to be complied by 21.10.2024, incorporating the above facts, asking to furnish his reply in support of his claim. The assessee filed its submission on 14.11 2024. The gist of submission of the assessee is as under:- "We enclose copy of detailed list of section wise TDS payments with complete details viz. Name of Deductee with PAN, amount on which TDS/TCS deducted/collected, TDS/TCS amount, and Tax Deducted Date and CIN details for the relevant financial year in support of our submission. The extract submitted above along-with copy of screen shot of Status of Demand as per Traces site which is NIL is self-evident that there is no instances of short deduction or short collection by the assessee in the relevant financial year. We believe that the same shall serve as complete compliance to your notice. We therefore sincerely request you to kindly consider our submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, dated 12.12.2024 has carried the matter in appeal before us. 9. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 10. As observed by us herein above, the Pr. CIT held a firm conviction that as the assessee per the mandate of law had not deducted/collected tax at source on payments aggregating to Rs. 67.13 crore (approx.), therefore, 30% of the said amount i.e. 20.13 crore (approx.) [30% of Rs. 67.13 crore (supra)] was liable to be disallowed u/s. 40(a)(ia) of the Act. 11. As is discernible from the record, the assessee on being confronted with the aforesaid purported action, had vide its reply dated 14.11.2024 in rebuttal of the observations of the Pr. CIT filed before him, viz. (i) copy of the detailed list of section vise TDS payments with complete details; (ii) names of the deductees with their PAN Nos; (iii) amounts on which tax was deducted/collected at source; (iv) the amount of deduction/collection of tax at source; (v) dates of deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding that the assessment order was erroneous and prejudicial to the interest of the revenue, traversed beyond the jurisdiction that was vested with him u/s. 263 of the Act. 13. Before proceeding any further, we deem it fit to cull out the provisions of Section 263 of the Act, which reads as under: "263. Revision of orders prejudicial to revenue. (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 [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, including- (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.--In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." (emphasis supplied by us) 14. Although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the revenue. The Pr. CIT, in our view, cannot without recording an observation after considering the documents/material/submissions filed by the assessee in the course of the proceedings before him and arbitrarily dispensing with the very process of arriving at an opinion that the order passed by the A.O was erroneous in so far it was prejudicial to the interest of the revenue, summarily set-aside the same to the A.O for carrying out the necessary verification. If that is so permitted, then we are afraid that it will lead to a situation where the Pr. CIT without himself arriving at a finding will summarily set aside the matter to the file of the A.O, i.e. without recording a finding that the assessment order passed by the A.O is found to be erroneous in so far it is prejudicial to the interest of the revenue under Section 263 of the Act, which, we are afraid is not permissible as per the mandate of law. In short, the outsourcing of the jurisdiction under Section 263 by the Pr. CIT to the A.O. is not permissible as per the settled position of law. Rather, we will mince no words in observing, that the setting aside of the matter to the file of the A.O for carrying out necessary ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur aforesaid view is fortified by the order of the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Modicare Ltd., ITA No.759/2016, dated 14.09.2017, wherein the Special Leave Petition (SLP) filed by the revenue had been dismissed by the Hon'ble Apex Court in its order passed in SLP(C) No.13055/2018, dated 30.01.2024. The Hon'ble High Court in its aforesaid order, had observed, that the exercise u/s. 263 of the Act could not have been "Outsourced" by the CIT to the A.O. It was further held by the Hon'ble High Court that the CIT is himself required to undertake minimal inquiry and give reasons for concluding that the assessment order was erroneous and prejudicial to the interest of the revenue. 18. Also, a similar view had been taken by the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Delhi Airport Metro Express Pvt. Ltd., ITA No.705/2017, wherein the Hon'ble High Court, had observed, that for exercising jurisdiction u/s. 263 of the Act, the conclusion that the order of the A.O. is erroneous and prejudicial to the interest of the revenue has to be preceded by some minimal inquiry. Further, we find that the Hon'ble High Court of Delhi in the case of Director of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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