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TMI Blog2025 (2) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no mentioning of invoking of Explanation 2 to Section 263 of the Act in the notice issued by the Ld. PCIT. The original assessment order has been passed after due examination of issue which necessary entails making enquiries and requisite verification where by pivot for invocation of Section 263 of the Act becomes non existence leading to the assumption of jurisdiction u/s 263 of the Act rendering the subsequent process null and void. The Ld. Assessee's Representative relied on the plethora of Judgments and sought for allowing the Appeal. 5. Per contra, the Ld. Departmental Representative submitted that the assessment order has been passed without making proper enquiries and verification, therefore the Ld. PCIT rightly invoked the Explanation 2 of Section 263 of the Act.The Ld. Departmental Representative relying on the Judgment of Jurisdictional High Court in the case of PCIT Vs. Paramount Propbuild (P.) Ltd. reported in [2024] 161 traxmann.com 85 (Delhi) and also relying on the order of the PCIT, sought for dismissal of the Appeal. 6. We have heard both the parties and perused the material available on record. During the original assessment proceedings, a notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner did not agree,It is clear from the above that where two view are possible and the Assessing Officer has taken one view and the CIT again revised the said order on the ground that he does not agree with the view taken by the Assessing Officer, in such circumstances the assessment order cannot be treated as an order erroneous or prejudicial to the Interest of the Revenue. Reason is simple. While exercising the revisionary jurisdiction, the CIT is not sitting in appeal. This has been so eloquently explained in the case of 'Malabar Industrial Co. Ltd. v. Commissioner of Income Tax' [(2000) 243 ITR 83]." 9. The Hon'ble Jurisdictional High Court in ITA No. 1428/2018 in the case of Pr. Commissioner of Income Tax Vs. M/s Clicks India Finance Pvt. Ltd vide Judgment dated 01/03/2024, while considering the revisional jurisdictional of the PCIT u/s 263 of the Act held as under:- 19. A bare reading of sub-Section (1) of Section 263 of the Act makes it abundantly clear that the said provision lays down a two pronged test to exercise the revisional auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer 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 Assessing Officer had not applied his mind on the issue. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in DawjeeDadabhoy& Co. v. S.P. Jain [(1957) 31 ITR 872 (Cal)], the High Court of Karnataka in CIT v. T. NarayanaPai [(1975) 98 ITR 422 (Kant)], the High Court of Bombay in CIT v. Gabriel India Ltd. [(1993) 203 ITR 108(Bom)] and the High Court of Gujarat in CIT v. Minalben S. Parikh [(1995) 215 ITR 81 (Guj)] treated loss of tax as prejudicial to the interests of the Revenue. 9. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Co. v. CIT [(1987) 163 ITR 129 (Mad)] interpreting "prejudicial to the interests of the Revenue". The High Court held: "In this context, (it must) be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration." In our view this interpretation is too narrow to merit acceptan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f one of them is absent, recourse cannot be had to Section 263(1) of the Act. ***" 27. Considering the aforesaid judicial pronouncements, it can be safely concluded that inadequacy of enquiry by the AO with respect to certain claims would not in itself be a reason to invoke the powers enshrined in Section 263 of the Act. The Revenue in the instant case has not been able to make out a sufficient case that the CIT has exercised the power in accordance with law. Rather, in our considered opinion, the facts of the case do not indicate that the twin conditions contained in Section 263 of the Act are fulfilled in its letter and spirit. 28. Notably, the ITAT, while making a categorical finding that the CIT had failed to point out any definite or specific error in the assessment order, has satisfactorily explained both the claims in question in Paragraph 8.2 of its order, which reads as under:- "8.2 In the Impugned Order, the Ld. Commissioner of Income Tax-IV, Delhi held that the AO had not examined the aforesaid two issues properly and, therefore, set aside the issues for further inquiries to be conducted by the AO. As regards the first issue is concerned, we note that out of total pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid, the Appeal preferred by the Revenue is dismissed along with the pending application(s), if any." 10. It is the contention of the Ld. Department's Representative that the Ld. PCIT has invoked Explanation 2 to Section 263 of the Act, therefore, the Judgment of Jurisdictional High court in the case of Paramount Propbuild Pvt. Ltd. (supra) is applicable. We find no force in the said argument as Ld. PCIT has not invoked the Explanation 2 of Section 263 either while issuing notice or while passing the order impugned. The Ld. Department's Representative cannot improve the case of the PCIT before us. Therefore, the Judgment relied by the Ld. Department's Representative in the case Paramount Propbuild is not applicable to the case in hand. 11. In the present case, the A.O. raised specific query on the issue of 'Short Term and Long Term Capital Gains earned during the year' and the Assessee has produced the cogent documents and after verifying the documents, the A.O. came to a conclusion that no addition requires to be made and while doing so, the A.O. has also called for books of accounts and examined on test check basis to examine the genuineness of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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