9911796707
TMI Blog2025 (3) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the material available on record, with regard and also in the light of the aforesaid well established principle of law, lead us to draw inference that the issue which was before the AO regarding duty draw back was properly examined by the AO and decided in favour of the assessee and PCT has not taken any enquiry as required by law or site any plausible or cogent reason to reach conclusion that the impugned assessment order was erroneous and prejudice to interest of Revenue and instead of enquiry himself, the PCIT observe that it was incumbent to the officer to investigate the matter stated in the return and only on this basis the Ld. PCIT directed to examine the issue and send back to the Ld. AO. Explanation 2 to Section 263 does not give unfettered power to Ld. PCIT to revise each and every order to examine the issue which is already been properly examined by the Ld. AO. Impugned order passed by the PCIT void ab initio and beyond the jurisdiction and liable to set aside and quashed. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 143(2) of the I.T. Act 1961 was issued on 01.09.2015 and which was duly served upon the assessee. Notices u/s 142(1) of the Act along with questionnaire was issued on 12.04.2016. Thereafter, notice u/s 142(1) of the Act was issued form time to time. 3. Heard rival submissions and perused the material available on record. 4. The Ld. AR expressed grievance in the submissions that the Ld. PCIT erroneously passed order on the duty draw back issue without considering various details, pleading and written submissions. 5. Bare perusal of the record shows that the PCIT issued notice u/s 263 of the Income Tax Act, 1961 (the Act) for the Assessment Year 2014-15 dated 11.08.2017 by noticing and observing that in the manufacturing and trading account, the assessee has credited an amount of Rs. 4,31,74,962/- as duty draw back received by it during the year and the assessee claimed deduction of Rs. 45,25,96,914/- u/s 80-IC of the Act, out of which deduction @ 75% was disallowed by the AO and addition of Rs. 33,94,47,685/- was made to the total income of the assessee. It was stated in the said notice that while calculating the net profit from the business and deductions u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: "19. A bare reading of sub-Section (1) of Section 263 of the Act makes kit abundantly clear that the said provision lays down a two pronged test to exercise the revisional authority i.e., firstly, the assessment order must be erroneous and secondly, it must be prejudicial to the interests of the Revenue. Further, Explanation 2 to Section 263 of the Act delineates certain conditions and circumstances when the order passed by the AO can be said to be erroneous and prejudicial to the Revenue. 20. Clause (a) of Explanation 2 to Section 263 of the Act further stipulates that if an order is passed without making an enquiry or verification which should have been made, the same would bestow a revisional power upon the Commissioner. However, the said Clause or any other condition laid down in Explanation 2 does not warrant recording of the said enquiry or verification in its entirety in the assessment order. 21. Admittedly, in the instant case, the questionnaire dated 02.11.2004, which has been annexed and brought on record in the present appeal, would manifest that the AO had asked for the allowability of the claims with respect to the issues in question. Consequently, the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open, In Gabriel India Ltd. (1993) 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113) ...... 23. A similar view was taken by this Court in the case of CIT v. Anil Kumar Sharma (2010 SCC OnLine Del 838), wherein, it was held that once it is inferred from the record of assessment that AO has applied its mind, the proceedings under Section 263 of the Act would fall in the category of Commissioner having a different opinion. Paragraph 8 of the said decision reads as under.- "8. In view of the above discussion, it is apparent that the Tribunal arrived at a conclusive finding that, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. 10. The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd after perusal of all the documents were submitted by the assessee, the Ld. AO being very much aware of the issue and, after applying his mind by raising proper query passed the order u/s 143(3) of the Act and since that order has been passed after fully examination, it cannot be termed that the Ld. AO has not examined the issue of duty draw back and Ld. PCIT had no jurisdiction for taking any action u/s 263 of the Act. 9. Invoking the provision u/s 263 of the Act, it is necessary to establish the twin conditions i.e., firstly, order in question must be erroneous and secondly it must be prejudice to the interest of the Revenue and fulfillment of about twin conditions is mandatory prior to invoked power u/s 263 of the Act and it is also relevant here that the Ld. PCIT while invoking the power u/s 263 of the Act, supposed to enquire into or examine the matter before reaching any conclusion. 10. The relevant part of the impugned order of PCIT is reproduced as under: "5.4. It is incumbent on the officer to investigate the facts stated 'in the return. when circumstances would make such an enquiry prudent and the word 'erroneous" in section 263 includes failure to make such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of hearing, the appellant informed that order u/s. 263 dtd.24.10.17 has been passed by Ld. Pr. CIT Meerut for A.Y.2014-15. A copy of the said order u/s. 263 has been placed on record. On going through the order u/s. 263 dtd.24.10.17, I noticed the findings in Para-6 of the said order as under:- "Thus, after careful consideration of assessee's submissions filed during the proceedings u/s. 263 vis-à-vis the records, it has been established that the assessment order dated 30.12.2016 was passed by the AO without correctly applying the provisions of the I.T. Act, 1961 which renders the assessment order erroneous and prejudicial to the interest of revenue. Therefore, assessment order dated 30.12.2016 passed by the DCIT, Circle-2, Meerut is set aside with the directions to examine the above issue aspect involved in the case properly after detailed enquiry and after affording reasonable opportunity of being heard to the assessee. After examination and enquiries he will take appropriate action in the light of relevant provisions and rules and shall pass an assessment order de novo as per law." 4.1 The Pr. CIT, u/s. 263, vide Para-6 of the said order as abstracted abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
