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2023 (9) TMI 1304 - ITAT DELHIRevision u/s 263 - “no inquiry” v/s “inadequate inquiry” - As per CIT deduction of provision for bad debts which were written back from the total income of the assessee in the year under consideration on the presumption that no enquiries were conducted by the learned AO with respect to the aforesaid claim, in the course original assessment - HELD THAT:- We are of the view that there is a distinction between merely calling for information on a particular issue and considering such information with due application of mind if and when such information is actually provided by the assessee. Thus in the present facts, we are of the view that on the issue of allowing of provision for doubtful debts, the claim of the assessee was allowed which according to us is a case of “no inquiry” and not a case of “inadequate inquiry” and consequently a case of non application of mind to the material on record. In the present case since the required information was not furnished by the assessee therefore it cannot be considered to be a case where the AO was satisfied with respect to the query by some other explanation offered by assessee. Merely asking a question which goes to the root of the matter and not carrying it further, would according to us fall in the category of non inquiry. We find that Hon’ble Apex Court in the case of Malabar Industries Co. [2000 (2) TMI 10 - SUPREME COURT] has held that “an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous and in the same category fall orders passed without applying the principals of natural justice or without application of mind.” Also in the case of Duggal & Co. [1994 (8) TMI 6 - DELHI HIGH COURT] has held that the Income tax officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is incumbent on the Income- tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent and the word “erroneous” in Section 263 of the Act includes the failure to make such an inquiry. It has further held that the order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. Thus we are of the view that PCIT was fully justified in invoking the provisions of Section 263 of the Act in the present case and therefore there is no merit in the grounds raised by assessee. Grounds of the assessee are dismissed.
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