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2016 (8) TMI 1565 - AT - Income TaxRevision u/s 263 by CIT - Validity of assessment framed u/s 143(3) r.w.s. 147/148 - As per CIT AO failed to conduct proper enquiries/verifications/examinations in respect of trading results declared in exclusion to extraordinary income declared by way of write back of certain credits - HELD THAT:- A combined reading of Section 263 and Section 147 would clearly suggest that revisionary powers under S. 263 cannot be read in a manner to expand the scope of section 147 of the Act. S. 263 read in the context of reassessment proceedings cannot be exercised unless there is a cause available on objective facts to demonstrate that detailed probe or enquiries were warranted to encompass escapement of other possible income in a given set of facts. Consequently, the alleged inaction of the AO on the issue of correctness of trading results in reassessment proceedings is not fatal or erroneous for the purposes of section 263 of the Act. Hence, the reassessment order passed within the four corner of its authority cannot be dubbed as erroneous per se and is thus is not susceptible to review contemplated under S. 263 of the Act. Lack of enquiry on unconnected issues in a reassessment proceeding - We notice that the Commissioner has merely entertained strong suspicion on the bona-fide of trading results owing to huge losses and observed that in the absence of income reported on account of credit towards write back of certain amounts under section 41(1), the assessee has declared trading losses on a substantial turnover which ought not to have been accepted without embarking upon a detailed enquiry. The show-cause action of the Commissioner under section 263 seeking to upset the reassessment order is thus clearly actuated in the realm of such suspicion. As noted earlier, indulging in roving enquiry u/s 147 on unconnected issues is a case of overreaching of powers which is not permissible in law. AO in his quasi judicial capacity has accepted the trading results. A mere different perception of Commissioner founded upon suspicion on the issue is not sufficient to legitimize jurisdiction under section 263. It would be farfetched to presume that the purported substantial turnover per se would necessarily give rise to presumption of profits thereon. The allegation of reassessment order being erroneous by the Commissioner is purely founded upon suspicion and surmises on losses declared. The exercise of revisionary power based on such suspicion is in our view not permissible in law. Certain figures of income as an amount written back does not tally with corresponding breakup submitted in the course of assessment proceedings - The income declared by the assessee for the impugned assessment year 2008-09 is higher than the income given in the assessment year 2007-08 as an amount written back under section 41(1) of the Act. Apparently, no prejudice has thus caused to the interest of Revenue by declaring higher income compared to what was provided in the course of assessment in the earlier year. The condition precedent for exercise of powers under S. 263 is thus sorely missing. Hence, we fail to visualize any rationale in this Ground set out by the Commissioner for invoking revisionary powers. A higher remission by a unilateral act to the prejudice of the Assessee can not be ordinarily forced. Therefore, this ground for invoking section 263 is also not sustainable in law - Decided in favour of assessee. AO has not verified the write off amount during the course of assessment proceedings - A.Y. 2009-10 - Hon’ble Supreme Court in the case of T.R.F. Ltd. [2010 (2) TMI 211 - SUPREME COURT] has held that the assessee need not prove the debts to be irrecoverable under section 36(1)(vii) of the Act. It is sufficient if the debts incidental to business are written off for the purpose of making claims. In the light of the aforesaid decision of the Hon’ble Supreme Court in the case of T.R.F. Ltd. vs. CIT (supra), it was not unreasonable for the Assessing Officer to accept the debts written off. Further, the Commissioner has not brought on record any good reason to hold to the contrary. In this view of the matter, we do not see any error committed by the Assessing Officer in admitting amounts write off towards bad debts and grant deduction of the same with similar amounts written back. In the light of aforesaid discussion, the action of the Commissioner under section 263 is outside the bounds of law and thus cannot be sustained. In consequence, the order passed u/s 263 for the assessment year 2009-10 dated 28.03.2014 requires to be set aside and quashed.
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