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2021 (7) TMI 291 - AT - Income TaxRevision u/s 263 by CIT - AO did not carry out enquiries or examination in respect of five issues - trade payable, advances receivable & short term borrowings, Inventory, salary to directors increased and bad debts written off - HELD THAT:- All the five points raised by the ld. CIT for revising the assessment order were duly enquired into by the AO and the assessee also furnished its reply to each one of them. Onus lies on the CIT to demonstrably indicate as to in which manner either the AO did not make proper enquiry on relevant aspects of the assessment or that the reply furnished by the assessee was fallacious, thereby rendering the assessment order erroneous causing prejudice to the interest of revenue. If the CIT simply declares an assessment order falling within the ken of section 263 just on his whims without any specific foundation for such a belief, the revision will not pass the test of judicial scrutiny. Simply put, in no situation - where the AO conducts proper enquiry; reply is filed by the assessee; and the claim of assessee is accepted – can the CIT invoke section 263 without indicating lacunas in the AO’s enquiry or fallacy either in the assessee’s reply or in the action of the AO in accepting such reply leading to under assessment of income, thereby causing prejudice to the interest of revenue. Adverting to the facts of extant case, we find that it falls in the afore discussed second way of the second outcome of the third category, namely, where the AO conducted enquiry; the assessee furnished his reply thereto; and the assessment was made accepting the point of view of the assessee without making any separate discussion in the assessment order. In such a panorama, the onus was upon the ld. CIT to show as to how the acceptance of the assessee’s claims by the AO led to the passing of an erroneous order thereby causing prejudice to the interest of revenue. The only raison d`etre given by him for the revision is that: “In the present case the AO has not verified all the relevant issues to deduce the correct taxable income and therefore the order passed by the Assessing Officer is prima-facie found to be erroneous in so far as it is prejudicial to the interest of revenue”. It is manifest on a bare perusal of the impugned order that, apart from relying on certain decisions justifying the revisionary exercise, the ld. CIT has not refuted the assessee’s contention that all the five points were raised by the AO during the course of the assessment proceedings and the assessee did satisfactorily furnish reply to each one of them backed by necessary details and further that there was nothing amiss in that. If the revision is held valid in such circumstances as are instantly obtaining, then each and every case of assessment would give a license to the CIT for making revision u/s 263 without first fulfilling the jurisdictional conditions of the assessment order being erroneous and prejudicial to the interest of revenue. As such, we are satisfied that the ld. CIT was not justified in setting aside the assessment order. - Decided in favour of assessee.
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