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2022 (8) TMI 1048 - AT - Income TaxRevision u/s 263 - Revision based on Audit Objection - Allegation of non independent application of mind by CIT - Whether there is no specific finding in the order that the order of assessment is erroneous insofar as it is prejudicial to the interests of revenue in respect of any of the issues raised? - HELD THAT:- As exercise of Revisionary Powers in the facts of the present case cannot be upheld. The Revisionary Powers in the facts of the present case have been exercised mechanically and in undue haste without even caring to address the reply made available by the assessee on the IT Portal. The fact that patently on the face of the record it is an order passed in undue haste is further tainted by the fact that no effort was made by the ld. PCIT to give the assessee an effective hearing. The fixing of the hearing in the peculiar facts and circumstances of the present case where the Show Cause Notice dated 23.02.2022 issued thereafter fixing the hearing on 04.03.2020 patently was a rhetoric, meaningless exercise. Admittedly, reasonable time was not made available to the assessee to put in an effective hearing. Onerous responsibility to provide an effective and fair hearing was treated like a meaningless exercise of merely ticking the box. It is unfortunate that no effort was made to even address the written reply of the assessee received on the IT Portal. The exercise of Revisionary powers cannot be allowed to be exercised whimsically or arbitrarily. In the facts of the present case, ld. PCIT was conscious of the fact as to why the specific case was selected for scrutiny under CASS. The ld. PCIT also had the benefit of queries raised by the AO and the replies of the assessee. The fact that there was a shrinkage loss higher than the estimate, was also a fact available on record. In the facts of the present case the 263 action was triggered by the higher percentage loss as flagged by the Audit Objection is a fact on record. The fact that the issues were enquired into by the AO in the facts of the present case or that on the audit objections, the AO required the assessee to offer its explanation, the fact remains that the higher percentage or shrinkage loss is based on estimated percentages in regard to evaporation etc. and the occasions for higher spillage or transportation loss were also estimated percentages were facts considered by the AO are arguments which we have considered. We also find that the ld. PCIT did not even care to look into the reply of the assessee before the passing of the order. The prayer of the ld. CIT-DR at this stage that the matter may be remanded back, we find in the peculiar facts of the present case cannot be accepted. The fact that the twin conditions of error in the order and said error which can be said to be prejudicial to the interests of the Revenue, we find have not been met. The fact remains that the order has been passed in undue haste without caring to address even the reply of the assessee. Argument canvassed on behalf of the assessee that merely because there is an Audit Objection, the exercise of powers u/s 263 is invalid, we hold cannot be accepted. What we understand from the aforesaid decision and various other decisions cited on this proposition is that a mechanical exercise of revisionary powers u/s 263 by the Revisionary Authority by merely citing the Audit Objection cannot be said to be a valid exercise of Revisionary Powers. PCIT is require to give an independent finding considering the record. The error in the order of the AO, that too such an error which is prejudicial to the interests of the Revenue, has to be pointed out by the Revisionary Authority in the order. The onerous power cannot be exercised mechanically and arbitrarily. The sagacious arguments of the ld. CIT-DR to this extent, we find are well founded. Accordingly, considering the peculiar facts and circumstances of the case for the reasons given herein above, we find that the impugned order on facts deserves to be quashed. Appeal of assessee allowed.
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