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2022 (10) TMI 972 - AT - Income TaxRevision u/s 263 by CIT - Reopening of assessment u/s 147 - assessee firm had allegedly received bogus entries - lack of inquiry v/s inadequate inquiry - whether the Ld. PCIT was justified in exercising his revisionary powers u/s. 263 when the AO had already rejected the various contentions of the assessee and had also made additions to the returned income by disallowing salary and interest to partners and had also enhanced the percentage of earnings by taking the same as 8% being commission earned by the assessee firm? - HELD THAT:- As in the present case, the Ld. PCIT has not specifically pointed out as to what inquiries or verification should have been carried out by the AO in this regard. From the records produced before us, it is very much evident that the AO had made inquiries regarding assessee's claim of having earned income from sub-contract work and, thereafter, after considering the reply submitted by the assessee, the AO reached a conclusion that the assessee's claim regarding its working as a sub-contractor was not to be accepted and that the assessee's such claim was to be rejected. Thereafter, the AO proceeded to hold that the assessee's work was in the nature of providing accommodation entries and based on this conclusion, the AO held that a rate of 8% should be applied being percentage of commission earned on providing the accommodation entries. Thus, in view of the questionnaires issued by the AO and the replies submitted by the assessee, the conclusion reached by the AO of rejecting the assessee's claim apparently proves that the AO had made proper inquiries and had also duly applied his mind to the facts of the case. Therefore, the contention of the Ld. PCIT that no enquiry was made by the AO is factually incorrect. It is not a case, where no inquiry had been made by the AO. Merely because the Ld. PCIT felt that further inquiry should have been made does not make the order of the AO erroneous and prejudicial to the interest of the Revenue. We also note that there is no incorrect application of law by the AO in the present case and further, the AO, after making inquiries and examining the records, has taken a view which is one of the possible views, and since this view is not unsustainable in law, it cannot be said that the order passed by the AO was erroneous in so far as being prejudicial to the interest of Revenue. Even at the cost of repetition, we reiterate that inadequacy of inquiry does not give jurisdiction to the Ld. PCIT to invoke his revisionary powers and set aside the assessment and nor does this section provide such powers to the Ld. PCIT that he can impose his view on the AO dictating him how a particular assessment is to be concluded. Pr.CIT has ignored the replies of the assessee and he has not discussed as to why he does not agree with the contentions of the assessee. The Ld. Pr.CIT has merely remitted the matter back to the Assessing Officer without making any inquiry himself. It is apparent that no independent inquiries have been made by the Ld. Pr.CIT although it was incumbent upon him to make such inquiry so as to reach the conclusion that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue. There is a difference between lack of inquiry and inadequate inquiry and it is for the Assessing Officer to decide the extent of inquiry to be made and it is his satisfaction which is required under the law. The Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] has held that if there was any inquiry, even inadequate, that would by itself not give occasion to the Commissioner to pass order u/s. 263 of the Act merely because the Commissioner had a different opinion in the matter. It is a settled law that the Ld. Pr.CIT cannot pass the order u/s. 263 on the ground that thorough inquiry should have been made by the Assessing Officer. We have no hesitation in holding that the Ld. Pr.CIT had wrongly invoked the revisionary powers u/s. 263 of the Act and we have no option but to quash the same. It is so ordered accordingly. - Decided in favour of assessee.
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