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2020 (4) TMI 574 - AT - Income TaxRevision u/s 263 - difference between "lack of inquiry" and "inadequate inquiry" - As per CIT AO was the alleged lack of enquiry in respect of the liquidated damages which was claimed to be in the nature of capital receipt and for which he held the assessment order to be erroneous and prejudicial to interest of the Revenue - HELD THAT:- From the order of the Ld. Pr. CIT, we note that he found fault with the AO’s role of an investigator and that he did not properly investigate into the facts of the case before taking a view that the liquidated damages received by the assessee being capital receipt was not liable to tax. We note that in the given facts of the present case the AO had made specific enquiry regarding the nature of liquidated damages. In compliance with the AO's notice u/s.142(1) the appellant furnished the required details along with an explanation vide its submission dated 30.11.2016. The appellant furnished copies of the FA agreements, arbitration award and the legal opinion received from a Senior Advocate regarding the character of receipt and its taxability. The appellant had also furnished a written note outlining the factual matrix and the reasons for which the receipt of liquidated damages was treated to be in the natureof capital receipt - all the requisite details were furnished by the appellant which enabled the AO to make enquiries into the nature and character of receipt and its taxability. No substance in the impugned order wherein it has been held that AO’s order suffered infirmity on account of lack of enquiry. Where the CIT finds that the enquiry conducted by the AO is not in accordance with his subjective standards, then the Ld. Pr. CIT should himself conduct the investigation and thereafter record a clear finding in his order u/s. 263 that the view followed or acted upon by the AO in his order was unsustainable in law. In the given facts of the present case, as noted earlier, the AO had made due enquiries into the nature & character of receipt of liquidated damages. - Decided in favour of assessee.
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