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2023 (12) TMI 807 - ITAT AHMEDABADRevision u/s 263 - as per CIT assessment order has been passed by AO without making inquiries or verification with respect to the donation to political party claimed as deduction u/s 80GG - HELD THAT:- An inquiry made by the AO considered inadequate by the Commissioner of Income Tax, cannot make the order of the AO erroneous. In our view, the order can be erroneous if the AO fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the AO. It is AO's prerogative to make inquiry to the extent he feels proper. CIT by invoking revisionary powers u/s 263 of the Act cannot impose his own understanding of the extent of inquiry. There were number of judgments by various Hon’ble High Courts in this regard. Delhi High Court in the case of CIT Vs. Sunbeam Auto [2009 (9) TMI 633 - DELHI HIGH COURT] made a distinction between lack of inquiry and inadequate inquiry. The Hon’ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The Hon’ble Supreme Court in recent case of Shree Gayatri Associates [2019 (6) TMI 888 - SC ORDER] held that where Pr. CIT passed a revised order after making addition to assessee's income u/s 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of such on-money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was liable to be dismissed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. AO completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 of the Act on ground that AO had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal, thus, set aside the revised order passed by Commissioner. Revealed it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings u/s 263 on the ground that the AO has not made enquiries or verification which should have been made in respect of donation to the political party. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. As also important to note that the learned PCIT referred the search proceeding carried out at the premises of the political party where it was discovered that said party involved in donation scam. We note that the search proceeding was carried out as on 2nd February 2021 whereas the assessment order in case of the assessee was passed as before the search proceeding. Therefore, in the given facts it was not possible for the AO to consider the finding of search. The fact of the party being involved in any scam was not before the AO. Hence, the formed his opinion based on the material available before him which in our considered opinion cannot be said as erroneous insofar prejudicial to the interest of the revenue. We hold that there is no error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Appeal filed by the assessee is allowed.
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