TMI Blog2012 (3) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... . For Appellant: Mr. Sanjeev Sabharwal, sr. standing counsel SANJIV KHANNA, J: (ORAL) 1. Ld. counsel for the Revenue at the outset states that Annexure 1 to this appeal is the assessment order passed pursuant to the order under Section 263 of the Income Tax Act, 1961 ("Act‟, for short). He prays for and is granted permission to place on record the original assessment order dated 26.12.2006. This order was made subject matter of an order under Section 263 of the Act dated 24th March, 2009 by the Commissioner of Income Tax ("CIT‟, for short). By the impugned order dated 8th July, 2011, the Income Tax Appellate Tribunal ("Tribunal‟, for short) has allowed the appeal of the respondent-assessee and has quashed the order dated 24.3.2009, under Section 263 of the Act, passed by the CIT on two aspects : (1) Claim for warranty; and (2) Deduction under Section 35 DDA. With regard to the third aspect i.e. non-recurring items, the Tribunal has upheld the order passed by the CIT. In this appeal, we are therefore concerned only with the first two aspects. 2. On the question of warranty claim, it is noticeable that this issue was raised by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of lack of inquiry that such a course of action would be open. In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113) : . . . From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. That would not vest the Com- missioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed . . . We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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