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2018 (2) TMI 870

to A.O. at the time of assessment, which was being verified by the A.O. before completing assessment. This is evidenced by the questionnaire issued by the A.O. as well as the information furnished by the assessee at the time of assessment. - In the consequential order passed u/s 143(3) r.w.s 263 of the Act, the A.O. has not made any specific disallowance in respect of the issues raised by the Ld. Principal Commissioner of Income Tax u/s 263 of the Act except the estimated additions. The Ld. PCIT has not made out a case of not conducting the enquiry on any of the issues, hence, we are unable to sustain the order of the Ld. Principal Commissioner of Income Tax and no reason to hold the assessment order passed by the A.O. was erroneous and prejudicial to the interest of the revenue. We set aside the order of Ld. Principal Commissioner of Income Tax. - Decided in favour of assessee - I.T.A.No.33/Vizag/2016 - Dated:- 9-2-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri Deba Kumar Sonowal, DR ORDER PER D.S. SUNDER SINGH, Accountant Member: This appeal filed by the assessee again .....

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d prejudicial to the interest of the revenue and accordingly set aside the assessment order directing the A.O. to redo the assessment after conducting enquiries and to take decision as per law. 4. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld. Counsel of the assessee argued that the Ld. Principal Commissioner of Income Tax has taken up the case for revision and set aside the assessment order for insufficiency of enquiry but not for lack of enquiry and argued that the Ld. PCIT is not permitted to invoke the jurisdiction under section 263 for inadequate enquiry. In the assessee s case, it is submitted by the Ld. A.R. that the A.O. has called for the books of accounts and the relevant information and verified all the issues raised by the Ld. Principal Commissioner of Income Tax in the show cause notice and the revision order. The A.O. after due verification of all the aspects passed the assessment order. The A.R further submitted that with regard to the verification of expenses, low profit, additions to assets, violations u/s 40A(3), qualified remarks of audit report, increase in capital and the current assets .....

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not made any specific addition in respect of the issues raised by the Ld. PCIT, except estimated additions of ₹ 2,59,654/- for vehicle maintenance and ₹ 2,99,157/- for salaries on estimation basis. The Ld. A.R. argued that the Ld. PCIT has invoked the revision u/s 263 of the Act on the surmises and conjectures, which is not sustainable in law. The Ld. Principal Commissioner of Income Tax has not brought on record any issue relating to the under assessment or suppression of income and it is not the case of the Ld. Principal Commissioner of Income Tax that the A.O. has not conducted the enquiries. It is a case of the Ld. Principal Commissioner of Income Tax that the A.O. has made inadequate enquiries and not placed the necessary copies of evidences furnished during the assessment. The Ld. A.R. further argued that the Ld. Principal Commissioner of Income Tax is not permitted to make revision u/s 263 of the Act unless the assessment made by the A.O. is found to be erroneous and prejudicial to the interest of the revenue. In this case, the Ld. Principal Commissioner of Income Tax has not made out any case of error, which is prejudicial to the interest of the revenue. Theref .....

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sallowed by the A.O., hence no case for revision and no violation. The Ld. Principal Commissioner of Income Tax is empowered to take up the revision u/s 263 of the Act, if the A.O. has not made any enquiries but not for inadequate enquiries. Inadequate enquiry cannot be a reason for revision u/s 263 of the Act. In the instant case the Ld. PCIT is of the view that the AO has not conducted the enquiries as per his expectations. For revision of the assessment order, the assessment order passed by the A.O. should be erroneous and prejudicial to the interest of the revenue. Once the assessee furnishes the required information which is being verified by the A.O., there is no case for revision. Once A.O. has conducted enquiry and he is satisfied with the reply given on the queries raised, the Ld. Principal Commissioner of Income Tax cannot intervene through revision to come to a conclusion that assessment order passed by the A.O. was erroneous and prejudicial to the interest of the revenue for lack of or inadequate enquiry. This view is supported by the decision of ITAT, Kolkata B Bench in the case of Vinod Aggarwal Vs. Principal CIT (Central) Kolkata (2018) 80 Taxmann.com 171. For ready .....

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supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interest of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. An order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. 32. Since the AO conducted enquiry the question is whether there can be no revision because the power u/s 263 can be invoked only in cases of lack of inquiry and not conducting inadequate inquiry. We are of the view that where an enquiry is conducted by the AO and he is satisfied with a r .....

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