TMI Blog2019 (11) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO during the assessment proceedings, we are of the considered view that there remains nothing for the PCIT to assume jurisdiction u/s 263 of the Act to say that the assessment order is not only erroneous but prejudicial to the interest of the revenue. We are of the considered view that the PCIT has wrongly assumed jurisdiction u/s 263 of the Act, hence his combined order for all the A.Ys deserves to be set aside. - Decided in favour of assessee. - ITA No. 605/DEL/2017 - - - Dated:- 31-10-2019 - Shri N.K. Billaiya, Accountant Member, And Ms. Suchitra Kamble, Judicial Member For the Assessee : Shri Rohin Jain, Adv, Shri Deepesh Jain, CA, Shri Arpit Goyal, CA For the Department : Shri Sanjay Shivam, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, With this appeal, the assessee has challenged the validity of the order dated 31.01.2019 framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] by the Pr. CIT, Gurgaon pertaining to A.Y 2014-15. 2. Facts on record show that in this case, assessment was completed u/s 143(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Debenture [CCD] aggregating to ₹ 1.35 crores in the immediately preceding Assessment Year 2013-14. The ld. counsel for the assessee further stated that during the year under consideration, CCD alongwith accrued interest thereon were converted into equity shares of the appellant at ₹ 688.52 per share which included face value of ₹ 10/- and share premium of ₹ 678.52 per share. 7. The ld. counsel for the assessee further stated that only share capital and premium aggregating to ₹ 25 lakhs belonged to the year under consideration and balance is brought forward CCD converted into equity shares. The ld. counsel for the assessee concluded by stating that since the ld. PCIT has himself proceeded on erroneous facts, which itself shows non-application of mind by the ld. PCIT, therefore, the order framed u/s 263 of the Act deserves to be quashed. 8. Per contra, the ld. DR strongly supported the findings of the ld. PCIT. It is the say of the ld. DR that Explanation 2 has been inserted in section 263 of the Act by the Finance Act, 2015 w.e.f 01.06.2015 and the said Explanation squarely applies on the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly reveal that thorough and investigative enquiries were conducted by the Assessing Officer, not only from the assessee, but also from all the concerned persons. 14. We find that it is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should. be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' it is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Hon'ble High Court of Bombay in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Incometax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent--if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-- recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous . 17. The co-ordinate bench in the case of Technip UK Ltd, ITA No. 1116/DEL/2014 vide order dated 17.12.2018 has held. as under: 62. We find the Hon'ble Delhi High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were I.T. assessees and the unsecured loan taken from M/s Stutee Chit Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. 64. Since in the instant case the A.O after considering the various submissions made by the assessee from time to time and has taken a possible view, therefore, merely because the DIT does not agree with the opinion of the A.O, he cannot invoke the provisions of section 263 to substitute his own opinion. It has further been held. in several decisions that when the A.O has made enquiry to his satisfaction and it is not a case of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held. to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would. have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would. not vest the Commissioner 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 conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Incometax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held. to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could. not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Hence the provisions of section 263 of the Act were not applicable to the instant case and, therefore, the commissioner was not justified in setting aside the assessment order. 19. The ld.. DR placed reliance on the decision in the case of Rajmandir Estates 386 ITR 162 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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