TMI Blog2019 (12) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the acceptance of the claim by the AO was a plausible view or on the facts of the finding on the facts that the said finding of the AO can be termed as sustainable in law. We find that vide questionnaire, the assessee was asked regarding Toll Plaza expenses consisting computer and weigh bridge expenses, court fee expenses, which were appropriated in new contractor account, the court fee expenses and recovery suit expenses were relating to business of the assessee licence fee, Ahatas income is duly shown as para copy of ledger account filed. The assessee had furnished his reply, which is found placed in the Paper Book Pages as referred above. AO had made enquiries under Limited scrutiny assessment. We find that the AO has made due enquiries and had taken a plausible view, hence, same, cannot be disturbed by Pr.CIT in the name of further, verification and framing fresh assessment. Since the AO has made during enquiry and examined the issues, hence, invocation of Explanation 2 of section 263 is not justified no it is applicable for the assessment year under consideration as it was inserted with effect from 01.06.2015. Pr. CIT has not done any enquiry and not suggested w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT noticed that the assessee has debited in the Profit Loss Account toll Plaza expenses of ₹ 1,48,97,057 which included expenses of ₹ 3,62,608 of computer expenses and ₹ 3,68,192 on weig bridge expenses. As these expenses were paid to particular entity which are in the nature of Works contract and liable to TDS under section 194C of the Act. However, the perusal of records suggest that there is nothing on record that TDS was deducted on these payments. The Pr.CIT further, observed that the assessee has debited ₹ 5,91,030 as court fees paid for civil suit to recover ₹ 2,09,00,000 and ₹ 17,53,638 against Kamaldeep Singh and M/s. Gupta Traders respectively. However, the perusal of records suggest that these are not relating to any business activity of the assessee, hence, such expenses are apparently not allowable. Further, the disputed assets involved in recovery of ₹ 2,26,53,638 were not find place in balance sheet hence, nature of source of funds has not been examined by the AO. Further, perusal of details of licence fee expenses in respect of liquor business showed that the assessee was running Ahatas (Drinking place at least at four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under CASS, hence, this cannot be extended to other queries. However, Pr.CIT observed that this case was selected for verification and examination of large expenses claimed under the head of other expenses. The Pr. CIT observed that regarding computer expense and weigh bridge expenses the assessee has not filed satisfactory reply for non deduction of TDS. Regarding expenses of ₹ 5,91,030, the claim of business relation and expenses debited to capital account but no details are filed. Hence, these expenses were liable to be disallowed. The AO was require to make enquiry for recovery suit claim of ₹ 2,26,53,638 and why these were not reflected in balance sheet. Regarding Ahatas income the assessee has only filed a ledger account showing income received as Ahatas income but details of same has not been filed. Thus, after considering reply to show-cause notice, the Pr. CIT observed that the order passed by the AO is erroneous as well as prejudicial to the interest of revenue because assessment order passed without making required inquiries and verification in respect of above issues. Therefore, the order was considered to be erroneous and prejudicial to the interest of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of suit recovery are given at Paper Book Page No. 55 to 64. Thus, the assessment order passed after making enquiries and verification. The learned counsel for the assessee further referred Paper Book Page No. 65 of which copy of Ahatas account showing monthly income from Ahatas totaling to ₹ 4,73,200 for the year under consideration. The details of same were submitted along with books of accounts during the course of assessment proceedings. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. The Pr.CIT has not specified that which enquiries were ought to have made. The ld. Counsel for the assessee further submitted that the Pr.CIT in his notice himself mentioned that the assessee examination of records showed the discrepancies, which means the details were on record and were examined by the AO. The learned counsel for the assessee further submitted that the assessment year involved is assessment year 2014-15 and amendment by way of Explanation 2 to section 263 was inserted with effect from 01.06.2015, hence, same is not applicable for the assessment year under consideration as it is not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us in so far as it is prejudicial to the interest of Revenue. It is a settled position of law that the aforesaid twin condition i.e. AO's order is erroneous and prejudicial to the interest of revenue is sine qua non for assumption of revisionary jurisdiction by Pr.CIT. As per the scheme of the Act, AO has a dual role to discharge while assessing the income of an assessee. He is both an investigator as well as an adjudicator. If the AO fails in discharging any of the two said duties i.e. as an investigator or that of an independent/impartial adjudicator, the Pr. CIT's supervisory jurisdiction is attracted because the order of the AO would be erroneous for lack of inquiry. Thus if he does not investigate, it would be erroneous for failure of AO to adjudicate as an independent/impartial adjudicator which means that if the AO passes assessment order in violation of natural justice, or there is bias or arbitrariness etc. then also the order of AO would be erroneous. When we say that lack of inquiry makes an AO's order erroneous, one has to keep in mind the difference between lack of inquiry and inadequate inquiry. Lack of inquiry makes the AO's order erroneous, but inade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the view taken by the Assessing Officer is found to be unsustainable in law, the powers under section 263 of the Act cannot be invoked. 8. No doubt, clause (a) of the Explanation 2 to section 263 deems the order to be erroneous and prejudicial to the interest of the Revenue in case order is passed without making enquiries or verification which should have been made in the opinion of Pr.CIT. In our opinion, for the applicability of clause (a) of Explanation, it is necessary that the Pr. CIT must mention in the order what inquiries or verification the Pr. CIT desires to have been carried out by the AO. The Pr. CIT in this case even though stated that the AO failed to examine computer expenses and weigh bridge, court fee, licensee fee and recovery dues during the course of assessment proceedings, but did not pointed out what type of inquiry of verification should have been carried out in this regard by the AO. However, the order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 3,62,608 of computer expenses and ₹ 3,68,192 on weigh bridge expenses which were works contract and liable to TDS under section 194C of the Act. The assessee debited ₹ 5,91,030 as court fees paid for civil suit to recover ₹ 2,09,00,000 and ₹ 17,53,638 against Kamaldeep Singh and M/s. Gupta Traders respectively how these are related to business activity not examined and no income from Ahatas has been shown, but did not pointed out as to why order is erroneous when the all detailed of balance sheet and notes appended thereto were on record of the AO. that The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order has been passed after making enquiries and verification. The learned counsel for the assessee further referred Paper Book Page No. 65 of which copy of Ahatas account showing monthly income from Ahatas totaling to ₹ 4,73,200 for the year under consideration. The details of same were submitted along with books of accounts during the course of assessment proceedings. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. The Pr.CIT has not specified that which enquiries were ought to have made. The ld. Counsel for the assessee further submitted that the Pr.CIT in his notice himself mentioned that the assessee examination of records showed the discrepancies, which means that the details were on record and were examined by the AO. Further, Explanation 2 to section 263 was inserted with effect from 01.06.2015, hence, same is not applicable for the assessment year under consideration as it is not retrospective in nature. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. Merely just because the view taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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