TMI Blog2021 (11) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... lear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further inquiries without a finding that the order is erroneous. Where the assessee we find had duly furnished an explanation of the issue not allegedly found to have been examined by the AO and the Ld.Pr.CIT having not even made an effort of examining the explanation simply restoring it to the AO to do so, there is we hold no finding of error by the Ld.PCIT in the order of the AO. We hold that the orders passed by the ld. Pr. CIT being beyond the scope of section 263 of the Act are not valid. Accordingly we set aside the revision orders passed by the Ld.PCIT for the two years under consideration. - Decided in favour of assessee. - ITA Nos. 123 And 124/CHD/2021 - - - Dated:- 4-10-2021 - Sh. Sanjay Garg, Judicial Member And Smt. Annapurna Gupta, Accountant Member For the Assessee : Shri Ashwani Kumar, C.A. And Shri Aditya Kumar, CA And Shri Bhavesh Jindal, CA For the Revenue : Smt. C. Chandrakanta, CIT ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: The present appeals relate to the same assessee and are against separate orders bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs.) (Rs.) (Rs.) Sales 429,55,17,000/- (inclusive of Excise Duty) 439,78,68,281/- (list of sales 5 lacs) 10,23,51,281/- Trade Receivables 3122.36 lacs 3305.05 lacs 1,82,69,000/- Trade Payables 361.45 lacs 472.36 lacs 1,10,91,000/- 3. Accordingly, Show Cause Notice was issued to the assessee as to why the provisions of Section 263 of the Act be not invoked on the issue of taxability of unexplained sales, receivables and payables as mentioned above. Due reply was filed by the assessee contending that the difference was on account of detail of sales and purchase filed during assessment proceedings being inclusive of indirect taxes which, it was contended, had been specifically mentioned in the detail whereas the financial statements, which included the Profit Loss Account, mentioned a note by the auditors that the sales was exclusive of indirect taxes. The differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed before me needs verification after consequential enquiry, If any, on the above mentioned issues. According to me, the proper submission would have been done during the assessment proceedings clarifying the above anomalies. Thus, according to me the record shows that the necessary inquiries which should have been made particularly in respect of the above mentioned issues and in the Show-Cause Notice (SCN), have not been made, making the order erroneous and prejudicial to interest of revenue. 6. In view of the above, it is evident that the assessment was completed without making in-depth inquiries or verifications which should have been made on the issues sales of ₹ 5,77,66,719/- and receivables of ₹ 8,80,31,000/- as detailed above and in the Show Cause Notice, rendering the order erroneous and prejudicial to the interests of revenue within the meaning of section 263 of the Act read with clause (a) of Explanation 2 there under. After careful consideration of the material available on the record, the submission made by the assessee and in the light of the above facts, it is held that impugned order of AY 2016-17 passed u/s 153A/143(3) of the Act by the AO on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT therefore has not arrived at a finding of error but has in fact restored it to the AO to arrive at the finding. 8. In both the present cases, the error noted by the Pr. CIT was that of the AO having not inquired into the difference in the amount of sales, trade receivables and trade payments as reflected in the financial statements of the assessee and that submitted in the details to the AO, causing prejudice to the Revenue on account of income relating to sales to that extent having escaped assessment or there being unexplained investments of the assessee . 9. But, we find, that the assessee had explained the differences to the ld. Pr. CIT stating that the detail furnished with respect to sales related only to those exceeding ₹ 5 lacs party-wise and amounts mentioned were inclusive of indirect taxes while the Profit Loss Account reflected sales exclusive of indirect taxes. That this had been submitted to the AO also while specifically mentioning in the details submitted to him that the amounts were inclusive of indirect taxes and the auditors had pointed out in their tax audit report that the sales were exclusive of indirect taxes. The assessee also filed a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 263 as above, to which our attention was drawn by the Ld.Counsel for the assessee as under: CIT vs Goetze(India) Ltd.361 ITR 505 This distinction must be kept in mind by the CIT while exercising jurisdiction under Section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interest of Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged inadequate investigation , it will be difficult 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any point of finality in the legal proceedings. The Hon ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd Vs. ITO (1977)(106 ITR 1) that there must be a point of finality in all legal proceedings and the stale issues should not be reactivitated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provison shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis- -vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue had to be preceded by some minimal inquiry. In fact, if the ld. PCIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the LD. PCIT to conduct such inquiry. 31. The ld PCIT has not referred to Explanation 2 of section 263 of the Act which has been inserted with effect from 01.06.2015 however we agree with the finding of the coordinate bench in the case of Narayan Tatu Rane (supra), wherein it has been held that Explanation cannot said to have overridden the law as interpreted by the various High Courts, where the High Courts have held that before reaching a conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue, the Commissioner himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of revenue. In the case of Narayan Rane a doubt is also expressed regarding the applicability of Explanation 2, which was inserted by Finance Act 2015 w.e.f. 01.06.2015, the bench also observed that if the Explanation is interpreted to have overridden the law as laid down by various High Courts, then the same would empower the Pr. CIT to find fault with ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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