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TMI Blog2022 (4) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout conducting the necessary enquiries with respect to certain items as detailed below: i. The assessee has made investments in two properties in the year under consideration. The source of the same was explained from the withdrawal of the partnership firm namely M/s. Jay Corporation which has directly paid to the vendor of the property. However, the AO has not cross verified from the accounts of the partnership firm. ii. The assessee has received unsecured loan from several parties which were accepted by the AO in the assessment proceedings without examining the genuineness of the loan as well as creditworthiness of the parties. iii. There was a gift of Rs. 2.5 lakhs from the father of the assessee. But in the bank account of the father, there were cash deposits which were utilized for the purpose of making gift to the assessee. iv. There was the payment towards the stamp duty, registration charges but the same were not examined by the AO during the assessment proceedings. 3.1. In view of the above the learned Principal CIT proposed to hold the assessment order as erroneous insofar prejudicial to the interest of revenue by issuing a show cause notice to the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat since all details were filed with the ld. Assessing Officer and assessment order was passed after consideration of all the materials, it cannot be stated that the enquiries made were insufficient so as to justify initiation of the proceedings under section 263 of the Act. The ld. Authorized Representative submitted that the Ld. Assessing Officer after consideration of all evidences placed on record and after due application of mind framed the assessment order. The Ld. AR submitted that since the Ld. AO has made enquiries during the course of assessment proceedings, it would not be open to the Ld. Pr. CIT to initiate proceedings u/s. 263 of the Act on account of non-verification. Thus, the said proceedings are liable to be set aside. 6. On the other, the learned DR submitted that the various documents about the investment in the properties, source of investment, about the unsecured loan, gift from father and property registration papers were filed but the AO with respect to the same has not carried out the necessary enquiries. Therefore, the ld. PCIT was right in initiating proceedings under section 263 of the Act. The ld. DR vehemently supported the order of the ld. PCIT. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considered view, this provision 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-à-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 after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld. Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld. Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents on record, we see no reason to interfere with the view of the Tribunal. The question whether the income should be taxed as business income or as arising from the other source was a debatable issue. The Assessing Officer has taken a plausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could be conclusively held that income arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were ca led for or directed." 7.7. From an analysis of the above judicial precedents, the principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Assessing Officer adopts one of the course permissible in law and it has resulted in loss of revenue; or where two views are possible and the Assessing Officer has take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 a copy of the property purchase Registration Index enclosed her with showing the dt. 13.03.2012 also reflect the investment in outnbl.sheet for F.Y. 2011-12 enclosed. I have enclosed here with the copies of Audit report, partnership deed and Anknowledgment receipt with statement of income of M/s. Jay Corporation. Regarding the gift of total Rs. 2,50,000/- from my father I have submitted a declaration for your consideration. A chart regarding investment transaction out of the source of unsecured loan deposits in prescribed format is enclosed herewith. iii. Letter written to the ITO dated 15-12-2015 where following details were submitted: Regarding the explanation to the source of investment for the purchase of property at Village Vinzol at consideration Rs. 4,14,31,000/-with other four parties. The payment is made through our partnership firm M/s. Jay Corporation in which my share is 40%, is Rs. 1,65,72,400/- done through my capital (investment) account with my partnership business M/s. Jay Corporation, copy of said conveyance deed along with my capital A/c with the said firm and Audited Bl. sheet of the firm is submitted with earlier submission 2) As stated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lained with details. iv. Letter written to the ITO dated 20-01-2016 where following details were submitted: I have submitted here with copies of bank pass-books of unsecured loan depositors which were remain unattached with earlier submission dated 24.09.2015 is enclosed here with for your perusal 7.9. With respect to the payment of stamp duty charges, it was submitted that the vendor of properties have borne such charges which can be verified from the copies of the sale deed which were available before the AO during the assessment proceedings as evident from the above discussion. In this regard, we find that there was no enquiry raised by the AO during the assessment proceedings. Even the ld. AR before us has submitted that the assessee has furnished reply to the AO vide letter dated 23-11-2015 placed on page 264 of the PB, as extracted below: Regarding expenditure incurred for Land premium, non-agricultural fees I have f submitted ledger copies and receipts with earlier submission, copies of said property deeds executed in F.Y. 2013-14 i.e. (1) For S. No. 244/8 vide regi. No. 2305 dt. 05.04.2013 (Rs. 8,23,180 & Rs. 16,200/-) (2) For S. No. 243/4+8 vide regi. No. 2674 dt. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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