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TMI Blog2022 (12) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... return for the AY 2017-18 on 18-03-2018, declaring an income of Rs. 50,98,970/- only. Subsequently, the case of the assessee was selected under scrutiny for the AY 2017- 18 and notice u/s 143(2) and notice u/s 142(1) were issued respectively. The assessee filed its reply in response to such notice. The AO after considering the submission of the assessee accepted the return income of the assessee without any modification. 4. The PCIT on examination of the case records of the assessee, found that a survey was carried out u/s 133A of the Act on 26-09-2016 at the premises of the assessee. The assessee during the survey proceeding has admitted the unaccounted income of Rs. 40,00,000/- only. Therefore, such unaccounted income should have been taxed under section 69 of the Income tax and therefore, the tax ought to have been levied u/s 115BBE of the Income tax Act. However the AO had not verified this issue while finalizing the assessment proceeding and hence, the AO had not levied the tax as per the provision of section 115BBE of the Income Tax Act. Therefore, the order of the AO is erroneous and prejudicial to the interest of the Revenue. Accordingly, the PCIT initiated the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the Income Tax Act. 7. Being aggrieved by the order of the learned PCIT, the assessee is in appeal before us. 8. The learned AR before us filed two paper books running from pages 1 to 38 contended that the assessment was framed by the AO after considering the necessary details and verification and application of mind. The learned AR in support of his contention drew our attention on page Nos. 8 to 9 of the paper book where the copy of the notice u/s 142(1) of the Act dated 23-12-2019 was placed. In the said notice, the assessee was asked about the explanation in respect of unaccounted income of Rs. 40,00,000/- during the course of survey. Likewise, the learned AR also drew our attention on pages 10 & 11 of the paper book where the reply of the assessee in response to the notice as mentioned above was placed. Thus, the learned AR contended that there cannot be said that the assessment order is erroneous and causing prejudice to the interest of Revenue in the given facts and circumstances. 9. On the contrary, the learned DR vehemently supported the order of the ld. PCIT. 10. We have heard the rival contentions of both the parties and perused the materials available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us 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 reexamine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 visà- 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 enquries 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 by way of Explanation 2(a) shall have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 called for or directed" 10.7 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 taken one view with which the Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee have paid the amount instantly and the assessee did not have claimed any expenses or any other deduction from such unaccounted income. Therefore, it is requested that the above transactions shall be not be considered additions under section 68 and tax shall not be levied under provision of section 115BBE. 10.9 From the above it is revealed it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of applicability of section 115BBE of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. 10.10 At this juncture, it is also important to note that the learned PCIT in his order passed under section 263 of the Act has made reference to the explanation 2 of section 263 of the Act. It was attempted by the learned PCIT to hold that there were certain necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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