TMI Blog2023 (6) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... O were submitted by the assessee. Just because the AO does not bring these documents and details in his assessment order does not mean that AO has not conducted proper enquiry during the assessment stage. In fact, AO has applied his mind. Assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . As in the assessee`s case, it cannot be said that it is a case of 'lack of inquiry'. In view of the facts of the case and judicial pronouncements relied upon, it is well established that the impugned assessment order passed u/s. 143(3) dated 11.02.2021, was passed by AO after calling for relevant information and after detailed examination of the same. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Decided in favour of assessee. - ITA No. 68/SRT/2023 - - - Dated:- 31-5-2023 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Ramesh Malpani, C.A For the Respondent : Shri Ashok B. Koli, CIT-D.R ORDER PER DR. A. L. SAINI, AM: By way of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that she has taken/accepted loan of Rs.2,07,46,940/- during the year under consideration from Ashish Dying Printing Mills Pvt. Ltd. . During the assessment proceedings, the assessee had furnished the ledger of unsecured loan taken from the said party. On perusal of the confirmation ledger, it was observed that during the year under consideration, the assessee had obtained loan of Rs.2,26,50,000/- from Ashish Dying Printing Mills Pvt. Ltd. There was a debit balance of Rs.19,03,607/- in the said loan account and after repayment of loan of Rs.25,00,000/- balance at the end of the year was at Rs.1,82,46,940/-. 5. The Ld PCIT noted that during the assessment proceedings, the AO has given sufficient opportunities of being heard to the assessee and to prove the creditworthiness and genuineness of the loan taken by the assessee from Ashish Dyeing Printing Mills Pvt. Ltd. The assessee has found that registration of Ashish Dyeing Printing Mills Pvt. Ltd had been cancelled by MCA and this company had filed its last balance sheet on 31.03.2006 for financial year 2005-06. Since Ashish Dyeing Printing Mills Pvt. Ltd. was not in existence in the A.Y 2018-19 and had not fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Printing Mills Pvt Ltd, which is pending before ld CIT(A) and therefore no order u/s 263 of the Act can be passed on the matter, as it is already subject matter of appeal before the Ld. CIT(A). 9. However, ld PCIT rejected the contention of the assessee and observed that the provisions of section 263 of the Act has been invoked to bring to tax the amount of Rs.44,03,060/-, which has erroneously not been added by the Assessing Officer in the assessment order dated 30.03.2021. This shows that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of Revenue. Accordingly, the assessment order passed u/s 143(3) r.w.s. 143(3A) 143(3B) of the Act dated 30.03.2021, in the assessee`s case was set aside by the ld PCIT with a direction to the Assessing Officer to pass fresh assessment order after taking into consideration the issues as may have been already considered together with the issue discussed herein above also. 10. Aggrieved by the order of Ld. PCIT, the assessee is in appeal before us. 11. Shri Ramesh Malpani, Learned Counsel for the assessee, begins by pointing out that the issue raised by the Ld. PCIT, has already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer and the view taken by the Assessing Officer is sustainable in the eye of law hence revisional proceedings u/s 263 of the Act may be quashed. 14. On the other hand, Learned CIT-DR for the Revenue submitted that Assessing Officer has passed the assessment order without proper verification of the issue of unsecured loan, from a company, whose registration was cancelled by MCA. Thus, Assessing Officer has framed the assessment order without application of his mind. The Ld. CIT-DR also submitted that Ld. PCIT has invoked the jurisdiction only on differential amount of Rs.44,03,060/- (Rs.2,26,50,000 1,82,46,940/-), which was not examined by the Assessing Officer. Therefore, ld CIT-DR prayed the Bench that order of Ld. PCIT may be upheld. 15. We have heard the Learned Counsel appearing on behalf of the respective parties at length. The Ld. Counsel for the assessee, relied upon the judgment of Hon'ble Jurisdictional High Court of Gujarat in the case of Haryana Paper Distributors (P) Ltd. Vs. PCIT [2019] 412 ITR 515 (Guj), wherein the Hon'ble jurisdictional High Court held that Ld. PCIT cannot exercise the jurisdiction on the disputed amount which is subject-matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transportation charges. He put the petitioner to notice and made addition @ 4% GP on the gross turnover. In the process, he gave benefit of the profit already disclosed by the petitioner. 10. Two things thus immediately become clear. First that the Assessing Officer did not hold that petitioner's purchases from M/s. Tarini Trading Pvt. Ltd. were bogus. In fact, he held to the contrary accepting the evidence produced by the petitioner mainly in the form of the statement of the Director of M/s. Tarini Trading Pvt. Ltd. that the purchases were made. It was only after Assessing Officer had believed that the purchases were made that the question of transportation of the goods by the assessee or some one else would arise. Secondly, he made limited addition on the premise that when the petitioner was not required to bear the transportation cost, his profit from such dealings would be higher than normal. 11. The Commissioner in the impugned show-cause notice thus committed an error in recording that the Assessing Officer had held that the purchases were bogus. This very foundation for issuance of the notice was incorrect. His further observations were merely consequential i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] 13. Clause (c) of Explanation 1 may be worded in a manner as suggesting the extent of the powers of the Commissioner for taking an order in revision, its effect is of circumscribing such powers in cases where the order passed by the Assessing Officer has been subject matter of any appeal and such subject matter has been considered and decided in such appeal. This provisions thus statutorily recognizes the principle of merger and avoids any conflict of opinion between two quasi judicial authorities of the same rank. This issue has been considered at length by Division Bench of this Court in case of CIT v. Nirma Chemicals Works (P.) Ltd. [2009] 182 taxmann.com 183/309 ITR 67 (Guj.). It was held as under: 20. The stand of the revenue that the assessment order was silent as regards eligibility or otherwise of section 80-I of the Act cannot thus be accepted. As noted hereinbefore the entire section lays down a complete codified scheme in itself for deciding not only the eligibility but also for the computation of the relief to which the assessee is entitled. When t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 263 of the Act, on the ground, that assessee had not furnished entire details regarding the contracts, which was cancelled and also the A.O. not looking into the provisions of Section 40(a)(i-a) of the Act whereby such expenses on which the T.D.S. was liable to be deducted, but was not actually deducted were required to be disallowed and added back under the said provisions of the Act. 16. On the other hand, the contention of assessee that the A.O. after considering the entire books of account and the reply furnished by the assessee passed the assessment order under Section 143(3) of the Act. Further, from perusal of the assessment order dated 18.11.2010, it is clear that the A.O. had considered all the books of account and further on 13.5.2010 it had required the assessee, the entire information for the relevant assessment years along with copy of bank statement, narration of debit and credit entries, and other details. 17. On 7.7.2010, the assessee had replied the said notice and made available all the documents as required by the A.O. The Tribunal being the last fact finding Court, in paragraph 7 of its judgment, had noted that details of the documents prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us or to be prejudicial to the interests of the Revenue. The observation of the Commissioner that the Assessing Officer had arrived at a finding without conducting an enquiry was erroneous, since an enquiry was specifically held with reference to which a disclosure of details was called for by the Assessing Officer and furnished by the Assessing Officer and furnished by the assessee. The Tribunal was justified in holding that recourse to the powers under Section 263 was not warranted in the facts and circumstances of the case. 20. In the case of CIT v. Arvind Jewellers, [2002] 124 Taxman 615/[2003] 259 ITR 502 (Gujrat), it was held that once the A.O. after issuing notice had considered all the material on record, there was no basis for invocation of jurisdiction under Section 263 of the Act. Relevant paragraph of the said judgment is extracted hereunder: Held, that the finding of fact by the Tribunal was that the assessee had produced relevant material and offered explanation in pursuance of the notices issued under Section 142(1) as well as section143(2) of the Act and after considering the material and explanations, the Income-tax Officer had come to a definite conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponse to the notice the assessee may show to the Commissioner that the order sought to be revised is not prejudicial to the interests of the revenue. In that event, the Commissioner would have no jurisdiction to take any further action. He would be competent to take action only if he rejects the plea of the assessee. It thus becomes necessary for the Commissioner to examine the merits of the objection raised by the assessee. He cannot delegate that power to the Income-tax Officer by setting aside the assessment order and directing him to make a fresh assessment after taking into consideration the objection of the assessee. 23. In the present case, the Tribunal rightly arrived at the finding that all the material in regard to land development expenses was before the Assessing Officer who had required the assessee to produce all the documents in relation to the same and after inquiring about the details of contract and the contract executed by assessee, the bill submitted and payment schedule made, the Assessing Officer accepted the books of account and only disallowed Rs.1,20,000/- and added to the income of the assessee, which was also set aside by order of the CIT(A) while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of law. 27. In the present case, the Tribunal had recorded specific finding of fact that the assessing authority had examined each and every aspect of the case on which the remand order hinges, as such the remand order was not sustainable in the eyes of law. 28. Considering the facts and circumstances of the case, we are of the considered opinion, that the revenue has failed to make any case for interference in the order of the ITAT, as the CIT had proceeded to remand the matter back to the assessing authority while the appeal of the assessee was pending under Section 250 and the power of exercise under Section 263 was barred by Clause (c) to Explanation 1 of Section 263 of the Act. Further, the remand order by the CIT was based merely on suspicion and presumption. 29. The appeal is devoid of merit and is hereby dismissed. The question of law is, therefore, answered against the revenue and in favour of the assessee. 18. By following the above legal precedents, we note that in the assessee`s case under consideration, Ld. PCIT has mainly exercised his jurisdiction u/s 263 of the Act for enhancement of the addition, which can be enhanced by ld CIT(A) u/s 251 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. Therefore, in the assessee`s case, it cannot be said that it is a case of 'lack of inquiry'. In view of the facts of the case and judicial pronouncements relied upon, it is well established that the impugned assessment order passed u/s. 143(3) dated 11.02.2021, was passed by Assessing Officer, after calling for relevant information and after detailed examination of the same. The Assessing Officer has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Based on these facts and circumstances, we quash the order dated 12.01.2023 passed by the ld PCIT under section 263 of the Act. 21. In the result, appeal of the assessee is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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