TMI Blog2023 (7) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... he PCIT under 263 of the Act, where during the course of assessment, AO gave a thoughtful consideration to the material placed on record and took a view which cannot be held to be absurd or legally implausible, then, in our considered view, the PCIT is not empowered to supplant his own view, with the view taken by the AO by taking recourse to proceedings u/s 263 of the Act. Scope of proceedings u/s 263 - Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has different opinion in the matter. In our view, sec 263 of the Act does not visualise a case of substitution of the judgment of the Principal CIT for that of the AO who passed the order unless the decision is held to be wholly erroneous. Principal CIT, 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-visit the entire assessment and determine the income himself at a higher figure. No error in the order of Ld. AO so as to justify init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty was not mortgaged by previous owner but by assessee himself, then amount paid to discharge mortgage debts could not be treated as cost of acquisition so as to allow same as deduction. Accordingly, Principal CIT set aside the assessment order on the ground that the order has been passed without making enquiries on verification which should have been made in terms of Explanation 2 to section 263 of the Act. 4. The assessee is in appeal before us against the aforesaid order passed by Principal CIT. Before us, the counsel for the assessee submitted that the facts of the case of VSMR Jagadish Chandran 227 ITR 240 are distinguishable, since the assessee did not create a mortgage on the aforesaid property and the assessee had not taken any finance on loan from Kitco Ltd. In the instant facts, the land sold by the assessee was under attachment due to personal guarantee given by the assessee and the account was settled by the purchaser by making a direct payment to Titco Ltd towards liability clearance of the said land. The said payment was made directly by the purchaser to Titco Ltd. to have clear title of immovable property under the said agreement. Accordingly, the aforesaid amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of VSMR Jagadish Chandran supra, however, considering the fact that what is being analyzed is the scope of revisionary power vested with the PCIT under 263 of the Act, where during the course of assessment, the Ld. Assessing Officer gave a thoughtful consideration to the material placed on record and took a view which cannot be held to be absurd or legally implausible, then, in our considered view, the PCIT is not empowered to supplant his own view, with the view taken by the Ld. Assessing Officer by taking recourse to proceedings u/s 263 of the Act. 6.1 Regarding the scope of proceedings u/s 263 of the Act, an inquiry made by the Assessing Officer is considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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 has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 15 . Thus, even the Commissioner conceded the position that the Assessing Officer made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of lack of inquiry . 6.3 In Gabriel India Ltd. [1993] 203 ITR 108 (Bom) , law on this aspect was discussed in the following manner (page 113) The consideration of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 retrospective or prospective application shall not be relevant. 6.5 We observe that this is not a case where there was an omission on part of the AO to examine this aspect of disallowance of the sum of ₹ 1.50 crores while computing capital gains tax. The AO had put a specific question before the assessee during the course of assessment and has taken the assessee s reply on record. Further the assessing Officer had also discussed this aspect as part of assessment order. Therefore, in our view, this is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. It is also not the case of the Pr. CIT that the Ld. AO failed to apply his mind to the issues on hand or he had omitted to make enquiries altogether or had taken a view which was not legally plausible in the instant facts. As held by various Courts, Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has different opinion in the matter. In our view, s 263 of the Act does not vis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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