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TMI Blog2023 (8) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned orders in the drawer and no further action was taken. Only when the consequential order under section 263/143(3) of the Act passed on 24.12.2018, the counsel advised the assessee to provide the status of the order passed u/s. 263 of the Act. Accordingly, the assessee took the immediate step to file the appeals before the Tribunal and there was delay in filing the appeals. It was submitted that the delay in filing the appeals is not intentional and prayed to admit the appeals by condoning the delay. After hearing both the sides, we are convinced that the delay in filing the appeals was reasonable cause. Consequently, we condone the delay of 269 days and admit the appeals for hearing on merits. 4. It was submitted by ld AR that for the assessment year 2013-14, the original assessment came to be completed u/s. 143(3) on 19.2.2016 and for assessment year 2014-15 on 26.2.2016. For the assessment year 2013-14, the Pr. CIT initiated proceedings u/s. 263 of the Act in respect of issue of TDS not deducted on the payments made to Power Grid Corporation of India Ltd (PGCIL) and consequential disallowance liable to be made u/s. 40(a)(ia) of the Act (i) on the differed tax liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chief Commissioner or Principal Commissioner or Commissioner. The initiation cannot come from any other point other than the persons mentioned in the provisions of Section 263 of the Act; (b) Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner has to examine the record, which he has called for. The records would include any and all documents in relation to the assessee and in respect of the assessee which are available with the revenue; (c) once Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner has initiated by calling for the records and on his examination of the records, he finds that there is an error in such records which has been passed by the AO or the TPO, as the case may be is; (d) erroneous and prejudicial to the interest of revenue. It should be both erroneous and prejudicial to the interest of revenue. The only erroneous or only prejudicial to the interest of revenue is not adequate; (e) Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may give the assessee an opportunity of being heard. The word used is "may" and not "shall". There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed u/s. 263 of the Act by the ld. Pr.CIT is liable to be annulled and we do so. 13. The decision relied on by the ld. CIT-DR in the case of M/s Kalinga Mining Corporation Pvt. Ltd. (supra), wherein the coordinate bench of this Tribunal has relied upon the decision of the Hon'ble Delhi High Court in the case of Gee Vee Enterprises (supra) would not apply, insofar as that was not a case where the Hon'ble Delhi High Court has given any findings that enquiry to be made or caused to be made by the Pr.CIT. That was a case in respect of the issue as to whether the AO has made a proper enquiry or not, so also in the decision in the case of the Special Bench of the ITAT in the case of Rajalakshmi Mills Ltd. (supra). 14. It must be mentioned here that in the decision of the coordinate bench of the Tribunal in the case of M/s Kalinga Mining Corporation Pvt. Ltd., (supra), in para 7 what has been extracted as being from the decision of the Hon'ble Delhi High Court in the case of Gee Vee Enterprises (supra), is not from the said decision but it is an extract from the decision of the Hon'ble Special Bench of Chennai Bench of the Tribunal in the case of Rajalakshmi Mills Ltd. (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "the order is passed without making inquiries or verification which should have been made". 20. Undoubtedly, the expression used in Explanation 2 to Section 263 is "when Commissioner is of the view," but that does not mean that the view so formed by the Commissioner is not subject to any judicial scrutiny or that such a view being formed is at the unfettered discretion of the Commissioner. The formation of his view has to be in a reasonable manner, it must stand the test of judicial scrutiny, and it must have, at its foundation, the inquiries, and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be. If we are to proceed on the basis, as is being urged by the learned Departmental Representative and as is canvassed in the impugned order, that once Commissioner records his view that the order is passed without making inquiries or verifications which should have been made, we cannot question such a view and we must uphold the validity of revision order, for the recording of that view alone, it would result in a situation that the Commissioner can de facto exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be. 21. That brings us to our next question, and that is what a prudent, judicious, and responsible Assessing Officer is to do in the course of his assessment proceedings. Is he to doubt or test every proposition put forward by the assessee and investigate all the claims made in the income tax return as deep as he can? The answer has to be emphatically in negative because, if he is to do so, the line of demarcation between scrutiny and investigation will get blurred, and, on a more practical note, it will be practically impossible to complete all the assessments allotted to him within no matter how liberal a time limit is framed. In scrutiny assessment proceedings, all that is required to be done is to examine the income tax return and claims made therein as to whether these are prima facie in accordance with the law and where one has any reasons to doubt the correctness of a claim made in the income tax return, probe into the matter deeper in detail. He need not look at everything with suspicion and inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section 263. In the case of Malabar Industrial Co Ltd Vs CIT [(2000) 243 ITR 83 (SC)], Hon'ble Supreme Court has held that "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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law." The test for what is the least expected of a prudent, judicious and responsible Assessing Officer in the normal course of his assessment work, or what constitutes a permissible course of action for the Assessing Officer, is not what he should have done in the ideal circumstances, but what an Assessing Officer, in the course of his performance of his duties as an Assessing Officer should, as a prudent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er u/s. 263 on the ground that necessary enquiries had been conducted by the AO. It was the submission that the assessee has not placed the proof of the verification or examination as done by the Assessing Officer in the course of original assessment. It was the submission that this should be considered as a case of no enquiry by the Assessing Officer and in the case of no enquiry, , the Pr. CIT is not expected to do any enquiry but expected to direct the AO to make enquiry. Only in such cases, where there is inadequacy of enquiry, that the Pr. CIT is required to do further enquiry to show how the orders passed by the AO was erroneous and prejudicial to the interest of the revenue. It was the further submission that the word used in the provisions of section 263 is to do enquiry as the Pr. CIT deems necessary. There is discretion available with the Pr. CIT to do or not to do enquiry. Ld Pr. CIT (OSD) drew our attention to the decision of the Hon'ble Jurisdictional High Court of Orissa in the case of Pr. CIT vs. Orissa State Police Housing & Welfare Corporation Ltd., (20220 139 taxmann.com 207) Orissa), wherein, in para 14, it has been held as follows: "Section 263 of the Act requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modifying, cancelling or directing fresh assessment, particularly when it is a case of "no inquiry". We are of the considered view that no inquiry, as envisaged in law, was carried out, hence, question of the Commissioner taking an alternate possible view does not arise. The Assessing Officer cannot be said to have taken a plausible view, as envisaged in law, and the view taken by the Commissioner to be an alternative one. Finding of the Commissioner that the order is erroneous is not on account of his mere disagreement with the view taken by the Assessing Officer. Any inquiry, without application of mind, is nonest. The given facts warranted the Assessing Officer to have conducted complete and proper inquiry and only thereafter, assessed the income so declared by the Assessee. He ought to have considered that the Assessee had sought to revise the return by declaring an income 1872% higher than what was originally returned and that too after action for scrutinizing the return was initiated. All transactions of sale of agricultural produce were in cash. Income declared was (a) disproportionately high only with respect to the relevant year and never in the preceding or succeeding yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2014-15, the assessee has offered Rs. 328.71 crores. It was the submission that it was only subsequent that OERC has given breakup of the amount and had permitted the assessee to collect the specified amount over a period of six years. In regard to the issue of deferred tax liability, and the issue on is in regard to contractual liability, the income arose on a contingent basis and the tax was liable to be offered by the assessee. On the issue of subsidy, the assessee was obliged to offer the same to tax if it was on revenue field by showing in the profit and loss account. If it was in the capital field, it has to be taken to capital reserve account and if it was for the machinery, the same was liable to be reduced from the cost of machinery for the purpose of claiming depreciation. It was the submission that Pr. CIT was not obliged to make any enquiry insofar as nothing has been brought to show that the AO had conducted any enquiry on these issues. It was the submission that the fact that the issues having not been considered clearly showed erroneous application of mind by the Assessing Officer. It was the prayer that the orders passed under section 263 are to be uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee that OERC has directed to recover the specified amounts in six years and that amounts have been recovered and offered to tax and in short it is excess income that has been offered to tax and same could not have been treated as erroneous and prejudicial to the interest of the revenue under any circumstances. The order of OERC is also dated 18.3.2011 and this order was available before the Pr. CIT before passing order u/s. 263. In regard to deferred tax liability also, the assessee has collected the amounts on the basis of the order of OERC. This was also before the Pr. CIT. Even on cursor perusal of the reply filed by the assessee would show that the assessee has offered the incomes in the line with the order passed by the Regulatory Authority. In regard to the issue of subsidy also, the assessee has categorically mentioned that it has been following AS-12 and that net of the subsidy has been offered to tax. Thus, clearly this is a case of no enquiry by the Pr. CIT. A perusal of the order of the Hon'ble Jurisdictional High Court of Orissa in the case of Orissa State Police Housing & Welfare Corporation Ltd., (supra) shows that in para 14, which has been extracted above, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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