TMI Blog2022 (8) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... record passed the assessment order. Since, the assessment was completed u/s. 143(3) of the Act the presumption is that the Assessing Officer has examined all documents on records before passing the order, even though elaborate discussion is not made in the order. In the instant case, as has been pointed earlier the AO made enquiry. The assessee in response to the questionnaire issued by Assessing Officer furnished details. AO after examining the documents furnished by assessee passed the order. Hence, the instant case is not that of lack of enquiry by the AO. Therefore, the ratio of the decisions relied upon by the Revenue would not apply in the facts of the present case. In the light of the facts discussed above, we hold that the CIT has erred in exercising jurisdiction u/s. 263 of the Act. Decided in favour of assessee. - Shri Vikas Awasthy, Judicial Member And Shri M. Balaganesh, Accountant Member For the Appellant : Shri J.D. Mistry, Sr. Advocate with Ms. Prachi Mehta Shri Sandeep Bhalla. For the Respondent : Ms. Surabhi Sharma Shri Milind Chavan. ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is against the order of Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return filed by the assessee without making any addition. Thus, it is evident from documents on record that the Assessing Officer made detailed enquiry before passing assessment order. 4. The ld. Counsel for the assessee further submitted that the CIT in exercise of his jurisdiction u/s. 263 of the Act issued notice dated 21/02/2020. The same is at page 39 of the paper book. The CIT in the notice alleged that the Assessing Officer has concluded the assessment without examining and verifying facts during the course of assessment in respect of the amount claimed as exempt. The assessee in response to the notice furnished a detailed reply on 11/03/2020 (at page 41 to 51 of the Paper Book). Even during proceedings u/s. 263 of the Act, the assessee filed submissions on 22/02/2021 and 04/03/2021, the same are at pages 68 to 76 and 77 to 125 of the Paper Book. In response to the notice u/s. 263 of the Act and during revision proceedings, the assessee time and again explained its mode of operations and detailed description of the activities carried out by the assessee. The assessee had explained that the income received by the assessee from its services in India are neither taxable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the enquiry. The CIT was of the opinion that adequate enquiry has not been conducted by the Assessing Officer in assessment proceedings. The CIT should have pointed the defects in the enquiry and also what more Assessing Officer should enquire. To support this argument the ld. Counsel for the assessee placed reliance on the following decisions: (i) Torrent Pharmaceuticals Ltd. vs. DCIT, 173 ITD 130 (Ahd-Trib) (ii) JRD Tata Trust vs. DCIT 85 ITR 431(Mum-Trib). (iii) Narayan Tatu Rane vs. ITO, 70 taxmann.com 227 (Mum) 5. Per contra, Ms. Surabhi Sharma representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. Departmental Representative submits that the Assessing Officer might have collected the documents during assessment proceedings but has not examined the same. The Assessing Officer failed to enquire as to why revised return was filed by the assessee resulting in refund of tax paid. The ld. Departmental Representative relied on Explanation -2 to section 263 of the Act to contend that the CIT has rightly directed the Assessing Officer to conduct the enquiry as the Assessing Officer has granted relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept the revised return of income. Thus, it is not a case of no enquiry by the Assessing Officer . 8. It is trait law that every loss of revenue as a consequence of the order by Assessing Officer cannot be considered as prejudicial to the interest of Revenue. If the Assessing Officer has taken one of the possible views which may have resulted in loss of revenue, it cannot be a subject matter of revision. The two conditions mandatory for exercising jurisdiction u/s. 263 of the Act are (i) the order should be erroneous; and (ii) prejudicial to the interest of Revenue. Both these conditions have to be satisfied simultaneously. If any one of the two mandatory conditions is missing special powers conferred on CIT u/s. 263 cannot be invoked. 9. As pointed earlier, the CIT has invoked Explanation -2(a) to section 263 of the Act while passing the order to contend that the assessment order has been passed without making enquiries or verification which should have been made. We observe that the Assessing Officer had made enquiries. The assessee responded to the same and made detailed submissions. If the Assessing Officer has not made detailed discussion on the merits of the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue, cannot be accepted The Revenue had filed SLP against the aforesaid order of the Hon ble High Court. The SLP of Revenue was dismissed by the Hon ble Apex Court. 10. The Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. (supra) has held that where the assessee had furnished detailed explanation in response to the queries made by the Assessing Officer and the Assessing Officer after being satisfied with the explanation so furnished passes the assessment order accepting the contentions of the assessee, the assessment order cannot be held to be erroneous simply because the Assessing Officer in his order did not make elaborate discussion. For the sake of completeness the relevant observation made by the Hon ble High Court are reproduced herein under: 13. We. therefore, hold that in order to exercise power under sub-section (1) of section 263 there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue. We have already held what is erroneous. It must be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be based on the whims or caprice of the revising authority. There must be materials available from the records called for by the Commissioner. 14. We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The ITO in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the ITO on being satisfied with the explanation of the assessee. Such decision of the ITO cannot be held to be 'erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the ITO to re-examine the matter that, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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