TMI Blog2023 (12) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The Hon ble Supreme Court in recent case of Shree Gayatri Associates [ 2019 (6) TMI 888 - SC ORDER] held that where Pr. CIT passed a revised order after making addition to assessee's income u/s 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of such on-money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was liable to be dismissed. The facts of this case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. AO completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 of the Act on ground that AO had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the year claimed huge amounts of deduction under chapter VI-A of the Act. Accordingly, the assessee was selected for limited scrutiny for verification of deduction claimed under chapter VI-A of the Act. The AO, after considering the submission of the assessee accepted the claim of the assessee in the assessment order dated 04-January- 2021. 4. The learned PCIT on perusal of assessment record found that the assessee has given donation to Rastriya Samajwadi Party for Rs. 25 Lakhs and claimed the same as deduction under section 80GG of the Act. The bank account of the assessee was credited for Rs. 25 Lakh just before the transferring of the amount as donation to impugned party. The learned PCIT further found that the search proceedings were conducted at the said political party dated 2nd February 2021 wherein it was revealed that the party was involved in donation scam. The AO, at the time of assessment failed to enquire and examine the source of Rs. 25 Lakh. As such the AO failed to make the proper verification or the cross verification of the issue of donation to the political party. 4.1 The learned PCIT was of the view that the order passed by the AO without pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were number of judgments by various Hon ble High Courts in this regard. 8.2 Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.) , made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The relevant observation of Hon ble Delhi High Court reads as under: 12. .. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Gabriel India Ltd. [1993] 203 ITR 108 (Bom) , discussed the law on this aspect in length in the following manner: The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 8.4 The Mumbai ITAT in the case of Sh. Narayan Tatu Rane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised order under section 263 of the Act on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal, thus, set aside the revised order passed by Commissioner. The Hon ble High Court upheld Tribunal's order. The Hon ble Supreme Court while dismissing the SLP filed by the Department held as under:- We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed 8.6 The Supreme Court in the another recent case of Principal Commissioner of Income-tax-2, Meerut v. Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y dated 07-01-2020 1. In my income tax return I have claimed following deduction under chapter VI-A Under Section Amount 80C 1,50,000/- 80D 21,438/- 80GGC 25,00,000/- 80TTA 9,086/- 8.9 During the year I have deposited Rs. 1,50,000/- in my Public Provident Fund and has claimed exemption U / s 80C. For your verification copy of my PPF Passbook is enclosed herewith. 8.10 During the year I have paid mediclaim premium to The New India Assurance Co. Ltd. o Rs. 22,998/- and has claimed deduction U / s 80D. For your verification copy of my ban statement is enclosed herewith in which it shows debit of Rs. 22 ,998/. on 22 ^ r September, 2017 8.11 During the year I have donated Rs. 25 ,00,000/- to political party Rashtriya Samajwa party and has claimed deduction U / s 80GGC. For your verification copy of donati receipt, Donation ledger account from my books and bank statement is enclosed herew in which it shows debit of Rs. 25,00,000/- 6th October, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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