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TMI Blog2023 (12) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proper inquiry is deemed to be erroneous insofar prejudicial to the interest of the Revenue despite the fact that the AO may have made some inquiry. The learned PCIT in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh 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, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous 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. 06.05.2016 examined the scope of enquiry under Explanation 2(a) to section 263 in the following words:- "20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing 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. Canara Bank Securities Ltd[2020] 114 taxmann.com 545 (SC), dismissed the Revenue's SLP holding that 263 proceedings are invalid when AO had made enquiries and taken a plausible view in law, with the following observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 8.12 From the above it is revealed it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of donation to the political party. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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