TMI Blog2024 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... s able to establish and show the error or mistake made by the AO, making the order unsustainable in law. In some cases, possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the AO had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further enquiries without a finding that the order is erroneous, the condition or requirement which must be satisfied for exercise of jurisdiction u/s 263 of the Act. In such matters, to remand the matter/issue to the AO would imply and mean that the CIT has not examined and decided whether or not the order is erroneous but has directed the AO to decide the aspect/question. In the present case before us, we note that Ld. Pr. CIT has raised three issues in the show cause notice and thereafter concluded on the same to set aside the assessment with the direction to do it afresh. We find that the issues in the present case considered by the Ld. CIT for exercising revisionary proceedings u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas in the written submissions furnished by the assessee, the name of Jyotipunj Educational Welfare was mentioned against the said unsecured loan. (ii) In the Note No. 13 of Balance sheet as on 31.03.2016, opening stock of Rs. 7,29,71,920/- was shown while the closing stock for the preceding year was shown at Rs. 7,87,68,920/-. Thus, there was a difference of Rs. 57,96,973/- which remained unreconciled. (iii) In clause 20(b) of the tax audit report in Form 3CD, details of contribution received from employees for PF ESI were furnished. It was observed that certain contribution from the employees was not credited in the government account or on before the due date. 3.2. Ld. Pr. CIT concluded the revisionary proceeding on the three above noted issues by holding that the impugned assessment order is erroneous and prejudicial to the interest of Revenue which was passed by the AO without making enquiries and verification which should have been made. He thus, cancelled and set aside the order with a direction to the Ld. AO to frame the assessment de novo by making fresh enquiries and verification in respect of the three issues and finalise the assessment in accordance with provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only given. The difference amount of Rs. 57,96,973/- pertains to finished goods which are not mentioned in the sub-notes because there was no change in the said amount during the year under consideration. Since there was change in the amount of raw material and WIP only, therefore, details of these were only mentioned in the sub-notes. According to him, sub-notes formed part of the notes to the Balance sheet. Ld. Pr. CIT has thus misinterpreted/misread the details contained in the sub-notes and the notes to the Balance Sheet which is evidently verifiable from the audited Balance sheet placed on record. 4.3. The third issue is relating to late payment of PF ESI. Ld. Counsel submitted that details of payment made towards PF ESI have duly been reported in the tax audit report, which was furnished in the course of assessment proceeding in response to queries raised in notice u/s. 142(1). Copies of challans and other details were furnished by the assessee during the relevant time of assessment proceeding. There were contradictory views on the allowability of claim made by the assessee u/s. 36(1)(va) of the Act. Ld. AO accepted the view in favour of the assessee based on various judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the course of proceeding u/s. 263 of the Act, assessee had furnished the relevant details and explained the issues raised through the show cause notice, supporting its contentions by corroborative documentary evidence. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon ble Courts. 6.2. For this, let us take the guidance of judicial precedence laid down by the Hon ble Apex Court in the case of Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordships have held that twin conditions need to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and in so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3.3. In some cases, possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the AO had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further enquiries without a finding that the order is erroneous, the condition or requirement which must be satisfied for exercise of jurisdiction u/s 263 of the Act. In such matters, to remand the matter/issue to the AO would imply and mean that the CIT has not examined and decided whether or not the order is erroneous but has directed the AO to decide the aspect/question. 6.3.4. The Hon'ble Court further held that this distinction must be kept in mind by the CIT while exercising jurisdiction u/s 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interest of revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged inadequate investigation , it will be difficult to hold that the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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