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TMI Blog2024 (7) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... Year (AY) 2018-19. Facts of the case: 2. The assessee, originally a partnership-firm engaged in real estate development, filed its original return of income for the year under consideration on 30-09-2018 and revised return on 31-10-2018 declaring total income at Rs. NIL. The assessee-firm was converted into a Private Limited Company, Aaravi Developers Private Limited on 31.10.2018. 2.1. The assessment under Section 143(3) of the Act was completed on 22-04-2021 accepting the returned income of the assessee. Subsequently, a notice under Section 263 of the Act was issued on 04-01-2024 by the PCIT, Ahmedabad proposing the revision of the assessment order dated 22.04.2021 on the ground that the Assessing Officer (AO) had not verified the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ented that the order passed by the PCIT on 16-03-2024 should be treated as void ab initio. He placed reliance on decisions of Hon'ble High Court of Delhi in case of PCIT Vs. Kaizen Products (P) Ltd. [2018] 97 taxmann.com 574 and decision of Delhi Tribunal in case of Varnika RPG Trust Vs. PCIT, Gaziabad [2021] 133 taxmann.com 32. 5. The Ld.Departmental Representative (DR) contented that in the faceless regime, the AO cannot make any changes in the name and other details to consider the change in the constitution due to conversion of the firm into company and, therefore, the order is in the name of the firm. The Ld.DR also pointed out that this issue is not a ground of appeal. Also, this issue was not taken before the PCIT and, hence, should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was passed in the name of non-existing entity, we note that the assessee had informed the AO about the conversion of firm into company. However, it is also noted that the assessee has not taken this issue as a ground before us and also before the PCIT. We also note that the assessee has responded to all the notices of the AO and the PCIT in proper spirit. In the case of conversion of firm into a company, the outer shell of the firm is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the venture continues - enfolded within the new entity. In other words, the business, on a going concern basis, lives on but within the new company. It is, therefore, essential to look beyond the mere concept of destruction of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustainable in law. 6.3. We noted the contention of the assessee that the AO's inquiry was neither inadequate nor insufficient. The AO verified the identity, creditworthiness, and genuineness of the transactions in terms of Section 68 of the Act. The AO's decision to accept the assessee's submissions after thorough verification cannot be deemed erroneous. We have also reviewed the judicial pronouncements relied upon by the assessee. These judicial precedents establish that revisionary action under Section 263 of the Act is not justified on grounds of inadequate inquiry if the AO has conducted sufficient inquiries and taken a permissible view. In the case of CIT vs. Hindustan Marketing & Advertising Co. Ltd. - 46 DTR 109 (Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment proceedings. 6.7. The assessee's reliance on the Hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd. vs. CIT(supra) and the Hon'ble Gujarat High Court's decision in CIT vs. Nirma Chemical Works Pvt. Ltd.(supra) is well-placed. These rulings support the assessee's contention that the AO's order, based on due inquiry and verification, cannot be revised under Section 263 of the Act merely because the PCIT holds a different view. 6.8. We also note that the PCIT has not demonstrated that the AO's insufficient investigation has led to an erroneous assessment. In our opinion, inadequate inquiry alone does not justify revision unless it results in a prejudicial outcome for the revenue. Thus, if the AO has conducted an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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