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TMI Blog2024 (8) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Section 143(2) and 142(1) of the Act along with detailed questionnaire were issued on 14.06.2016 for 29.06.2016. On 29.06.2016, Shri. Viney Goel, CA for the appellant/assessee appeared and filed Power of Attorney and on request case was adjourned to 14.07.2016. On the said date, neither anybody appeared nor assessee filed reply. Notice under Section 142(1) of the Act dated 06.10.2016 was issued for 18.10.2016. But again on the said date neither anybody appeared nor assessee filed reply. Notice under Section 142(1) of the Act dated 15.11.2016 was issued. On 21.11.2016, Shri Viney Goel, FCA for the appellant/assessee appeared and filed reply to the questionnaire. The matter was partly discussed and adjourned to 25.11.2016, Sh. Viney Goel, CA was asked for complete reply on questionnaire, cash book, ledger, stock register and relevant bills/voucher of all expenses. The case was partly discussed and adjourned for 25.11.2016. 3. On culmination of assessment proceeding, Ld. A.O. passed assessment order dated 07.12.2016 making additions of Rs. 2,50,000 and Rs. 20,000/-. 4. Perusal of assessment order dated 07.12.2016 along with other records revealed, discrepancies and errors. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision under Section 263 of the Act. 11. The Learned Authorised Representative for the appellant/assessee submitted that learned Pr. CIT erred in invoking the appellant/assessee's contention that proceedings under Section 263 cannot be used for substituting option of Ld. Assessing Officer by that of Learned Pr. CIT. 12. Learned Authorised Representative for the appellant/assessee submitted that learned Pr. CIT erred in invoking revisionary power under Section 263 of the Act that despite the fact that even after thorough examination, no specific findings had been given on the issue as to how the order of Assessing Officer was erroneous and prejudicial to the interest of the Revenue by the assessment order. 13. Learned Authorised Representative for the appellant/assessee submitted that Hon'ble Supreme Court in Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax, 2000 (2) TMI 10- Supreme Court, dated 10.02.2000 observed that: "A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the income-tax Officer is erroneous in so far as it is prejudicial to the interests of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prejudicial to the interest of the Revenue, as per by the following judicial pronouncements- (a) PR. COMMISSIONER OF INCOME TAX 3, NEW DELHI VERSUS DELHI AIRPORT METRO EXPRESS PVT. LTD., 2017 (9) TMI 529 DELHI HIGH COURT, Dated.- September 5, 2017 (b) PR. COMMISSIONER OF INCOME TAX -6 VERSUS MODICARE LIMITED, 2017 (9) TMI 1238-DELHI HIGH COURT, Dated.- September 14, 2017. (c) Revenue filed an SLP against above mentioned Delhi High court order before the apex court and same was dismissed vide order PR. COMMISSIONER OF INCOME TAX 6 VERSUS MODICARE LIMITED, 2024 (2) TMI 347-SC ORDER, Dated.- January 30, 2024 (d) DIT VERSUS JYOTI FOUNDATION, 2013 (7) TMI 483 DELHI HIGH COURT, Dated.- July 9, 2013 Learned PCIT in the present case has wrongly passed order u/s 263 of the Act without undertaking some minimal enquiry to the support his conclusion that assessment order was erroneous and prejudicial to the interest of the Revenue. 16. Learned Authorized Representative for appellant/assessee submitted that Ld. PCIT has not invoked the explanation 2 of section 263 of the Act by giving in the show cause notice. Therefore, the opportunity w.r.t. the explanation 2 of section 263 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of record in light of aforesaid rival contentions, it is crystal clear that Ld. PCIT issued show cause notice dated 07/02/2019 u/s 263 which is at page 269 -274 of the PB. Regarding assessee's claim of receipt of application money/share premium from three companies. The three companies appeared to be shell companies. The assessee attended and in-death enquiry to verify the genuineness of the transaction, show cause was issued regarding transaction with the person u/s 40A(2)(b) of the Act. Show cause notice mentioned that increase in expenditure on account of freight and octroi/ clearing and showing appeared to be on higher side. Investigations were required regarding assessee's claim of securities premium of Rs. 1,14,00,000/-, independent enquiry was required to be conducted regarding 22 sundry debtors. In pursuance to show cause, assessee had submitted copies of documents which were filed before Ld. AO. After examining the record, the Ld. PCIT in the impugned order pointed out specific points of failure of Ld. AO to re-examine the genuineness and veracity of receipt of application money/share premium from three companies, payment of remuneration to the Directors specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of assessment or the said authority is circumscribed to only consider the cases where no enquiry has been conducted at all. 22. Reliance can be placed on the decision of this Court in the case of CIT v. Sunbeam Auto Ltd. [2009] SCC OnLine Del 4237], wherein, it was held that if the AO has not provided detailed reasons with respect to each and every item of deduction etc. in the assessment order, that by itself would not reflect a non-application of mind by the AO. It was further held that merely inadequacy of enquiry would not confer the power of revision under Section 263 of the Act of the Act on the Commissioner. The relevant paragraph of the said decision reads as under:- "17. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter." No substantial question of law arises for our consideration." 24. In Ashish Rajpal as well, this Court was of the view that the fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. 25. Further, the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd., enunciates the meaning and intont-of the phrase "prejudicial to the interests of the Revenue", in the following words:- "8. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss 2024 (3) TMI 157-HC-Pr. Commissioner Of Income Tax-2 Delhi Versus Mis Clex Finance India of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain ((1957) 31 ITR 87 (Cal)), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT [(1973) 3 SCC 482: 1973 SCC (Tax) 318: (1973) 88 ITR 323J.)" [Emphasis supplied] 26. Recently, the Hon'ble Supreme Court in the case of CIT v. Paville Projects (P) Ltd. [2023 SCC OnLine SC 371], while relying upon Malabar Industrial Co. Ltd., has discussed the sanctity of twofold conditions for the purpose of invoking jurisdiction under Section 263 of the Act. The relevant paragraph of the said decision reads as under:- "27. Learned counsel appearing on behalf of the assessee has heavily relied upon the decision of this Court in the case of Malabar Industrial Co. Ltd. (supra). It is true that in the said decision and on interpretation of Section 263 of the Income Tax Act, it is observed and held that in order to exercise the jurisdiction under Section 263(1) of the Income-tax Act, the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. It is further observed that if one of them is absent, recourse cannot be had to Section 263(1) of the Act. 27. Considering the aforesaid judicial pronouncements, it can be safely concluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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