No revision u/s 263 simply because AO in order did not make elaborate discussion – ITAT

No revision u/s 263 simply because AO in order did not make an elaborate discussion – ITAT

ABCAUS Case Law Citation
ABCAUS 3597 (2022) (05) ITAT

Important case law relied referred:
Malabar Industrial Co. Ltd. 243 ITR 83
Gabriel India Ltd 203 ITR 10
CIT vs. Anil Kumar reported in 335 ITR 83
Vikas Polymer reported in 341 ITR 53

In the instant case, the assessee had challenged the order passed by the PCIT in assuming power u/s. 263 of the Income Tax Act, 1961 (the Act) holding the assessment order as erroneous and prejudicial to the interest of revenue.

The case of the Revenue was that the Assessing Officer (AO) had not examined properly the cash deposited between pre-demonetization period and during the demonetization period.

Before the Tribunal, the assessee stated that the Assessing Officer, during the course of assessment proceedings u/s 143(3) of the Act, has raised specific queries relating to the cash deposit in bank after demonetization and had made detailed enquiries for cash deposit for which the assessee had submitted detailed reply alongwith supporting documentary evidence.

The contention was that the Assessing Officer had made enquiries but has also considered the relevant documentary evidences submitted by the assessee for verification and after due verification/examination, the Assessing Officer did not take any adverse view and therefore, the assessment order was neither erroneous and prejudicial to the interest of the Revenue and the assumption of jurisdiction by the PCIT was bad in law.

The Tribunal noted that by notice, the Assessing Officer had raised specific queries towards the cash deposits which the assessee had replied with summary of the cash book.

The Tribunal opined that the basis for assuming jurisdiction u/s 263 of the Act was very much examined by the Assessing Officer while framing the assessment order u/s 143(3) of the Act and, therefore, it could not be said that there was no application of mind by the Assessing Officer.

According to the ITAT, the the Assessing Officer had taken a plausible view after going through various submissions made by the assessee. Therefore, the assessment order could not be said to be erroneous and prejudicial to the interest of the Revenue.

The ITAT observed several decisions including that of the Hon’ble Supreme Court and Hon’ble High Court of Delhi and Bombay wherein it has been held that

(a) CIT can not invoke the provisions of section 263 to substitute his own opinion.

(b) If neither the query nor the answers were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the AO calls for interference and revision

(c) Where it was discernible from record that the A.O has applied his mind to the issue in question, the CIT cannot invoke section 263 of the Act merely because he has different opinion.

(d) Where the claim was allowed by the AO after raining queries and on  being satisfied with the explanation of the assessee.Such decision cannot be held to be “erroneous” simply because in his order he did not  make  an  elaborate  discussion  in  that  regard.

In view of the above decisions, the Tribunal held that the assessment order framed u/s 143(3) of the Act was neither erroneous nor prejudicial to the interest of the Revenue.  Therefore, the assumption of jurisdiction u/s 263 of the Act by the CIT was bad in law. 

Accordingly, the ITAT set aside the order of the CIT and restored that of the Assessing Officer.

The appeal was allowed in favour of the assessee.  

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