JAYPEE FERTILIZERS & INDUSTRIES LTD.,NOIDA vs. PR.CIT, NOIDA

PER SATBEER SINGH GODARA, JM

This assessee’s appeal for assessment year 2017-18, arises against the Principal Commissioner of Income Tax (“PCIT”), Noida’s
DIN and order no. ITBA/REV/F/REV5/2021-22/1041157300(1), dated 21.03.2022 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Heard both the parties. Case file perused.
Assessee by Sh. Sanjeev Choudhary, CA
Sh. V.K. Garg, Adv.
Sh. Praveen Kumar, CA
Department by Sh. Dayainder Singh Sidhu, CIT(DR)
Date of hearing
30.07.2025
Date of pronouncement
30.07.2025
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 The Hon. Supreme Court in Rampyari Devi Saraogi v CIT67 ITR
84 while taking note of the fact that the AO had concluded the assessment in "undue hurry" by passing a short, stereotyped
4 | P a g e assessment order, without making any inquiries, upheld the revision done by the CIT.

 In the case of Deniel Merchants Pvt Ltd vs ITO dated
29.11.2017, the Hon'ble Supreme Court upheld the law as laid down by the High Courts in SubhlakshmiVanijya Pvt. Ltd vs.
CIT 155 ITD 171 (Kol), Rajmandir Estates 386 ITR 162 (Cal)etc and held that the CIT is entitled to revise the assessment order u/s 263 on the ground that the AO did not make any proper inquiry while accepting the explanation of the assessee insofar as receipt of share application money is concerned.

 In the case of Malabar Industrial Co. Ltd. Vs CIT [2000] 109
Taxman 66 (SC)/[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1 (SC)
Hon'ble Supreme Court held that where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any supporting material without making any enquiry, exercise of juri iction by Commissioner under section 263(1) was justified.

 The Hon'ble Delhi High court in the case of CIT Vs Shri Braham
Dev Gupta in ITA no 907/2017 and 1162/2017 has clearly decided that Pr. Commissioner of Income tax can invoke the provision of section 263 of Income Tax Act where AO has not made adequate enquiry and verification. In this matter, SLP of the assessee has also been dismissed by Hon'ble Apex Court.

 The Hon'ble ITAT Delhi in the case of AnkushGarg v CIT, Rohtak in ITA No 2287 & 2288/Del/2015 dated 21.05.2019, upheld the Pr. CITs action u/s 263 by holding that the order of the AO was cryptic, and was not passed after due examination and verification of certain issues and therefore, there was an error on the part of AO which led to a correct conclusion of the CIT that the order of the AO was not only erroneous but also prejudicial to the interest of Revenue.

 In the case of Pooja Gupta in ITA No 4057/Del/ 2018 dated
31.01.2019, the ITAT Delhi has discussed the validity of action under section 263 in respect of penny stock matters. The Tribunal has referred to the detailed SOP issued by the CBDT,
CBDT Instruction dt 16.03.2016 on penny stock/LTCG, and other specified parameters in this order, and held that the order u/s 263 was justified since there was complete lack of inquiry with regard to the perspective for which the case was selected for scrutiny, and that the AO had merely relied on the assessee's submissions.
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 The decision of the ITAT Delhi Bench in the case of Bhushan
 Hon'ble HIGH COURT OF KARNATAKA in the case of CIT vs.
Infosys Technologies Ltd. 341 ITR 293 dated 04.01.2012 has held that section 263 is a section which enables the Commissioner to have a look at the orders or proceedings of the lower authorities and to effect a correction, if so needed, particularly if the order or proceeding is erroneous and prejudicial to the interest of the revenue. It is also held that the Commissioner can regard the order as erroneous on the ground that in the circumstances of the case, ITO should have made further inquiries before accepting the statements made by the assessee in his return.

 Hon'ble ITAT Delhi Bench in the case of Ramesh Kumar, ITA No.
1982/Del/2018 for A.Y. 2014-15 order dated 25.01.2019 has observed as under-.

On going through the facts, it can be observed that the Assessing Officer has not conducted any enquiry and this is a clear case of lack of enquiry not a case inadequate enquiry.
Further non application of mind by the Assessing Officer can be easily gauzed from the fact that the information available with the Assessing Officer has not been utilised during the assessment proceedings which makes the case fit for applying the provisions of explanation 2 (a) of section 263.  Further, Hon'ble ITAT Delhi Bench in the case of Shanker
Tradex Pvt. Ltd. vs. PCIT, ITA No. 2999/Del/2017 for A.Y.
2007-08 order dated 16.04.2018 has rightly held that the Assessing Officer though reopened the assessment proceedings did not make any inquiry and there is no mention of the same in the Assessment Order itself which proves that the order is passed without making inquiries or verification which should have been made by the Assessing Officer. Thus, it is prejudicial to the interest of the Revenue and there is loss of revenue.

 Similar view is taken by Hon'ble ITAT Delhi Bench in the case of Surya Financial Services Ltd. vs. PCIT [2018-TIOL-74-ITAT-
DEL]order dated 08.01.2018, the relevant part of which is reproduced as under-
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"6.5 In view of above, there is absolutely no dispute that the AO has not made any enquiry regarding the accommodation entry pertaining to the assessee specifically which was found during the course of search and investigation in SK Jain Group as highlighted by the Pr. CIT. Once adequate or proper enquiry has not been done, then in terms of Explanation 2 inserted in section 263 of the Act by the Finance Act, 2015, w.e.f. 1.6.2015, the assessment order is deemed to be erroneous in so far as it is prejudicial to the interest of Revenue..........”

 Hon'ble Delhi High Court in the case of Gee Vee Enterprises vs
Addl. CIT, 99 ITR 375 held that the Commissioner can regard the order as erroneous on the ground that in the circumstances of the case, ITC should have made further inquiries before accepting the statements made by the assessee in his return.

 Further Hon'ble Delhi Bench in the case of Perfetti Van Melle
India Pvt. Ltd., ITA No. 3046/Del/2016 for A.Y. 2009-10 order dated 11.01.2019 has taken a similar view by observing that where the Assessing Officer has not properly adjudicated the issue of claim u/s 80IC before allowing the same to the assessee company, the Pr. CIT has rightly invoked Section 263
of the Act and passed the order.

(a) the order is passed without making inquiries or verification which should have been made;

(b) the order is passed allowing any relief without inquiring into the claim;

(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; ог

(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the 7 | P a g e juri ictional High Court or Supreme Court in the case of the assessee or any other person.

This is what leaves the assessee aggrieved.
3. Learned counsel vehemently argues during the course of hearing that the Assessing Officer had duly issued his section 142(1) notice as indicated in the assessee’s paper-book running into 35 pages followed by submissions of the relevant details at his behest in response thereto. He further seeks to buttress the point that the above section 35D deduction issued is no more res integra since already settled in assessee’s favour and against the department in assessment year 2012-13 which has been fairly not disputed in the PCIT’s revision direction in para 4.1 hereinabove.
And that once it is settled that the assessee is entitled for section 35D relief in question in the first year of commencement of its business, we ought to reverse the impugned revision direction forming subject matter of adjudication before us.
4. Learned CIT(DR) has drawn strong support from the above extracted impugned revision directions. He takes us to para 4.4
8 | P a g e thereof that there is no indication about either the Assessing Officer having inquired into and verified all the relevant facts or the assessee had filed all the relevant submissions; as the case may be. Mr. Sidhu also refers to the various judicial precedents discussed in the impugned revision directions as well as Explanation 2(a) to section 263(1) attracting such a revision exercise once there is no inquiry by the Assessing Officer.
5. We have given our thoughtful consideration to the assessee’s and the department’s foregoing vehement stands against and in support of the PCIT’s impugned section 263 revision directions. We find no merit in the assessee’s case. This is for the precise reason that apart from placing on record that the Assessing Officer’s
142(1) notice(s) dated 12.04.2019 and 02.01.2019 (pages 9 to 13) and its response dated 02.08.2019 and 14.04.2019; respectively, we do not find any detailed inquiry or verification by the Assessing
Officer as indicated in para 4.4 of the PCIT’s revision directions. It rather emerges that all what the assessee appears to have done at page 16 in the paper-book along with his reply dated 02.08.2019
is to claim “any other amount allowable as deduction” under section 35D including preliminary expenses, upfront fee and 9 | P a g e professional and technical fee involving varying sums whose verification never saw light of the day. We conclude in this factual backdrop that the learned PCIT’s impugned revision direction forming subject matter of challenge, do not call for any interference in section 254(1) appellate proceedings before the tribunal. The same stand upheld therefore.
6. This assessee’s appeal is dismissed.
Order pronounced in the open court on 30th July, 2025 (AVDHESH KUMAR MISHRA)
JUDICIAL MEMBER

Dated: 30th July, 2025. RK/-