SARITA KASHYAP,,NEW DELHI vs. PR. CIT-19,, NEW DELHI

When the appeal was called for hearing, none appeared for the assessee. Perusal of record reveals that on past several occasions when the appeal was fixed for hearing, the assessee remained absent.

Considering the above, we proceed to dispose of the appeal ex-parte qua the assessee after hearing the learned Departmental Representative.

We have heard learned Departmental Representative and perused the materials on record. Briefly the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed her return of income on 29.09.2012 declaring total income at Rs.21,85,050/-. The return of income filed by the assessee was selected for scrutiny and assessment in case of the assessee was completed under section 143(3) of the Act vide order dated 23.02.2015 determining the total income of Rs.57,29,700/-. After completion of assessment, learned Commissioner (Appeals) called for and examined the assessment record in exercise of power conferred under section 263 of the Act. After verifying the record, he observed that the Assessing Officer has not made proper inquiries on the following issues:

Stating that while finalizing the assessment proceeding, the Assessing Officer has not properly examined these issues, learned PCIT held that the assessment order is erroneous and prejudicial to the interest of the Revenue. Thus, after issuing the show- cause-notice and considering assessee’s submissions, learned PCIT set aside the assessment order with a direction to consider the issues mentioned by him in the show-cause-notice afresh.

Thus, a scrutiny of the assessment order would clearly reveal that it is not a case where the Assessing Officer has passed the order mechanically without any inquiry and proper application of mind. Whereas, learned PCIT has considered the assessment order erroneous and prejudicial to the interest of Revenue as according to him, the household expenses shown at Rs.3,50,000/- is inadequate, the explanation given by the assessee regarding reduction in gross profit rate is general in nature and as regards the commission/discount of Rs.1,39,49,992/-, the Assessing Officer has called for only broad details instead of calling for terms of agreement for sale, for allowing commission/discount. Thus, from the issues noted by revisionary authority, it is very much evident that in course of assessment proceeding, the Assessing Officer, indeed, had inquired into all these issues and being satisfied with the explanation/submission of the assessee, has not made any addition/disallowance. What the revisionary authority by exercising power under section 263 of the Act desires is to substitute his own opinion/decision with that of the Assessing Officer. In fact, the revisionary authority himself has gone into the allowability or otherwise of each item of expenditure claimed by the assessee. This, in our view, is not the intent and purport of section 263 of the Act. It is a fact on record that on all the issues raised by the revisionary authority in the show-cause-notice issued under section 263 of the Act, the Assessing Officer has conducted inquiry in course of the assessment proceeding and has decided those issues applying his own wisdom. Only because such decision of the Assessing Officer is not to the liking of learned PCIT, it cannot be said that the assessment order is erroneous and prejudicial to the interest of Revenue. It is further relevant to observe, in response to the show-cause-notice issued under section 263 of the Act, the assessee has furnished a detailed reply which has been extensively reproduced in the impugned order of learned PCIT. However, there is no speaking order of learned PCIT on various submissions made by the assessee, not only on the jurisdictional aspect but also on merits.

Thus, I set aside the assessment with instructions to the AO to enquire deeply into above issues and then reframe the assessment order.”

Thus, it is manifest, through an order bereft of reasoning, learned PCIT has rejected assessee’s submission and has set aside the assessment order without any strong finding either with regard to the error in the assessment order or prejudice caused to the Revenue. Thus, in our considered opinion, the assumption of jurisdiction under section 263 of the Act in the present case is invalid. Accordingly, we quash the impugned order of learned PCIT passed under section 263 of the Act and restore the assessment order.

In the result, the appeal is allowed.