WORLDVIEW EDUCATION SERVICES PRIVATE LMITED,HYDERABAD vs. ITO., WARD-17(1), HYDERABAD

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आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘A’ Bench, Hyderabad

BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT
AND SHRI MANJUNATHA G. ACCOUNTANT MEMBER

आ.अपी.सं /ITA No.1056/Hyd/2025
Assessment Year 2021-2022

Worldview Education
Services Private Limited,
Hyderabad – 500 016. Telangana.
Ward-17(1),
Hyderabad.
(Appellant)
(Respondent)

िनधाŊįरतीȪारा /Assessee by: CA C. Maheshwar Reddy
राज̾ वȪारा /Revenue by:
G Saratha, Sr. AR

सुनवाई की तारीख/Date of hearing:
27.11.2025
घोषणा की तारीख/Pronouncement:
19.12.2025

आदेश/ORDER

PER VIJAY PAL RAO, VICE PRESIDENT :

This appeal by the Assessee is directed against the Order dated
28.03.2025
of the learned
Principal
Commissioner of Income Tax, Hyderabad-2, Hyderabad, for the assessment year 2021-2022. 2
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this year. Accordingly, the Pr. CIT invoked provisions of sec.263 of the Act by issuing show cause notice dated
17.03.2025 whereby the assessee was asked to show cause as to why the claim of Rs.1,06,63,541/- should not be treated as an unallowable expenditure under the provisions of Sec.37
of the Act and consequently, the assessment order passed by the Faceless Assessment Officer [in short “FAO”] is erroneous and prejudicial to the interests of the revenue. The assessee has filed his reply/submissions dated 27.03.2025 along with the financial statements, computation of income, ITR for the assessment year 2021-2022 as well as the other records including the show cause notice issued by the Assessing
Officer and reply filed by the assessee along with the evidences to show that this amount of Rs.1,06,63,541/- represents the payments received from the students in the preceding year and also offered to tax in the preceding year, but, due to the advent of Covid-2019 pandemic and restrictions on the movement, including the flights and other transport facilities of the tour programmes were cancelled and the payments were refunded to the students/

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institutions. The Pr. CIT was not convinced with the reply and passed the impugned order whereby the assessment order dated 13.12.2022 was set-aside being erroneous in so far as prejudicial to the interests of the revenue with the direction that the Assessing Officer should examine the issue in detail, after giving an opportunity to the assessee.
3. Before the Tribunal, the learned Authorised
Representative of the Assessee has explained the circumstances, under which, the assessee due to the Covid-
2019 pandemic and restrictions on the movements by the Authorities and complete ban of international flights, the assessee has refunded the amounts to the customers to the tune of Rs.1,06,63,541/-.
The learned
Authorised
Representative of the Assessee has submitted that the assessee company specialized in offering the tour operation services primarily catering to the educational institutions specially schools the assessee company had collected fees from the students based on the tour plans and terms agreed with them after tying-up with the parties, the assessee would start the programme like
Visa processing, booking

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accommodation in Abroad etc., and the programme continue finally it will be completed as per the timelines agreed between the parties. He has further submitted that due to the ban of international travelling on account of Covid-2019
pandemic, the schedule programmes against which the assessee has received the fees from the students were not commenced as per the schedule. Further, it was unclear whether these programmes would proceed as per the schedule or need to be cancelled. In such an uncertain situation, the assessee finally refunded the said fees of Rs.1,06,63,541/- during the year under consideration to the students and since this amount was already recognized as income in the preceding year i.e., assessment year 2020-
2021, therefore, the same has been debited to the P & L A/c for the year under consideration. Thus, the learned
Authorised Representative of the Assessee has submitted that this refund of the payment is in the nature of sales return and has been rightly deducted from the total revenue by debiting the P & L A/c as the income was already recognized in the preceding year, therefore, the refund made

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during the year under consideration can be debited as business loss which is an allowable deduction. The learned
Authorised Representative of the Assessee has further submitted that the Assessing Officer has issued notice u/sec.142(1) of the Act dated 20.10.2022 placed at page-61
to 64 of the paper book calling for information in respect of the refund made to the clients. In query no.4, the Assessing
Officer has specifically asked the documentary evidences of refund and written expenses for the year under consideration. The learned Authorised Representative of the Assessee has referred to the reply dated 14.11.2022 placed at pages 176 and 177 of the paper book and submitted that the x produced all the relevant record and explained the facts relating to the refund made by the assessee to the clients during the year under consideration. He has then referred to the show cause notice issued by the Assessing Officer dated
24.12.2022 placed at pages-68 to 74 of the paper book and submitted that in query no.3, the Assessing Officer has again asked the assessee as to why this claim should not be disallowed. The assessee has duly replied to the show cause

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notice vide reply dated 02.12.2022 placed at pages 188 to 189
of the paper book and furnished all the relevant record. After considering the reply and relevant documentary evidence filed by the assessee, the Assessing Officer was satisfied and accepted the claim of the assessee. Thus, the learned
Authorised Representative of the Assessee has submitted that the Assessing Officer has conducted due enquiry while passing the assessment order and accepting the claim of the assessee. Thus, the issue was duly considered by the Assessing Officer while passing the assessment order, then, the Pr. CIT cannot exercise his powers u/sec.263 of the Act.
He has further contended that the Pr. CIT has not made out a case of lack of enquiry on the part of the Assessing Officer and, therefore, set-aside the assessment order for further enquiry by the Assessing Officer, is not permissible under the provisions of sec.263 of the Act. The Assessing Officer has taken a view based on the relevant record and reply of the assessee, then, the Pr. CIT cannot invoke provisions of sec.263 of the Act merely because he does not agree with the view which is one of the possible view taken by the Assessing

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Officer. The learned Authorised Representative of the Assessee has also relied upon the following decisions:
1. Spectra Shares & Scrips (P) Ltd vs. CIT reported in 354
ITR 35 (AP-HC);
2. CIT vs. V. Dhana Reddy and Co. 407 ITR 96 (AP-HC) which is upheld by the Hon'ble Supreme court [Principal
Commissioner of Income-tax-l vs. V. Dhana Reddy & Co.
[2018] 100 taxmann.com 358 (SC);
3. Commissioner to Income-tax vs. Gabriel India Ltd.
[1993] 71 Taxman 585 (Bombay);
4. India Research and Development (P) Ltd vs Add. CIT and Others 445 ITRI 83 (Kar.-HC);
5. CIT vs. Sunbeam Auto Ltd. 332 ITR 167 (Del.-HC);
6. Pr. CIT vs. Deccan Jewellers P. Ltd. 438 ITR 131 (AP-
HC);
7. D. Pedda Reddaiah vs. ITO, dated 30.04.2020 (ITAT,
Hyd. Tribu);
8. CIT vs. M. Chandra Sekhar 151 ITR 433 (SC).
9. CIT vs. Mulchand Bagri (108 CTR 206 Cal.).
10. CIT vs. D P Karai (266 ITR 113 Guj);

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accounting standards, the refund of advance is neither considered as revenue nor as an expenditure and, therefore, the claim of deduction is not permissible under the law as rightly pointed out by the Pr. CIT that this claim is not allowable u/sec.37 of the Act. He has relied upon the impugned order of the learned Pr. CIT.
5. We have considered the rival submissions as well as the relevant material on record. The learned Pr. CIT has invoked provisions of sec.263 of the Act by issuing the show cause notice dated 17.03.2025 as under :

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sec.37 of the Act. The Pr. CIT in the show cause notice itself has admitted this fact that the issue was already examined and verified by the Assessing Officer during the regular scrutiny proceedings. Hence, the same, cannot be reopened u/sec.147 of the Act when no new issue or evidence is brought on record other than the issue involved during the assessment proceedings. Thus, this quotation of the Pr. CIT in the show cause notice as the proposal sent by the Assessing Officer clearly shows that the Assessing Officer while passing the assessment order has duly conducted enquiry and after considering the reply and evidence brought on record by the assessee, has accepted the claim. Therefore, the case in hand is admittedly and undisputedly does not fall in the category of ‘lack of enquiry or inadequate enquiry’ on the part of the Assessing Officer. It is manifest from the show cause notice itself that the Pr. CIT has initiated the proceedings u/sec.263 of the Act because the Assessing
Officer wanted to review it’s own order or the subsequent
Assessing Officer wanted to reverse the earlier order and view taken by the Assessing Officer while passing the assessment

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order, but, due to the restrictions for reopening of the assessment u/sec.147, a proposal is sent to the Pr. CIT for revision of the assessment order. The Pr. CIT has then passed the impugned order as under :

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“4. Please furnish the documentary evidences of refunds and return expenses for A.Y. 2021-22 as mentioned in your reply dated
13.09.2022.”

“1. The following accounts or documents or information is/are sought under section 142(1) of the Income-tax Act, 1961:

Kindly refer to the assessment proceedings for the A.Y.
2021-22 in your case. In this regard, certain details were sought vide notices u/s 142(1) dated 20.10.2022 and 03.11.2022 issued to you. However, it is observed that you have not submitted requisite details sought vide the above referred notices u/s 142(1) dated 20.10.2022 and 03.11.2022. You are therefore once again requested to submit the point wise details along with documentary evidences as sought vide the above referred notice issued u/s 142(1) dated 20.10.2022 on or before date mentioned in this notice.”

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“3. Further, as per your reply dated 14.11.2022
regarding Refunds and Return Expenses you have stated that “... The Assessee Company collects Advance from the concerned schools and pay necessary expenses like hotel bookings as per the tour schedule. After completion of the tour, the company will collect entire amount as agreed at the time of initial negotiation and the same has been recognized as income....”

On perusal of afore mentioned reply, it is observed that you collect advance from schools before the commencement of tour and treat them as income only when the tour is over or completed. Further you have also stated that as the tour has been cancelled due to Covid pandemic your company has raised credit notes to return the advances taken from schools. As advances received for tours cancelled due to Covid were not recognized as income by you, therefore, the amount of credit notes and refunds on account of cancellation of tours cannot be claimed as direct expenses. In view of above-mentioned facts, you are requested to explain with documentary evidences that why the afore mentioned refunds and return expenses amounting to Rs.1,06,63,541/- claimed by you as other direct expenses should not be disallowed.”

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book] the assessee has specifically replied to the query of claim of deduction on account of refunds as under :

“3. Refunds and Return Expenses:

The Assessee Company is in the Business of providing Tour
Operational Services to Educational Institutions majorly schools for the students below the age of 16 years. The company approaches various schools across India with different Tour/Program plans.
After all negotiations, the Assessee Company fixes the tour plan and Price. The Assessee Company starts collecting fee from the students based upon the agreed terms. For the programs which will be completed within the financial year the company issues invoices to the students as per the payments made by them and recognizes the same as income. For the programs ought to be happen in the coming year fee received form the same will be shown under advances and routed through balance sheet.

As explained above during the year under consideration, the Assessee Company has given Invoices to the Students for the programmes which will be completed within the Fin. Year 2019-20
and paid the GST on the same as per the provisions of the GST
Law. Due to Covid-19 pandemic, from the December 2019 onwards all the countries have stated imposing restrictions on the travel as well as public gatherings. Due to the uncertainty persisted at the point of time we are unable to take the call whether to continue or cancel the programmes. Hence, the invoices issued to the customers have been offered to Tax in the year 2019-20 it-self.
Further, we have waited for a considerable period of time 3 to 4
months to get the clarity on circumstances. As there is no improvement in the situations, the Management has finally decided to cancel the programmes and refund the fee to the 19
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concerned students. As income is already recognized in the Fin.
Year 2019-20, hence the refunds paid to the students have been debited to the P & L account by raising credit notes. In this regard the copies of invoices issued to the students in the financial year
2019-20 and against which the credit notes is already submitted in the earlier submission. Further, the evidences of Payments of refund are also submitted in the earlier submission for the kind consideration of the Assessing Officer. Hence it is prayed the Assessing Officer to consider the same.”

nature of sales return and accordingly, an allowable claim of expenditure. Thus, by considering all these facts, the Assessing Officer has accepted the claim of the assessee when he was satisfied with the reply as well as the documentary evidence produced by the assessee. Once the Assessing Officer has conducted due enquiry and was satisfied with the claim of the assessee based on the documentary evidences, then, invoking the provisions of sec.263 by the Pr. CIT merely because he does not agree with the view taken by the Assessing Officer, is not permissible under law, so far as the view taken by the Assessing Officer is a possible and rather a correct view. Hence, it is not a case of complete lack of enquiry on the part of the Assessing
Officer while passing the assessment order and this fact is already admitted by the Pr. CIT in the show cause notice itself, then, the order of the Assessing Officer cannot be held as erroneous on account of lack of enquiry or incomplete enquiry.

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ITO vs. DG Housing Project Ltd., [2012] 343 ITR 329 (Del.) held that in the cases of wrong opinion/view taken by the Assessing Officer while giving the findings on merits, the Commissioner has to come to the conclusion and himself decide that the order is erroneous by conducting necessary enquiry if requires before the order u/sec.263 of the Act is passed. Therefore, under the provisions of sec.263, the Commissioner is required to give a conclusive finding to hold that the order passed by the Assessing Officer on merits after conducting enquiry, is not permissible under law. The Hon’ble High Court has further observed that while setting aside the matter to the record of the Assessing Officer, the Pr.
CIT himself was not sure about the correctness of the claim.
Hence, he has not given the concluding finding whether the order of the Assessing Officer allowing the claim of deduction after conducting enquiry is absolutely against the provisions of law. The relevant findings of the Hon’ble Delhi High Court in Para-18 are as under:

“18. It is in this context that the Supreme Court in Malabar
83 (SC), had observed that the phrase „prejudicial to the interest

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of Revenue‟ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing
Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue.”

“31. From the above decisions, the following principles as to exercise of juri iction by the Commissioner u/s.263 of the Act can be culled out :

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(a) 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. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to Section 263 (1) of the Act.
(b) Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income
Tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law.
(c) To invoke suo motu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income Tax
Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax
Officer is not called upon to write an elaborate judgment

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giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision.
(e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted.
(f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie

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material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed.
(g) The power of the Commissioner under Sec.263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment.

Capital Gains under various categories. It is settled law that the Assessing Officer is not called upon to write an elaborate judgment giving detailed reasons. In para-5 and 5.2 of his order dated 31-
03- 2011 u/Sec.263, the respondent also held that substantial information had been furnished by the assessee , and at Para 5.1
he held that there was application of mind by the Assessing Officer but the conclusion of the Assessing Officer is wrong.

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….

….

…..
“61. We are of the view that the Assessing Officer had not only taken a possible view but in the circumstances the only view possible and therefore his order could not have been termed as erroneous or prejudicial to the revenue warranting exercise of revisional juri iction u/s.263 of the Act by the respondent. The respondent had no different or new material to take different view from the one taken by the Assessing Officer and the reasons given by him to reopen the assessment and sustain the revision are totally unacceptable. The respondent is not vested any power u/s.263 to initiate proceedings for revision in every case and start re- examination and fresh enquiries in matters which have already been concluded under the law. The Tribunal in our view had grossly erred in agreeing with the order of the respondent and in upholding it on grounds which have not been found in the show cause notice of the respondent, that too without considering the several issues of fact and law raised by the assessee in his written submissions and grounds of appeal. Both the respondent and the Tribunal have based their orders on preconceived notions, conjunctures and surmises, manifestly misread the facts and twisted them to justify their conclusions.

'"Where the fact finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant facts could have found, the court is entitled to interfere… "

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It relied on the following passage in it's decision in Omar Salay
Mohamed Sait v. Commissioner of Income Tax.

"We are aware that the Income Tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, it's findings, even though on questions of fact, will be liable to be set aside by this Court."'

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“21. In our opinion, the whole premise on which the CIT has invoked his revisional powers is the purported improper and incomplete examination of the transactions between the assessee and the Trusts. No findings have been rendered by the CIT that the AO has made an incorrect assessment of facts or incorrect application of law to satisfy the requirements of the order being erroneous and prejudicial to the interests of the Revenue, as held in Malabar Industrial Company Ltd. (2 supra). In the opinion of the CIT, the AO ought to have made a further probe into the nature of the transactions between the assessee and the two Trusts. In other words, the CIT has desired a fishing and roving enquiry which is not permissible as per the settled legal position as discussed above. The CIT has arrogated to himself the role of appellate body forgetting that he was only exercising his revisional power, the scope of which is far narrower than the scope of appeal. It is not as if from the material on record the CIT has found the transactions

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between the assessee and the two Trusts as sham or nominal, or any material was found revealing fraudulent nature of the transactions.
He only wanted to know on a further appreciation/examination whether the transactions suffer from any such features. Therefore, the Tribunal, in our opinion, is justified in terming the order of the CIT as based on mere conjectures and surmises, and not on the facts borne out by the record. The Tribunal also recorded a finding that the assessments for the relevant assessment year relating to the two Trusts were carefully scrutinized after calling for the details and examining the same by the AO. Interestingly, the CIT having expressed his suspicion about the genuine nature of the transactions between the assessee and the Trusts, has not exercised his revisional powers under Section 263 of the Act with regard to the assessments completed under Section 143(3) of the Act pertaining to the two
Trusts. It would be incongruous to interfere with the assessments completed in respect of the assessee, while leaving aside the assessment orders passed in respect of the two Trusts, whose returns of income are intricately connected with the suspected transactions of the assessee. The action of the CIT thus suffers from inherent contradiction.

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Order pronounced in the open Court on 19th day of December, 2025. [MANJUNATHA G.]

[VIJAY PAL RAO]
ACCOUNTANT MEMBER
VICE PRESIDENT

Hyderabad, Dated 19th December, 2025

VBP

Copy to :

BY ORDER
////