Loading judgment…
Facts
The assessee, Devprabha Construction Private Ltd., filed an appeal against the order of the Principal Commissioner of Income Tax (PCIT) passed under Section 263 of the Income Tax Act, 1961. The PCIT had set aside the original assessment order for AY 2018-19, alleging that the Assessing Officer (AO) had completed the assessment without conducting necessary inquiries or verifications, making the order erroneous and prejudicial to the interest of revenue.
Held
The Tribunal held that the AO had conducted necessary inquiries and that the details were available with him. The PCIT's action of assuming jurisdiction under Section 263 on the ground of inadequate inquiry was not justified, especially when the AO had taken a plausible view. The Tribunal also noted that no adverse inferences were drawn by the AO or PCIT in subsequent proceedings, and the case involved two possible views, one of which was taken by the AO.
Key Issues
Whether the PCIT was justified in invoking Section 263 of the Income Tax Act, 1961, on the grounds of inadequate inquiry by the AO, when the AO had conducted inquiries and the case allowed for two possible views?
Sections Cited
263, 143(3), 133(6), 40(A)(2b), 37, 40A(2b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri Devesh Poddar, Adv. Department represented by Shri Shadab Ahmed, CIT-DR Date of hearing 30/04/2025 Date of pronouncement 30/05/2025 O R D E R PER: BENCH 1. This appeal by the assessee is directed against the order of learned Principal Commissioner of Income Tax, Dhanbad (in short, the ld. PCIT) passed under Section 263 of the Income Tax Act, 1961 (in short, the Act) dated 31/01/2024 for the A.Y. 2018-19. In this appeal, the assessee has raised following grounds of appeal:
1. That the learned Principal Commissioner of Income Tax, Dhanbad was not justified in assuming jurisdiction under section 263 of the Income Tax Act, 1961 without satisfying the basic requirement for holding the impugned assessment order passed u/s 143(3) of the Act as erroneous and prejudicial to the interest of revenue when the said order was passed after due verification of the claims made by the Appellant by issue of notices u/s 133(6) of the Act to the respective parties in the course of assessment.
2. That the learned Principal Commissioner of Income Tax, Dhanbad was not justified in arriving at an erroneous conclusion without any basis that the machinery hire charges had allegedly been paid by the Appellant to inflate expenses when, allegedly no such machinery was ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT owned by the related parties which had been revealed from so-called updated government records in FY 2023-24 without going through the records for the relevant assessment year 2018-19 was taken into consideration before arriving at a pre-meditated wrong finding on which no opportunity was allowed to the Appellant to the Appellant to file rebuttal on these points as would be revealed from the notice issued u/s 263 of the Act.
3. That the learned Principal Commissioner of Income Tax Dhanbad had failed to appreciate the legal position that there was no error in the order which has been committed without verification as all the payees of the hour charges are regular assessees in the group whose assessments are done at the DCIT-Central Circle, Dhanbad, situated in the same building as the PCIT, Dhanbad wherefrom a report could have been obtained by him at ease which had not been done for reasons best known to him and such reluctance to verify records had resulted in erroneous revision of a valid order which was again pending in appeal before NFAC.
4. That the learned Principal Commissioner of Income Tax, Dhanbad was wrong to conclude that all the fixed assets of the Appellant company were eligible for depreciation at the rate of 15 percent and not 30 percent when the depreciation at the rate of thirty percent has been allowed as per the Tax Audit Report filed as well as the Assessment, Verification and Review Unit of the Faceless Assessment Centre after examination of details filed and thus, has recorded an unsubstantiated and erroneous observation that depreciation issue was not verified in the course of assessment.
5. The action of the learned Principal Commissioner of Income Tax, Dhanbad, is, otherwise, perverse and violates the principles of natural justice which has been passed without rebutting the contentions filed by the Appellant with reasons and justifications.
6. The Appellant craves leave to add, alter or abandon one or more grounds of appeal
in the course of hearing of the appeal by the Hon'ble Bench."
2. Facts of the case, in brief, are that the assessee company is engaged in executing mining contracts floated by Bharat Coking Coal Limited (BCCL), Dhanbad. Subsequently, the case of assessee was selected through CASS system for complete scrutiny to examine "business expenses". The Assessing Officer completed assessment under Section 143(3) of the Act vide its order dated 19/04/2021 on a total income of Rs. 13,79,36,071/- for the assessment year under consideration. 2 ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT 3. However, the ld. PCIT, Dhanbad while examining the assessment record of the assessee, found that the Assessing Officer has completed assessment order without making necessary enquiries or verification in apropos of the issue for which the case was selected for complete scrutiny and therefore, the ld. PCIT set aside the assessment order dated 19/04/2021 on the ground that the assessment order is erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of Section 263 of the Act.
The ld. PCIT in the impugned order has stated that "while examining the assessment record in the case of assessee, certain discrepancies were unearthed and remained unverified during the course of assessment proceedings and the impugned order was passed without making necessary enquiries or verifications by the Assessing Officer. In apropos of these issues, the said assessment order under Section 143 r.w.s. 144B of the Act was deemed to be erroneous in so far as it is prejudicial to the interests of revenue within the meaning of Section 263 of the Act." The ld. PCIT after giving a detailed discussion in the body of the impugned order, finally invoked jurisdiction under Clause (a) of Explanation (2) of Section 263 of the Act and set aside the order of Assessing Officer and directed him to make a fresh assessment considering the findings on the issues discussed on each issue and the conclusions drawn.
5. Aggrieved by the order of ld. PCIT, this appeal by the assessee, has been preferred before us. During the appellate proceedings before us, the assessee also submitted paper book alongwith appeal memorandum in Form-36 by ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT enclosing the details of documents filed during the course of assessment proceedings. It was submitted by the ld. AR of the assessee as under: "1. This appeal has been filed by the assessee against the order passed U/s 263 dated 31/01/2024 by the Ld. PCIT Dhanbad vide which the original assessment order dated 19/04/2021 passed U/s 143(3) has been set aside.
That on perusal of the impugned 263 order, it can be seen that the PCIT on the following 3 issues has set aside the original assessment order:- a) Business Expenses - Hire Charges paid to 7 persons on which TDS not deducted, out of which AO has conducted enquiry and verified only 5 persons. b) Hire Charges have been made to related persons U/s 40(A)(2b) without deduction of TDS and verifying the ownership and other details. c) Depreciation on Plant & Machinery has been claimed at 30% instead of 15% as the same were self used.
That with respect to the issue that is Hire Charges was paid to 7 persons on whom TDS was not deducted, PCIT observed that the Ld AO has conducted enquiry in case of 5 entities and overlooked to conduct any enquiry in case of Ws Dev Multicom Pvt. Ltd and Smt. Jaya Devi. a) The AO vide 142(1) notice dated 09/12/2020 had duly verified and enquired regarding hire charges paid made to 7 persons on which TDS has not been deducted. The same can be verified from the copy of the 142(1) notice which is at Page 161 - 165 of the paper book and for ready reference, a copy of the same is attached herewith at Page 6-10. b) That in response to the 142(1) notice dated 09/12/2020, the reply of the assessee was filed online on 03/01/2021, acknowledgment copy of which is attached herewith at Page - 11-12 wherein annexure 9 i.e. note for non deduction of TDS is at Page 13 and that apart from our submissions we have also attached Form 26A in case of Smt Jaya Devi (Annexure 13, copy of which is at Page 14-16 and M/s Dev Multicom Pvt Ltd (Annexure 12 copy of which is at Page 17-19). c) That with respect to M/s Dev Multicom Pvt Ltd we would like to submit that this is a sister concern company of the assessee and is assessed with the same AO i.e. Central Circle Dhanbad. This can be verified from the ITR Acknowledgement of M/s Dev Multicom Pvt Ltd for AY 2018-19 copy of which is at Page 131 of the paper book. The ITR and audited accounts of M/s Dev Multicom Pvt Ltd was 4 ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT already on record with the AO and that the same was duly looked into wherein it was stated that against the total hire charges paid by the assessee amounting to Rs. 3,94,55,000/-, M/s Dev Multicom Pvt Ltd has disclosed a turnover of Rs. 6,50,05,714/-. (Audited account of M/s Dev Multicom Pvt Ltd is at Page 131 - 140 of the paper book.) Moreover Form 26A of M/s Dev Multicom Pvt Ltd was also in on record with the AO as stated above. d) That similar to the above is the case of Smt Jaya Devi who is assessed with the same AO i.e. Central Circle Dhanbad. The ITR acknowledgment and audited accounts is attached at Page 141 - 145 of the Paper Book from which it can be verified that as against the total payment of Rs. 1,21,30,000/- made by the assessee, Smt Jaya Devi has disclosed a total receipt of Rs. 1,42,18,433/-. Moreover Form 26A of M/s Dev Multicom Pvt Ltd was also in on record with the AO as stated above. e) That as such, it is erroneous and incorrect to state that the Ld AO did not conduct any enquiry with respect to non deduction of TDS on hire charges paid to these 2 entities. That merely because AO formed an opinion in favour of the assessee and did not record the same in the order of assessment, will not render the assessment to be erroneous and prejudicial to the interest of revenue. CIT V. Ashish Rajpal (2009) 23 DTR 266/ 320 ITR 674/180 Taxman 623 (Delhi) (High Court) - Where the assessing officer during the scrutiny assessment proceeding raised a query which was answered by the assessee to the satisfaction of the assessing officer but the same was not reflected in the assessment order by him, a conclusion cannot be drawn by the Commissioner that no proper enquiry with respect to the issue was made by the assessing officer, and enable him to assume jurisdiction under section 263 of the Act. Copy of the order is attached at Page 20-28. CIT V. Max India Ltd. (2007) 295 1TR 282/213 CTR 266 / (2008) 166 Taxman 188 /204 Taxman 1 SC - Hon'ble Apex Court observed that "The phrase "Prejudicial to the interest of revenue" section 263 has to be read in conjunction with the expression "erroneous". When the Assessing Officer takes one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law." CIT v. DLF Power Ltd. (2009) 31 DTR 93 /229 CTR 27 I 329 ITR 289 / 185 Taxman 356 (Delhi)(High Court) - Where two views were possible on the issue, and one view is taken by the assessing officer while passing order under section 143(3) of the Act, which was also a plausible view, merely because the view benefited the assessee, the action of the assessing officer cannot be held to be erroneous by the Commissioner for assuming jurisdiction under section 263 of the Act. f) That as such, the allegation of the PCIT that the AO has only looked into 5 persons/entities out of the 7 persons to whom hire charges was paid without deduction of TDS is factually incorrect.
4. That with respect to the 2nd issue i.e. hire charges paid to related persons U/s 40(A)(2b) and the vehicles/ machinery ownership details, we would like to submit as under:- a) That this issue was duly enquired and looked into at the time of original assessment which can be verified from the 142(1) notice, copy of which is at Page 161 - 165 of the paper book and for ready reference, a copy of the same is attached herewith at Page 06-10. b) That with respect to the verification of the details of the 5 related persons, though the AO had issued 133(6) notices to them which was duly replied (page 61 to 76 of the paper book). c) That further the vehicle ownership details of these 5 persons are also attached at Page 77 - 130 of the Paper Book and that the details of the same have also bee4 mentioned in the original assessment order. That this issue was duly looked into by the AO, and the AO after considering the same had made an addition of Rs. 3,37,50,000/- being 50% of the total amount paid to them and as such, has already applied his mind and formed an opinion. This can be verified from the original assessment order which is at Page 37 to 51 of the appeal memo. Thus once when an issue has already been looked into by the AO and opinion has been formed, Ld PCIT could not invoke jurisdiction U/s 263 on grounds of inadequate enquiry. Commissioner of Income Tax, Bangalore vs. Chemsworth (P.) Ltd. [20201 119 taxmann.com 358 (Karnataka)/[2020] 275 Taxman 408 (Karnataka)[16-09- 2020] 6 ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT The Assessing Officer in the order of assessment is not required to give detailed reasoning in respect of each and every item of deduction and, therefore, the question whether there has been an application of mind before allowing expenditure has to be examined from the record of the case. The question of lack of enquiry/inadequate enquiry is also required to be kept in mind and mere inadequacy of the enquiry would not confer jurisdiction on the Commissioner under section 263. In the instant case, the Commissioner has held that the enquiry conducted by the Assessing Qfficer is inadequate and has assumed the revisional jurisdiction. The assessee has filed all the details before the Assessing Officer and Assessing Officer has accepted the contention of the assessee that no expenditure is attributable to the exempt income during the relevant assessment year. Thus, while recording the aforesaid finding, the Assessing Officer has taken one of the plausible views in allowing the claim of the assessee and, therefore, the Commissioner could not have set aside the order of assessment merely on the ground of inadequacy of enquiry. The order passed by the Commissioner is not sustainable in law and the same has rightly been set aside by the Tribunal. [Para 8] (Copy of the order is attached at Page 29-31. Commissioner of Income-tax vs. Sunbeam Auto Ltd. [2010] 189 Taxman 436 (Delhi)/[2011] 332 ITR 167 (Delhi)/[2009] 227 CTR 133 (Delhi)[11-09-2009] The submission of the revenue was that while passing the assessment order, the Assessing Officer did not consider the aspect specifically whether the expenditure in question was revenue or capital expenditure. That argument predicated on the assessment order, which apparently did not give any reason while allowing the entire expenditure as revenue expenditure. However, that, by itself, would not be indicative of the fact that the Assessing Officer had not applied his mind to the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reasons in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. One has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry' If there was any inquiry, even inadequate, that would not, by itself, give occasion to the Commissioner to pass orders under section 263 merely because he 7 ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT has different opinion in the matter. It is only in cases of 'lack of Inquiry' that such a course of action would be open. [Para 12] (Copy of the order is attached at Page 32-40. d) That moreover no adverse comment or addition has been made by the AO in course of consequential assessment proceedings with respect to the hire charges paid to these 5 persons and the ownership of vehicles/ machinery by them. As such, since no adverse comment or addition has been made by the AO in consequential assessment, order passed U/s 263 to this extent is bad in law. Reliance is placed upon the detailed decision of Hon'ble ITAT Cuttuck Bench in the case of M/s Ravi Metallics Ltd Vs PCIT Sambalpur in dated 30/05/2022, wherein it was held as follows:- (Copy of the order at Page 41-60) A perusal of the consequential order clearly shows that the additions which have been proposed by the Pr. CIT, more so the issues that have been raised by the Pr. CIT have not resulted into any of the addition in the assessment. Obviously, if the Pr. CIT had done cursory verification of the details that has been produced by the assessee in the course of proceedings u/s.263 of the Act, maybe, the Pr. CIT himself would have dropped the proceedings. However, having invoking the powers u/s.263 of the Act, no addition on the said issues has been made. The additions have been made on other issues; clearly shows that the issues raised in the proceedings u/s.263 of the Act are unsustainable and liable to be quashed. We are not going into merits of the additions made in the consequential order. Only on the ground that no specific addition has been made in respect of specific issues which have been raised in the proceedings u/s. 263 of the Act, therefore, the order passed u/s. 263 of the Act is hereby quashed.
That further it is seen that the PCIT was of the opinion that assessee has claimed excess depreciation on plant & machinery @ 30% instead of 15% which was allowable and that this issue has not been looked into by the Ld AO. a) During the assessment proceedings the audited accounts of the assessee was duly produced on record wherein the list of fixed assets and depreciation was also available. It was submitted that depreciation @ 30% has been claimed on the Plant & Machinery (Tippers/ trucks) which was let out on hire. The AO considering ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT the nature and business activity of, assessee was convinced with the submissions and as such, no adverse findings was made. b) Moreover, with respect to the issue of depreciation, we would like to submit that in the consequent assessment proceedings, no adverse findings or addition has been made on this issue and as such, the order passed u/s 263 to this extent is erroneous. The copy of the consequential assessment order is attached herewith at Page 61-74. Reliance is placed upon the detailed decision of Hon'ble ITAT Cuttuck Bench in the case of M/s Ravi Metallics Ltd Vs PCIT Sambalpur in dated 30/05/2022 (supra). As such, placing reliance on the above facts and case laws, we submit that the order passed U/s 263 alleging the original assessment order to be erroneous and prejudicial to the interest of revenue is bad in law and fit to be set aside. We shall be obliged for your kind consideration and necessary order."
The ld. AR of the appellant also submitted Paper Book/Rectified paper book containing all the details and the relevant documents which were produced before the AO during the course of original assessment proceedings on which the ld. PCIT in its impugned order has stated that the same was not verified or examined by the Assessing Officer. In the rectified paper book, the appellant has given further details of all the documents filed before the ld. PCIT on all the issues raised in the impugned order of the ld. PCIT. The ld. AR of the assessee, thereafter, submitted that since all the details were filed before the Assessing Officer during the original assessment proceedings and was duly verified by him, the action of the ld. PCIT by deeming the said assessment order, as erroneous and prejudicial to the interests of revenue under Section 263 of the Act, is not justified in view of the decision of Hon'ble Delhi High Court in the case of CIT V. Ashish Rajpal (2009) 23 DTR 266/ 320 ITR 674/180 Taxman 623 (Delhi) wherein it was held that "where the Assessing Officer during the scrutiny assessment proceedings, raised a query which was ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT answered by the assessee to the satisfaction of the Assessing Officer but the same was not reflected in that assessment order by him, a conclusion cannot be drawn by the Commissioner that no proper enquiry with respect to issue was made by the Assessing Officer and enable him to assume jurisdiction under Section 263 of the Act. Further, Hon'ble Supreme Court in the case of CIT Vs. Max India Limited (2007) 295 1TR 282/213 CTR 266 / (2008) 166 Taxman 188 /204 Taxman 1 SC - has observed that the Phrase, "Prejudicial to the interest of revenue" section 263 has to be read in conjunction with the expression "erroneous". When the Assessing Officer takes one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law." The Ld. AR also quoted the decision of the Hon'ble Delhi High court in the case of CIT Vs DLF Power Ltd. (2009) 31 DTR 93 /229 CTR 27 I 329 ITR 289 / 185 Taxman 356 (Delhi) wherein it was held that where the Assessing Officer takes one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order and prejudicial to the interest of revenue unless the view taken by the Assessing Officer is completely unsustainable in law. The ld. AR of the assessee also placed reliance on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Chemsworth (P) Ltd. [20201 119 taxmann.com 358 (Karnataka)/[2020] 275 Taxman 408 (Karnataka) [16-09-2020] wherein it was held that inadequacy of enquiry conducted by the Assessing Officer wherein the assessee has filed all the ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT details as required by the Assessing Officer, the Commissioner could not have set aside the assessment order merely on the ground of inadequacy of enquiry. The ld. AR of the assessee further placed reliance on the decision of Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto Ltd. [2010] 189 Taxman 436 (Delhi)/ [2011] 332 ITR 167 (Delhi)/ [2009] 227 CTR 133 (Delhi) [11-09- 2009] wherein the Hon'ble High Court has held that "there is a distinction between a 'lack of inquiry' and 'inadequate inquiry' 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.
The ld. AR of the appellant finally, submitted that even in the consequential order passed in consequence of the impugned order under Section 263 of the Act, no adverse inferences were drawn by the Assessing Officer while passing the assessment order under Section 143(3) read with section 263 dated 28/03/2025 and no addition was made except some expenditure was disallowed under Section 37 read with section 40A(2b) of the Act on estimate basis being 20% of the expenditure claimed. The Ld. AR, then placed reliance on the decision made by Hon'ble ITAT Cuttack Bench in the case of M/s Ravi Metallics Ltd Vs PCIT Sambalpur in dated 30/05/2022, wherein it was held as under: - “A perusal of the consequential order clearly shows that the additions which have been proposed by the Pr. CIT, more so the issues that have been raised by the Pr. CIT have not resulted into any of the addition in the assessment. Obviously, if the Pr. CIT had done cursory verification of the details that has been produced by the assessee in the course of proceedings u/s.263 of the ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT Act, maybe, the Pr. CIT himself would have dropped the proceedings. However, having invoking the powers u/s.263 of the Act, no addition on the said issues has been made. The additions have been made on other issues; clearly shows that the issues raised in the proceedings u/s.263 of the Act are unsustainable and liable to be quashed. We are not going into merits of the additions made in the consequential order. Only on the ground that no specific addition has been made in respect of specific issues which have been raised in the proceedings u/s. 263 of the Act, therefore, the order passed u/s. 263 of the Act is hereby quashed.”
The ld. CIT-DR, on the other hand, placed reliance on the order of the Hon'ble Jurisdictional High Court in the case of PCIT Vs. Manju Devi Chaurasia PCIT Vs. Manju Devi Chaurasia reported in (2024) 161 taxmann.com 809 (Jharkhand) dated 13/02/2024 wherein it was held as under: "In the instant case, it is not a case of change of opinion rather it is a case where the assessment order is erroneous and is prejudicial to the interest of revenue due to lack of enquiries/verification by the original Assessing Officer with regard to claim of assessee regarding the source and details of introduction of capital. The law is also well settled as has been held by the Hon'ble Apex Court in the case of Rampyari Devi Saraogi Vs CIT (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal Vs CIT (1973) 88 ITR 323 (SC) where a sum not earned by a person is assessed as income in his hand on his so offering the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interest of revenue".
ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT The ld. CIT-DR further, put emphasis on Explanation (2) of Section 263 wherein it has been provided that "for the purpose of this Section it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if, in the opinion of the Principal Commissioner or Commissioner, the order is passed without making enquiries or verification which should have been made." The ld. CIT-Departmental Representative, therefore, was of the view that under this amended provision, it shall be the duty of the Commissioner/Pr.CIT to assume jurisdiction under Section 263 of the Act where no enquiry has been made by the Assessing officer. Thus, ld. PCIT has rightly invoked jurisdiction under Section 263 of the Act since the Assessing Officer had not conducted necessary enquiry/verification in the present case.
We have considered the facts of the case, the two Paper Books containing details of the documents which were claimed to have been submitted before the AO during original assessment proceedings, the impugned order passed by the ld. PCIT and the rival submissions made above. We have also considered the various judicial decisions, quoted as above, in this regard including the decision of Hon'ble Jurisdictional High Court in the case of PCIT Vs. Manju Devi Chaurasia reported in (2024) 161 taxmann.com 809 (Jharkhand) dated 13/02/2024.
It is found from the impugned order that the ld. PCIT has set aside the original assessment on two counts, first, on the issue of transactions made by the assessee with Smt. Jaya Kumari and with M/s Dev Multicom Pvt. Ltd. amounting to Rs.5,15,85,000/- and second, on the issue of machinery hired for ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT which the payment of ₹ 6,75,00,000/- made to the five related parties on the ground that the AO has not done any enquiry to verify and establish the ownership of the plant and machinery hired and the Assessing Officer should have examined the transportation equipment which were used for assessee's own business and occasionally let out on hire before allowing claim of depreciation @ 30%.
The Ld. AR, on the other hand, contested both these grounds vehemently and claimed that all the required documents were produced before the AO at the time of original assessment order. It was also claimed by the Ld. AR that these documents were also produced before the Ld. PCIT during the course of 263 proceedings. The Ld. AR then produced the same documents before us also in the form of Paper Books and successfully demonstrated before us that all these documents were available with the AO as well as the Ld. PCIT and neither the AO nor the Ld. PCIT could draw any adverse inference either at the time of original assessment u/s 143 (3) or during the revisionary proceeding u/s 263 of the Act. Thus, it is wrong on the part of the Ld. PCIT to conclude that necessary enquiry/verification was not made by the Assessing Officer. We also agree with the contention of the appellant that simply because everything has not been stated in the original assessment order, would not mean that no enquiry or verification was made as has been held by the various Courts, the emphasis on which has been supplied by the ld. AR of the assessee and discussed above.
So far, the decision of Hon'ble Jurisdictional High Court in the case of PCIT Vs Manju Devi Chaurasia (supra) is concerned, it is a case specific and cannot be ITA 27/Ran/2024 Devprabha Construction P Ltd. Vs PCIT applied in the instant case as the facts of the two cases are entirely different. Here in the present case, it is found that the appellant had given all the possible details as required by the original Assessing Officer and he did not come up with any adverse finding. The same details were also filed before the ld. PCIT during the proceedings under Section 263 of the Act. Thus, it is not a case where no enquiry/verification was made but it is a case of two possible views one taken by the Assessing Officer after giving due consideration of all the details filed by appellant before him and another by the ld. PCIT and it has already been held by the Hon'ble Apex Court that where two views are possible and one view was taken by the Assessing Officer, cancelling of the order of Assessing Officer under Section 263 being erroneous and prejudicial to the interest of revenue is not permissible. Mere change of opinion on the same set of facts is not allowed in view of the Hon'ble Apex Court decisions in plethora of cases.
Regarding the provisions of the Act as provided in Explanation (2) of Section 263 is concerned, though, we agree with the view of the Ld. CIT DR that it shall be the duty of the CIT/PCIT to assume jurisdiction under Section 263 of the Act where no enquiry has been made by the Assessing officer, however, in the case before us, it has been clearly demonstrated by the Ld. AR that necessary enquiries were made by the AO though, it was found to be inadequate by the Ld. PCIT. As has been held by the various courts mentioned in the submissions of the Ld. AR that the CIT could not have set aside the assessment order merely on the ground of inadequacy of enquiry.