RASHLEELA ENTERPRISES PRIVATE LIMITED,JAIPUR vs. THE PCIT (CENTRAL), JAIPUR

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ITA 461/JPR/2024Status: DisposedITAT Jaipur05 September 2024AY 2019-2039 pages
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What did the Tribunal hold?

The Tribunal held that the PCIT cannot invoke Section 263 merely because he disagrees with the AO's conclusion or believes more inquiries should have been made. The AO had conducted inquiries and examined the records, and the assessment order was not demonstrably erroneous or prejudicial to the revenue.

What were the facts?

The Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263 against the assessee's assessment order for AY 2019-20. The PCIT held that the Assessing Officer (AO) passed the order erroneously and prejudicially to the revenue by not adequately examining the applicability of Section 14A read with Rule 8D.

What were the issues?

Whether the PCIT was justified in revising the assessment order under Section 263 when the AO had conducted inquiries and the order was not demonstrably erroneous or prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 14A,Section 143(3)

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Income Tax Appellate Tribunal, JAIPUR BENCHES, A JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

For Appellant: CA राजस्व की ओर से /
Hearing: 20/08/2024Pronounced: 05/09/2024

merits also the order of the ld. PCIT is not sustainable.

14.

Based on the discussion recorded the bench noted that every inadequacy of the enquiry conducted by an AO as against the no enquiry cannot form a basis for setting aside an assessment order which has been passed by AO. In the instance case as discussed herein above the issue raised and ld. AO takes a plausible view so as to establish that on that issue the order is not erroneous. Thus, when based on the submission and discussion so recorded at is evident that the inquiry has been made and considering the submission of the assessee ld. AO considered the submission of the assessee and has not disallowed the interest as alleged by the based on the submission placed on record cannot be considered as erroneous and prejudicial to the interest of the revenue.

Therefore, the order passed by the ld. PCIT dated 21.03.2024 cannot be sustained in law merely because the original assessment order does not exactly advert to the issue which the ld. PCIT is seeing. Hence, the PCIT could not have exercised the powers conferred upon her u/s. 263 of the Act only on the reasons that she had a different view or perspective in the matter. The principle of law enunciated by the Supreme Court in Malabar Industrial Co. Ltd. has set up a standard concerning the width and amplitude of power vested for exercising revisionary jurisdiction under Section 263 of the Act. While exercising power under the said provision, the concerned officer must be satisfied that the twin conditions provided therein stand fulfilled, i.e., the order passed by the AO, which is sought to be revised, is erroneous and is also prejudicial to the interest of the revenue. In other words, if one of the two conditions is not satisfied, the revisionary power under the said provision cannot be invoked.

15.

Ergo, we quash the order passed by the PCIT, Central Jaipur.

Order pronounced in the open court on 05/09/2024.

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