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Facts
The assessee assails the invocation of revisionary jurisdiction u/s 263 by the Pr. CIT for AY 2015-16, challenging the cancellation of the assessment order passed by the AO. The Pr. CIT doubted the value of closing stock and unsecured loans, despite the AO having accepted the assessee's submissions after scrutiny and issuing a show-cause notice.
Held
The Tribunal held that the issues flagged by the Pr. CIT were well-documented and inquired into by the AO during assessment proceedings. The AO had applied his mind and accepted the assessee's claim, making a plausible view. The Pr. CIT cannot substitute his own view for that of the AO simply because further verification was possible.
Key Issues
Whether the Pr. CIT was justified in invoking revisionary jurisdiction u/s 263 when the AO had already conducted scrutiny and formed a plausible view, and whether the Pr. CIT could substitute his view for that of the AO?
Sections Cited
263, 143(3), 142(1), 133(6)
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Income Tax Appellate Tribunal, “DB” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year:2015-16) बनाम/ B.P. Oil Mills Ltd. Pr. CIT-1, Maithan, Agra. Agra Vs. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACB-6524-H (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Deependra Mohan, CA – Ld. AR � थ�कीओरसे/Respondent by : Sh. Sukesh Kumar Jain – Ld. CIT/DR सुनवाईकीतारीख/Date of Hearing : 20-02-2025 घोषणाकीतारीख /Date of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of this appeal, the assessee assails invocation of revisionary jurisdiction u/s 263 by Ld. Pr. Commissioner of Income Tax, Agra-1 (Pr.CIT) for Assessment Year (AY) 2015-16 vide impugned order dated 31-03-2021 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 15-12-2017. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.
Upon perusal of assessment order, it could be seen that the assessee’s return of income was scrutinized and during the course of assessment proceedings, notice u/s 142(1) was issued on 21-11- 2016 along with a detailed questionnaire. After considering assessee’s submissions, Ld. AO made adhoc disallowance of salary expenses and framed the assessment. In the questionnaire, the assessee was directed to file financial statements, note on business activities and comparative chart of sales, receipts and profitability. The same was duly furnished by the assessee in its various replies. The assessee also filed the details of unsecured loans and inter- corporate deposits. The assessment order take note of the fact that the assessee furnished required details / explanations. The assessee also furnished tax audit report, bank statement, books of accounts, bills and voucher which were put to test check. Having satisfied with assessee’s explanation, Ld. AO chose to make adhoc disallowance of salary expenses.
Subsequently, Ld. Pr. CIT, upon perusal of case records and on the basis of observations in Tax Audit Report, doubted the value of closing stock-in-trade and also observed that the assessee obtained unsecured loans which were required to be examined. No independent enquiry was conducted by Ld. AO u/s 133(6). Accordingly, the assessee was show-caused. The assessee refuted all these allegations and stated that the case was subjected to complete scrutiny and detailed replies were submitted by the assessee form time to time. The assessee also demonstrated that closing stock-in-trade was much higher than as computed by Ld. Pr. CIT. The assessee also furnished detailed replies as submitted to Ld. AO on the issue of unsecured loans and inter-corporate deposits vide its replies dated 20-09-2017 and 15-12-2017. However, rejecting the same, Ld. Pr. CIT cancelled the assessment order and directed Ld. AO to pass a fresh order after examining these issues. Aggrieved, the assessee is in further appeal before us.
It could be observed that the assessee’s case was subjected to complete scrutiny. During the course of assessment proceedings, various queries were raised by Ld. AO calling for financial statement, tax audit report and various other documents. The assessee duly replied the same and in its replies dated 20-09-2017 and 15-12-2017, furnished complete details of unsecured loans / inter-corporate deposits. After due consideration of assessee’s replies and documents on record, Ld. AO accepted substantial claim of the assessee except for adhoc disallowance of salary expenses. On these facts, it could very well be said that the flagged issues were well documented by the assessee and the same were duly been enquired into by Ld. AO during the course of assessment proceedings itself. After due consideration of assessee’s submissions, Ld. AO substantially accepted the claim of the assessee with due application of mind. In our opinion, the allegations in the proposed revision are not well founded. It is a case of acceptance of one of the plausible views which was more on facts and the said view could not be said to be opposed to any law or statutory provisions. The Ld. AO, in our considered opinion, had taken one of the plausible views in the matter and therefore, Ld. Pr. CIT could not be said to be justified in substituting the view of Ld. AO with that of his own view. Simply because some further verification was required or simply because the verification was not done in a particular manner, the same could not justify revision of the order unless it was shown that the view of Ld. AO was erroneous or opposed to any law.
The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (supra) has held that the phrase 'prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest 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 interest of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law. The said principal has been reiterated by Hon’ble Court in its subsequent judgment titled as CIT V/s Max India Ltd. (295 ITR 282). Similar principal has been followed in Grasim Industries Ltd. V/s CIT (321 ITR 92). The ratio of all these decisions is that where two views are possible and AO has preferred one view against another view, order could not be said to be erroneous or prejudicial to the interest of the revenue.
Therefore, on the given facts, the impugned revision of assessment order could not be sustained in law. We order so. The assessment as framed by Ld. AO stand restored back.
The appeal stand allowed in terms of our above order. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) 4ाियक सद5 /JUDICIAL MEMBER लेखासद5 / ACCOUNTANT MEMBER Dated: 22.04.2025 आदेशकी7ितिलिपअ9ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु1/CIT 4. िवभागीय�ितिनिध/DR 5. गाड7फाईल/GF ASSISTANT REGISTRAR
ITAT AGRA