Income Tax Appellate Tribunal - Amritsar
Shri Satish Kumar. S/O. Sh. Hans Raj , ... vs Income Tax Officer Ward-4, Hoshiarpur on 19 December, 2019
Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 1 of 20 IN THE INCOME TAX APPELLATE TRIBUNAL AMNRITSAR BENCH, AMRITSAR BEFORE SHRI N.K. CHOUDHRY, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A ./ ./ No.258/ASR/2019 िनधारणवष/ िनधारणवष/A.Y.:2014-15 Shri Satish Kumar s/o Hans Raj, Vs. Principal Commissioner of B-12, MCH-366/13, Billa Income-Tax-1, Jalandhar House, New Jagatpura, Hoshiarpur PAN: AAWPK 0932 D अपीलाथ Appellant यथ /Respondent िनधा रतीक ओरसे /Assessee by Shri Surinder Mahajan, CA राज वक ओरसे /Revenue by Shri Alok Kumar, CIT (D.R.) सुनवाईक तार ख/ Date of hearing: 16.12.2019 उ#ोषणाक तार ख/Pronouncement on: 19.12.2019 आदे श /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER:
1. This appeal by the Assessee is directed against the order of learned Principal Commissioner of Income-Tax-1, Jalandhar (in short "the Pr.CIT") dated 26.03.2019pertaining to Assessment Year 2014-15, passed under section 263 of Income Tax Act, 1961 (in short 'the Act'). Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 2 of 20
2. Ground No. 1 to 6 of appeal states that Pr.CIT has erred in passing order under section 263 of the Act, which is illegal and without jurisdiction and Pr.CIT has grossly erred in holding the assessment order passed under section 143 (3) as erroneous and prejudicial to the interest of the Revenue, even though the AO has carried out necessary enquiries by issue of questionnaire. The assessment order was not prejudicial as assessment order was selected for Limited scrutiny under CASS to verify and examine large other expenses as claimed in the Profit & Loss Account. Therefore, Pr.CIT has grossly erred in setting-aside the order and directing the AO to make fresh assessment after making proper enquiries, which amounts to change of opinion and the assessment framed is neither erroneous and prejudicial to the interest of the Revenue.
2. Succinctly, facts as culled out from the orders of lower authorities are that the assessee is engaged in business of Real Estate, Liquor Contractor and Toll Plaza Contractor. The assessee has filed return of income on 19.09.2014 declaring total income of Rs.18,37,730 which was selected under CASS for Limited scrutiny for examination of large expenses. The same was assessed at Rs.18,63,230 vide order dated 21.11.2016 under section 143(3) of the Act. On examination of records, Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 3 of 20 the Pr. CIT noticed that the assessee has debited in the Profit & Loss Account toll Plaza expenses of Rs.1,48,97,057 which included expenses of Rs. 3,62,608 of computer expenses and Rs.3,68,192 on weig bridge expenses. As these expenses were paid to particular entity which are in the nature of Works contract and liable to TDS under section 194C of the Act. However, the perusal of records suggest that there is nothing on record that TDS was deducted on these payments. The Pr.CIT further, observed that the assessee has debited Rs.5,91,030 as court fees paid for civil suit to recover Rs. 2,09,00,000 and Rs.17,53,638 against Kamaldeep Singh and M/s. Gupta Traders respectively. However, the perusal of records suggest that these are not relating to any business activity of the assessee, hence, such expenses are apparently not allowable. Further, the disputed assets involved in recovery of Rs.2,26,53,638 were not find place in balance sheet hence, nature of source of funds has not been examined by the AO. Further, perusal of details of licence fee expenses in respect of liquor business showed that the assessee was running Ahatas (Drinking place at least at four places) but no income from Ahatas has been shown. Therefore, the Pr.CIT has issued a show-cause notice to the assessee to hold as to why the order passed should not be treated as erroneous and prejudicial to the interest of the Revenue. The assessee Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 4 of 20 has replied that payment made for computer and weigh bridge expenses on account of payment made in last year and appropriated to expenses account during the year under consideration. The Toll Plaza Contract was allotted for nine months only. Computer and weigh bridge installed on the Toll Plaza are taken over by the new contractor and expenses are written off proportionately and claimed in Profit & Loss Account on which no TDS was required to be made. The amount of Rs.2,09,00,000 from Kamaldeep Singh and Rs.17,53,638 from Gupta Traders are relates to business of the assessee. The amount due has been debited in capital account since liquor licence is for one year and all amount due has been debited in capital account. As regards income from Ahatas, it was submitted that the Ahatas were given to the independent person, who run the Ahatas on daily payments of Rs.300 to Rs.1000 per day and amount received is credited in sales account. Further, on legal ground, it was submitted that the AO has made all the enquiries and test checked the books of accounts and completed the assessment after verification. Therefore, the assessment order is not erroneous and prejudicial to the interest of the Revenue as held by the Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) : [2003] 183 CTR 228 (SC) : [2003] 131 Taxman 535 (SC). The Ld. AR of the assessee Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 5 of 20 has also relied in the case of CIT v. Amar Jewellers Ltd. v. DCIT [2002]259 ITR 502, CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi), CIT v. Vinod Kumar Gupta [2007] 165 Taxman 225 (P&H) and others which have been reproduced by the Pr.CIT in his order passed under section 263 of the Act. However, the Pr. CIT observed that the objection regarding difference of opinion between the AO and Pr.CIT, is concerned the position has been substantially altered with insertion of Explanation-2 to section 263 by the Finance Act, 2015 and the deeming provisions would not apply pertaining to pre amended period does not hold good. The assessee has objected that case was selected under Limited scrutiny under CASS, hence, this cannot be extended to other queries. However, Pr.CIT observed that this case was selected for verification and examination of large expenses claimed under the head of other expenses. The Pr. CIT observed that regarding computer expense and weigh bridge expenses the assessee has not filed satisfactory reply for non deduction of TDS. Regarding expenses of Rs.5,91,030, the claim of business relation and expenses debited to capital account but no details are filed. Hence, these expenses were liable to be disallowed. The AO was require to make enquiry for recovery suit claim of Rs.2,26,53,638 and why these were not reflected in balance sheet. Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 6 of 20 Regarding Ahatas income the assessee has only filed a ledger account showing income received as Ahatas income but details of same has not been filed. Thus, after considering reply to show-cause notice, the Pr. CIT observed that the order passed by the AO is erroneous as well as prejudicial to the interest of revenue because assessment order passed without making required inquiries and verification in respect of above issues. Therefore, the order was considered to be erroneous and prejudicial to the interest of the revenue hence, was set-aside to the file of the AO with a direction to make fresh assessment on the above mentioned issues after giving due opportunity to the assessee.
3. Aggrieved with order of Pr.CIT, the assessee filed this appeal before Tribunal. The learned counsel for the assessee vehemently contended that the AO has duly verified and applied his mind to the issues under consideration; therefore, the order of the AO is not erroneous and prejudicial to the interest of the revenue. The learned counsel for the assessee submitted that the Pr.CIT can assume jurisdiction under section 263 of the Act only if the order of the AO is erroneous as far as it is prejudicial to the interest of the revenue. Both the conditions have to be fulfilled before action under section 263 is initiated. The ld. Counsel for the assessee has drawn our attention to point no. 1 of questionnaire (PB- Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 7 of 20
16) of notice under section 142(1) dated 22.08.2016 (Paper Book Page No.14 to 23 ) by which the details of Toll Plaza expenses of Rs.1,48,97,057 was called for and the assessee has filed his reply vide letter dated 29.08.2016 (PB 24 to27) vide point no. 1 giving details of Toll Plaza Expenses. With reference to issue no. 2, being court fees expenses of Rs.5,91,030, it was submitted to the AO has raised query vide para No.7 of questionnaire dated 22.08.2016 of which reply was furnished by the assessee vide paragraph No.3 (placed at PB-18). With regard to licensing fees of Rs.2,70,39,107. The learned Counsel submitted that the AO has raised query vide para 2 of notice under section 142(1) dated 22.08.2016 (PB-17) which was replied by the assessee vide para No. 2 of which reply is placed the assessee Paper Book Page No. 18 and also detail explanation was filed vide paragraph No. 2 of explanation which is placed at the assessee`s Paper Book Page No. 25. With regard to recovery suit expenses, the learned counsel for the assessee submitted that a copy of ledger account was filed which is placed at Paper Book Page No. 51 showing the expenses debited in the name of Shri Kamaldeep Singh Anand and Gupta Traders. Hence, it was contended that such expenses are reflected in the ledger account, which have been debited to capital account of the assessee. The copy of account is placed at Paper Book Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 8 of 20 Page No. 53 of Kamaldeep Singh and of Gupta Traders at Paper Book Page No.54. The details of suit recovery are given at Paper Book Page No. 55 to
64. Thus, the assessment order passed after making enquiries and verification. The learned counsel for the assessee further referred Paper Book Page No. 65 of which copy of Ahatas account showing monthly income from Ahatas totaling to Rs.4,73,200 for the year under consideration. The details of same were submitted along with books of accounts during the course of assessment proceedings. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. The Pr.CIT has not specified that which enquiries were ought to have made. The ld. Counsel for the assessee further submitted that the Pr.CIT in his notice himself mentioned that the assessee examination of records showed the discrepancies, which means the details were on record and were examined by the AO. The learned counsel for the assessee further submitted that the assessment year involved is assessment year 2014-15 and amendment by way of Explanation 2 to section 263 was inserted with effect from 01.06.2015, hence, same is not applicable for the assessment year under consideration as it is not retrospective in nature. It was submitted that erroneous order means the assessment that deviate from Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 9 of 20 law and not in accordance with law. If the AO, acting in accordance with law makes certain assessment, the same cannot be termed as erroneous.
4. Further, in support of his contentions, the ld. Counsel for the assessee relying on plethora of decisions, including the decisions of the Hon'ble Supreme Court in Malabar Industrial Co. Limited (243 ITR 83); CIT V. Arvind Jewellers 259 ITR 502 (Gujarat), CIT V. Vinod Kumar Gupta [2007] 165 Taxman 225 (P&H), CIT V/s. Max India Ltd. 2007] 295 ITR 282 (SC), ITO V. DG Housing Projects Limited [2012] 343 ITR 329 (Del),Ranka Jewellers v. Addl. CIT [2010] 328 ITR 148 (Bombay), CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi) Narain Singla v. Pr.CIT 62 Taxmann.com 225 (Chandigarh-Trib) , Jivan Kumar v. Pr.CIT [I.T.A.No. 219 & 672/ASR/2016 and others as per his case laws Paper Book. The learned counsel for the assessee submitted that it is a settled position of law that when the assessing officer has taken a certain view on the basis of evidence before him on the information furnished by the assessee regarding issue under consideration in response to enquiries made by the assessing officer, the Pr.CIT cannot seek to revise the assessment order under Section 263 of the Act by taking a different view.
5. Au contraire, the Ld. CIT (DR) submitted this is a case where the AO has not made required enquiries. The case was selected for Limited Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 10 of 20 scrutiny, but that does not mean that the AO was not required to make enquiries, which are necessary. The assessee has claimed various expenses but the AO has not examined the same properly. Therefore, Explanation-2 to section 263 of the Act is very much applicable, as the AO has not made required enquiry. Therefore, the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Hence, Pr.CIT has rightly assumed jurisdiction to set-aside the issue to the AO for fresh assessment as the AO to examine the issue under dispute.
6. We have heard the rival submissions of both the parties and perused the material available on record. We are of the view that section 263 of the Act enables supervisory jurisdiction to the Pr.CIT over the AO. The Pr.CIT is empowered to act u/s. 263 of the Act when he considers that AO's order is erroneous in so far as it is prejudicial to the interest of Revenue. It is a settled position of law that the aforesaid twin condition i.e. AO's order is erroneous and prejudicial to the interest of revenue is sine qua non for assumption of revisionary jurisdiction by Pr.CIT. As per the scheme of the Act, AO has a dual role to discharge while assessing the income of an assessee. He is both an investigator as well as an adjudicator. If the AO fails in discharging any of the two said duties i.e. as an investigator or that of an independent/impartial adjudicator, the Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 11 of 20 Pr. CIT's supervisory jurisdiction is attracted because the order of the AO would be erroneous for lack of inquiry. Thus if he does not investigate, it would be erroneous for failure of AO to adjudicate as an independent/impartial adjudicator which means that if the AO passes assessment order in violation of natural justice, or there is bias or arbitrariness etc. then also the order of AO would be erroneous. When we say that lack of inquiry makes an AO's order erroneous, one has to keep in mind the difference between lack of inquiry and inadequate inquiry. Lack of inquiry makes the AO's order erroneous, but inadequate inquiry does not make the order of AO erroneous. The Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) 109 Taxman 66 (SC) had interpreted the provisions of section 263(1) in the following words :"A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo- moto-moto under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. 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 Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 12 of 20 prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue--recourse cannot be had to section 263(1) of the Act.---- There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind . . .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 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."
Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 13 of 20
7. Following the aforesaid judgment, the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282 (SC) reiterated that the phrase "prejudicial to the interests of the Revenue" as used in section 263(1) of the Act must be read in conjunction with the expression "erroneous" and unless the view taken by the Assessing Officer is found to be unsustainable in law, the powers under section 263 of the Act cannot be invoked.
8. No doubt, clause (a) of the Explanation 2 to section 263 deems the order to be erroneous and prejudicial to the interest of the Revenue in case order is passed without making enquiries or verification which should have been made in the opinion of Pr.CIT. In our opinion, for the applicability of clause (a) of Explanation, it is necessary that the Pr. CIT must mention in the order what inquiries or verification the Pr. CIT desires to have been carried out by the AO. The Pr. CIT in this case even though stated that the AO failed to examine computer expenses and weigh bridge, court fee, licensee fee and recovery dues during the course of assessment proceedings, but did not pointed out what type of inquiry of verification should have been carried out in this regard by the AO. However, the order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 14 of 20 verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr.CIT. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue.
9. Similar view has been in the case of CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi) wherein the Hon`ble High Court held that inadequacy of enquiry will not give jurisdiction to Commissioner under section 263. In this case the Hon`ble High Court has held as under: (Head note) : Section 263 of the Income- tax Act, 1961 - Revision- of order prejudicial to interest of revenue- Assessment year 2001-02- Whether if while making assessment, Assessing Officer has made an inadequate enquiry, that would not, by itself, give occasion to Commissioner to pass order under section 263, merely because he has different opinion in matter, it is only in cases of 'lack of inquiry' that such a course of action would be open- Held, yes - Assessee-company was engaged in business of manufacturing and supplying auto parts - In assessment for relevant assessment year, it had been allowed deduction of expenditure incurred on tools and dyes Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 15 of 20 as revenue expenditure - Commissioner, however, set aside assessment order in exercise of his powers under section 263 on ground that Assessing Officer had allowed aforesaid expenditure without making proper enquiry - He, accordingly, remitted matter back to Assessing Officer to re-examine issue - Whether when facts clearly showed that Assessing Officer had undertaken exercise of examining as to whether expenditure incurred by assessee in replacement of dyes and tools was to be treated as revenue expenditure or not and on being satisfied with assessee's explanation, he accepted same, it could be said to be a case of lack of inquiry - Held, no - Whether further, on facts and law, view taken by Assessing Officer was one of possible views and, therefore, assessment order passed by Assessing Officer could not be held to be prejudicial to interest of revenue - Held, yes - Whether, therefore, Tribunal was justified in setting aside order of Commissioner - Held, yes
10. The Pr. CIT has noticed that the assessee has debited in the Profit & Loss Account toll Plaza expenses included Rs.3,62,608 of computer expenses and Rs.3,68,192 on weigh bridge expenses which were works contract and liable to TDS under section 194C of the Act. The assessee debited Rs.5,91,030 as court fees paid for civil suit to recover Rs. Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 16 of 20 2,09,00,000 and Rs.17,53,638 against Kamaldeep Singh and M/s. Gupta Traders respectively how these are related to business activity not examined and no income from Ahatas has been shown, but did not pointed out as to why order is erroneous when the all detailed of balance sheet and notes appended thereto were on record of the AO. that The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue.
11. In the case of CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi) it was held that if there is some enquiry by the Assessing Officer in the original proceedings, even if inadequate, that cannot clothe the Commissioner with jurisdiction under section 263 merely because he can form another opinion. At the most, the case of the assessee can be regarded to be lack of inquiry in accordance with Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 17 of 20 Commissioner of Income tax if he has different opinion how to proceed with assessment of the case.
12. In the light of the above mentioned judicial precedents and facts of the present case, what has to be seen is whether the AO has made enquiries about issue under consideration. The ld. Counsel for the assessee has drawn our attention to point no. 1 of questionnaire (PB-16) of notice under section 142(1) dated 22.08.2016 (Paper Book Page No.14 to 23 ) by which the details of Toll Plaza expenses of Rs.1,48,97,057 were called for and the assessee has filed his reply vide letter dated 29.08.2016 (PB 24 to 27) vide point no. 1 giving details of Toll Plaza Expenses. With reference to issue no. 2, being court fees expenses of Rs.5,91,030, it was submitted to the AO has raised query vide para No.7 of questionnaire dated 22.08.2016 of which reply was furnished by the assessee vide paragraph No.3 (placed at PB-18). With regard to licensing fees of Rs.2,70,39,107,the learned Counsel submitted that the AO has raised query vide para 2 of notice under section 142(1) dated 22.08.2016 (PB-17) which was replied by the assessee vide para No. 2 of which reply is placed the assessee Paper Book Page No. 18 and also detail explanation was filed vide paragraph No. 2 of explanation is placed at the assessee`s Paper Book Page No. 25. With regard to recovery suit Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 18 of 20 expenses, the learned counsel for the assessee submitted that a copy of ledger account was filed which is placed at Paper Book Page No. 51 showing the expenses debited in the name of Shri Kamaldeep Singh Anand and Gupta Traders. Hence, it was contended that such expenses are reflected in the ledger account, which have been debited to capital account of the assessee. The copy of account is placed at Paper Book Page No. 53 of Kamaldeep Singh and of Gupta Traders at Paper Book Page No.54. The details of suit recovery are given at Paper Book Page No. 55 to
64. Thus, the assessment order has been passed after making enquiries and verification. The learned counsel for the assessee further referred Paper Book Page No. 65 of which copy of Ahatas account showing monthly income from Ahatas totaling to Rs.4,73,200 for the year under consideration. The details of same were submitted along with books of accounts during the course of assessment proceedings. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. The Pr.CIT has not specified that which enquiries were ought to have made. The ld. Counsel for the assessee further submitted that the Pr.CIT in his notice himself mentioned that the assessee examination of records showed the discrepancies, which means that the details were on record and were Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 19 of 20 examined by the AO. Further, Explanation 2 to section 263 was inserted with effect from 01.06.2015, hence, same is not applicable for the assessment year under consideration as it is not retrospective in nature. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. If the answer is affirmative then second question arises whether the acceptance of the claim by the AO was a plausible view or on the facts of the finding on the facts that the said finding of the AO can be termed as sustainable in law. We find that vide questionnaire, the assessee was asked regarding Toll Plaza expenses consisting computer and weigh bridge expenses, court fee expenses, which were appropriated in new contractor account, the court fee expenses and recovery suit expenses were relating to business of the assessee licence fee, Ahatas income is duly shown as para copy of ledger account filed. The assessee had furnished his reply, which is found placed in the Paper Book Pages as referred above. Therefore, the AO had made enquiries under Limited scrutiny assessment. We find that the AO has made due enquiries and had taken a plausible view, hence, same, cannot be disturbed by Pr.CIT in the name of further, verification and framing Satish Kumar v. Pr.CIT- Jalandhar/I.T.A.No. 258/ASR/2019/A.Y. 14-15 Page 20 of 20 fresh assessment. Since the AO has made during enquiry and examined the issues, hence, invocation of Explanation 2 of section 263 is not justified no it is applicable for the assessment year under consideration as it was inserted with effect from 01.06.2015. The Pr. CIT has not done any enquiry and not suggested what enquiries were to be carried out. In view of this matter, and relying on above mentioned judicial pronouncements, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 of the Act. Therefore, in absence of the same the Ld. Pr. CIT was not correct in exercise the jurisdiction under section 263 of the Act and setting aside assessment for making denovo and accordingly, we quash the impugned order passed under section 263 of the Act and allow the appeal of the assessee.
13. In the result, the appeal of the assessee stands allowed.
14. The order pronounced in the open Court on 19.12.2019 Sd/- Sd/-
(N.K.CHOUDHRY) (O.P.MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Amritsar: Dated: December 19, 2019/opm
Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/ Guard file of ITAT.
By order Assistant Registrar, ITAT