No Sec. 263 revision for not mentioning reasons of accepting assessee’s submissions: ITAT

Case Details:Reliance Payment Solutions Ltd. v. PCIT - [2022] 136 taxmann.com 277 (Mumbai - Trib.)

Judiciary and Counsel Details

• • Pramod Kumar, Vice-President and Kuldip Singh, Judicial Member
  • Nimesh Vora for the Appellant. 
  • Sandeep Raj for the Respondent.

Facts of the Case

Assessee was engaged in the business of ‘operation of the semi-closed prepaid instrument by the RBI’. During the assessment, the Assessing Officer raised an issue with regards to a higher claim of depreciation, and the assessee filed a detailed reply stating there was no excess depreciation claimed by it.

However, the Assessing Officer (AO) didn’t make any observations on this in the Assessment Order. In this backdrop, the Principal Commissioner initiated revisional proceedings under section 263.
Assessee filed appeal against initiation of revisional proceedings before the Mumbai Tribunal.

ITAT Held

The Mumbai Tribunal held that the PCIT had initiated revisional proceedings on the short ground that AO passed the assessment order without making any further enquiry. He concluded that in the absence of any specific inquiry made by the AO or recording his reason for accepting the assessee’s submission without any appropriate evidence, it couldn’t be said that the assessee duly submitted documents.

Thus, the question before the tribunal was whether non-recording of the reasons for accepting explanation would render the order erroneous and prejudicial to the interest of the revenue?

The action of AO in accepting an explanation of the assessee cannot be faulted merely because it could have been lawful to make mere detailed inquiries or because he did not write specific reasons for accepting the explanation. As for PCIT’s observations regarding accepting the explanation “without appropriate evidence”, there was nothing to question the bona fides of the AO or to elaborate as to what should have been ‘appropriate’ evidence.

The issue raised in the revision order was specifically looked into, detailed submissions were made and the AO duly accepted these submissions. Thus, merely because AO did not write specific reasons for accepting the assessee’s explanation, it cannot be reason enough to invoke powers under section 263 and non-mentioning of these reasons does not render the assessment order erroneous and prejudicial to the interest of the revenue.