Section 263 of the Income-tax Act empowers revision only if an assessment order is both erroneous and prejudicial; mere disagreement with the order is insufficient.

ORDER

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

The above captioned two separate appeals by the assessee are preferred against two separate orders of the PCIT, Ghaziabad and Meerut dated 22.03.2019 and 08.03.2021 pertaining to A.Ys. 2014-15 and 2015-16.

2. In both these appeals, the assessee has challenged the assumption of jurisdiction u/s 263 of the Income-tax Act, 1961 [the Act, for short] by the respective PCITs in respective A.Ys.

3. Since the underlying facts in the issues are identical in both these appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity.

4. Representatives of both the sides agreed to address the bench on the facts of ITA No. 4620/DEL/2019 for A.Y 2014-15.

5. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.

4. Briefly stated, the facts of the case are that the assessment for A.Y 2014-15 was framed u/s 143(3) of the Act vide order dated 22.12.2016. Assuming jurisdiction conferred upon him by provisions of section 263 of the Act, the PCIT issued show cause notice to the assessee which reads as under:

5. The assessee filed detailed reply to the queries raised by the PCIT with supporting documentary evidences which were considered by the PCIT and the PCIT finally completed the proceedings by observing as under:

“10. It is not necessary for the Commissioner to make further enquiries before cancelling the assessment order of the AO. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the AO. should have made assessee in its' return. The reasons are obvious. Unlike the Civil Court which is neutral to give decision on the basis of evidence produced before it. an A.O. is not only an adjudicator but is also an investigator. He cannot remain passive in the face of a return which is apparent in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the cases are such as to provoke inquiry. The meaning to be given to the word "erroneous" in section 263 of the I.T. Act. 1961, emerges out of this context. The word "erroneous" in that section includes cases where there has been a failure to make the necessary inquiries ( Gee Vee Enterprises Vs. Addl. CIT (1975) 99 IYT375, 386(Oel.).

11. It is incumbent on the officer to investigate the facts stated in the return, when circumstances would make such an enquiry prudent and the word "erroneous' in section 263 of the I. T. Act, 1961. includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct.

Ouggal and Company Vs. CIT,(1996) 220 ITR 456, 459 (Del.)

CIT Vs. Pushpa Oevi (1987) 1641TR 639 (Pat.)

Swaroop Vegetable Products Industries Ltd., Vs. CIT (All.) 1871TR 412

CIT Vs. Smt. Rambha Oevi (1987) 1641TR 658 (Pat.)

CIT Vs. Bela Nisa (1988) 1711TR 643 (Pat.)

CIT Vs. Smt. Kaushalya Oevi (1988) 1711TR 686 (Pat.)

CfT Vs. United Commercial Bank (1993) 201 ITR 162 (Gal.)

Jubilant Organosys Vs. CIT (2004) 2651TR 4201137 Taxman 515 (All.) .

Malabar Industrial Co. Ltd. Vs. CIT (2000) 109 Taxman 6612431TR 83 (SC)

CIT Vs. McMilon and Company (SC) 33 ITR 182

Lajjawati Singhal Vs. CIT (All.) 226 ITR 527

12. In .view of the aforesaid discussion, it is found that the order passed by the A.O. is erroneous as well as prejudicial to the interest of the Revenue on the issues discussed in aforesaid paragraphs. Hence, the assessment order passed by the