Revisional Jurisdiction can be invoked for ‘Lack of Inquiry’, not for ‘Inadequate Inquiry’: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the revisional jurisdiction under section 263 of the Income Tax Act, 1961 can be invoked only for “lack of inquiry” and not for “inadequate inquiry”.

The AO accepted the return filed by the assessee after verification of all the aforesaid documents did not have any occasion to suspect the transactions of the assessee and accordingly accepted the claim of weighted deduction u/s 35(1)(ii) of the Act of the assessee and completed the assessment u/s 143(3) of the Act.

Subsequent to the completion of assessment, CBDT vide its Instruction in F.No. 225/351/2018-ITA(II) dated 14.12.2018 on the subject of Bogus Donation Racket under section 35(1)(ii) had informed to all the field officers that the approval u/s 35(1)(ii) of the Income Tax Act granted to the Donee Trust expired on 31.03.2006 and the said trust without being recognized to receive donations, had been in the habit of receiving donations from various donors for undertaking scientific research and had issued forged certificates thereon. Following this, the revisionary jurisdiction u/s 263 of the Act by the ld. PCIT, who sought to treat the order passed by the AO as erroneous in as much as it is prejudicial to the interests of the revenue by holding that the PCIT is that the AO had merely accepted the evidence submitted by the assessee without causing further enquiries.

The Tribunal bench comprising Shri M.Balaganesh, Accountant Member & Shri Kavitha Rajagopal, Judicial Member has held that “In any case, we find from the narration of the aforesaid facts, the AO had indeed carried out requisite enquiries on the issue of deduction u/s 35(1)(ii) of the Act. Once an assessment is framed after conducting enquiries as detailed supra, then the order passed by the ld AO cannot be subject matter of revision u/s 263 of the Act. The law is now very well settled that the revision jurisdiction u/s 263 of the Act could be invoked by the ld. PCIT only in the event of “lack of enquiry” by the ld AO and not on account of “inadequate enquiry”. Reliance in this regard is placed on the decision of Hon‟ble Delhi High Court in the case of CIT vs Sunbeam Auto Ltd reported in 332 ITR 167 (Del).”

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