Shri Ravi Dipakbhai Shah, Ahmedabad V. The Pr. CIT-6, Ahmedabad

ITA 160/AHD/2020

AI Insights

The case revolves around an appeal by Ravi Dipakbhai Shah against the order passed by the Pr.CIT-6, Ahmedabad, which invoked revisionary powers under section 263 of the Income Tax Act, 1961. The original assessment for the assessment year 2014-15 had minor additions, but the Pr.CIT found that the Assessing Officer had not conducted necessary inquiries into various expenses and the genuineness of commission payments, which were significantly higher than in the preceding year. The Tribunal dismissed the appeal, agreeing with the Pr.CIT that the assessment was erroneous as it lacked proper inquiry into the issues for which the case was selected for scrutiny.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133457 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 11-02-2020
• Other Referred Cases: N. Balakrishnan Vs. M. Krishnamurthy, Collector, Land Acquisition Vs. Mst.Katiji & Others, Maniben Devraj Shah Vs. Municipal Corporation of Brihan Mumbai, Cenzer Industries Ltd. Vs. ITO, Tractors & Farm Equipments Ltd. Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order; Transfer pricing; Opportunity of being heard; Period of limitation; Condonation of delay; TDS; Set aside
• Section: 263; 2; 40A(3); 143(3); 44AB; 113; 153; 92CA

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘A’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.160/Ahd/2020 [Asst.Year : 2014-15] Ravi Dipakbhai Shah 21-22 Shantam Apartments 38, Jagabhai Park Rambaug, Maninagar, Ahmedabad. PAN : AZTPS 8167 N The Pr.CIT-6 Ahmedabad. (Applicant) (Responent) Assessee by : Shri Tushar Hemani, Sr.Advocate Parimalsinh B. Parmar,AR Revenue by : Shri Vijay Kumar Jaiswal, CIT-DR स ु नवाई क तार ख/Date of Hearing : 16/02/2023&24 -5-2023 घोषणा क तार ख /Date of Pronouncement: 26/05/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld. Pr.Commissioner of Income Tax-6, Ahmedabad[hereinafter referred to as “Ld.Pr.CIT”] dated 01.03.2019 pertaining to the Asst.Year 2014-15by invoking revisionary power under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act’ for short). 2. The Registry has pointed out that there is delay of 284 days in filing of this appeal by the assessee. The assessee filed an ITA No.160/Ahd/2020 2 application seeking condonation of delay on the ground that the appeal was delayed on account of the fact that he was ill-advised by his earlier counsel in not filing appeal against the order passed by the ld.Pr.CIT under section 263 of the Act, and that only subsequently, when the consequential assessment order under section 143(3) of the Act was passed, assessing the income of the assessee multiple times to that returned by the assessee, that the assessee was alarmed and hadconsulted another counsel, who when asked about the status of the appeal against the order passed under section 263 of the Act, was appraised by the assessee of the fact that no appeal was filed. That it was then that the assessee was advised by the later counsel to file appeal against the order passed u/s 263 of the Act, since he had good case. That therefore, on the advice of the later counsel, the present appeal was filed belatedly. An affidavit of the assessee stating the above facts on oath was also filed before us. 3. The ld.counsel for the assessee contended that there being sufficient cause for the delay in filing appeal, in the interest of justice, the delay needed to be condoned. He relied on various case laws in this regard. We will deal with these case laws while adjudicating the issue. 4. The ld.DR vehemently opposed the application for condonation of delay filed by the assessee stating that there was inordinate delay of 284 days and no sufficient cause was adduced by the assessee for the delay. He relied on the Third Member decision of the ITAT in the case of Tractors & Farm Equipments Ltd., (2007) 104 ITD 149 (Chennai)(TM).Copy of the decision was placed before us. ITA No.160/Ahd/2020 3 5. We have heard contentions of both the parties; gone through the facts relating to delay in filing of the appeal as presented before us, and have also gone through various decisions of Courts on the issue of condonation of delay, which were cited before us. 6. Before proceedings to give our verdict on the application of the assessee for condonation of delay in the present case, we shall first bring out judicially settled principles laid down for condonation of delay. Beginning with decision of the Hon’ble Apex Court in the case of N. Balakrishnan Vs. M. Krishnamurthy, 1998 (7) SCC 123,the Hon’ble Court in the said case first dealt with the meaning and purpose of laying down limitation rule in law. Hon’ble Court held that object and purpose of providing a legal remedy is to repair damage caused by reason of legal injury. The Law of Limitation, it held, fixes a life span for such legal remedy for the redressal of the legal injury so suffered. Hon’ble Court noted that time being precious and that wasted time would never revisit, and by passing of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the Courts, therefore, there had to be a life span fixed for each remedy; that unending period of launching the remedy may lead to unending uncertainty and consequential anarchy. Hon’ble Court held that the law of limitation was thus founded on public policy,for the general welfare of all that a period be put to litigation.It held that Rule of Limitation is not meant to destroy the right of the parties, rather they are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The relevant portion of the above judgment laying down the above principles is as under: “Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly the object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes ITA No.160/Ahd/2020 4 a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.” Having so dealt with the purpose of law of limitation, the Hon’ble Court in the said decision also held that condonation of delay is a matter of discretion of the Court, which is to be exercised on the basis of acceptability of the explanation for the delay, with the length of delay being of no consequence; that what would be a prime point for consideration of the delay, was whether there was a satisfactory explanation for the impugned delay. The Court held that primary function of courts is to adjudicate the dispute between the parties and to advance substantial justice and the time limit fixed for approaching the Court is not for the reason that on expiry such time limit, a bad cause would become a good cause. The relevant portion of the judgment is as under: “It is axiomatic that condonation of delay is a matter of discretion of the court Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to want of acceptable explanation whereas in certain other cases delay of very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in reversional jurisdiction, unless the exercise of discretion was on whole untenable grounds or arbitrary or perverse. But it is a different matter when the first cut refuses to condone the delay. In such cases, the superior cut would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court. The reason for such a different stance is thus: The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. Time limit fixed for approaching the court in different ITA No.160/Ahd/2020 5 situations in not because on the expiry of such time a bad cause would transform into a good cause.” 7. Having so explained, the logic and purpose behind the Law of Limitation and the manner in which discretion is to be exercised for condonation of the delay, the Hon’ble Apex Court in the case of Collector, Land Acquisition Vs. Mst.Katiji& Others, 167 ITR 471 (SC) exhaustively dealt with power conferred by the Legislature to condone the delay by enacting section 5 in the Limitation Act, holding that purpose for the same was to enable Courts to advance substantial justice to the party by disposing of the matters on merit.The Hon’ble Court in the said case held that expression “sufficient cause” for section 5 of Limitation Act was to be applied in a manner to sub-serve the ends of justice and therefore a justifiable liberal approach had to be adopted on principle. The Hon’ble Court has given reasons for adopting a liberal approach stating that : • ordinarily a litigant does not stand to benefit by lodging an appeal late, • and by refusing to condone delay, a meritorious matter will be thrown out at the very threshold and cause of justice defeated, • as opposed to that if delay is condoned ,the highest that can happen is that a cause would be decided on merits after hearing the parties; • that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, because either side cannot claim to have vested right in injustice being done because of non- deliberate delay ITA No.160/Ahd/2020 6 • that there was no presumption that delay was occasioned deliberately, and in fact a litigant does not stand to benefit by resorting to delay; • that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. The Hon’ble Court elucidated these aspects for adopting a liberal and justice oriented approach on the issue of condonation of delay as under: “1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the 'State' which was seeking condonation and not a private party was altogether irrelevant. ITA No.160/Ahd/2020 7 The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even handed manner. There is no warrant for according a step-motherly treatment when the 'State' is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinary (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non- grata status. The Courts therefore have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression "sufficient cause". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even handed justice on mertis in preference to the approach which scuttles a decision on merits. Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay. The order of the High Court dismissing the appeal before it as time barred, is therefore. set aside. Delay is condoned. And the matter is remitted to the High Court.” 8. In the case of Maniben Devraj Shab Vs. Municipal Corporation of Brihan Mumbai, (2012) 5 SCC 157, Hon’ble Apex Court emphasised that liberal and justice oriented approach is required to be adopted while condoning the delays, but at the same time, the Hon’ble Court took note of rights acquired by the successful litigant on the expiry of period of limitation and taking note of the same held that the expression “sufficient cause” would derive colour from the factual matrix of each case and would largely depend upon the bona fide nature of the expression; that if the Courts find that there is no negligence on the part of the applicant and the cause shown for the delay does not lack bona fide, then the Court can condone the delay, but on the other hand, if the explanation is found to be concocted or the litigant found to be negligent in prosecuting his cause, then it ITA No.160/Ahd/2020 8 would be legitimate for the Court not to exercise its discretion to condone the delay. Para-23 and 24 of the judgment holding so are as under: "23. What needs to be emphasised is that even though a liberal and justice- oriented approach is required to be adopted in the exercise of power under Section 5 of the Limitation Act and other similar statutes, the courts can neither become oblivious of the fact that the successful litigant has acquired certain rights on the basis of the judgment under challenge and a lot of time is consumed at various stages of litigation apart from the cost. 24. What colour the expression 'sufficient cause' would get in the factual matrix of a given case would largely depend on bona fide nature of the explanation. If the court finds that there has been no negligence on the part of the applicant and the cause shown for the delay does not lack bona fides, then it may condone the delay. If, on the other hand, the explanation given by the applicant is found to be concocted or he is thoroughly negligent in prosecuting his cause, then it would be a legitimate exercise of discretion not to condone the delay." 9. Similarly, Hon’ble Bombay High Court in the case of Cenzer Industries Ltd. Vs. ITO in Notice of Motion Nos.492 & 493 of 2015 dated 15.1.2016 while condoning the delay of 865 days reiterated the principles laid down in Maniben Devraj Shah(supra), taking note of right accrued to the successful litigants on the expiry of litigation to treat the dispute as settled and arrange its affairs on that basis, held that this right of successful defendant could be disturbed for condoning the delay of filing appeal by the litigants only when the litigants explained the delay, and there is bonafide reasons for not having moved within the prescribed time i.e. by not being diligent. The reason for explaining the delay, it was held had to be plausible and reasonable so as to enable the court to exercise its discretion. The relevant finding of the Hon’ble Court in this regard at para-11 of its order is as under: '5. It is a settled position that an application for condonation of delay has to be liberally construed, as held by the Apex Court in various cases (see Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC). However, this liberal construction of the sufficient cause while condoning delay has to be counter balanced by ensuring that the law of limitation which provides for definite ITA No.160/Ahd/2020 9 consequence on the rights of the parties does not become ineffective. The rule of limitation is provided for general welfare of the society so as to put a period beyond which a party cannot agitate an issue in litigation. The rationale for the same is that once a litigation is decided, the dispute must repose. This is particularly so, if the party aggrieved by the order does not agitate the issue before the appellate forum within the time provided. The opposite party can then proceed on the basis that the dispute is settled and arrange its affairs on that basis. Thus, if the aggrieved party has not moved the appellate forum within the prescribed time, resulting in other securing an accrued rights, then the party moving an application for condonation of delay, must endeavour to explain the delay and show his bonafide in not having moved within the time prescribed (i.e. not being diligent). The law assist the vigilant and not the indolent as stated in the LatinMaxim "Vigilantsbusennondormientibus jura suveniunt.". The reasons for explaining the delay has to be plausible and reasonable so that the Court can exercise its discretion. Moreover, although a party is not be required to explain the reasons for not filing an appeal within the prescribed time the party must explain the delay post period of limitation i.e. from the expiry of the period of limitation.' 10. In the decision of ITAT, Chennai Bench in Tractor & Farm Equipments Ltd. (2007) 104 ITD 149 (Chennai) (TM) the same principle was laid down stating that the party seeking condonation of delay has to prove beyond the shadow of doubt that he was diligent and not guilty of negligence whatsoever; that sufficient cause must be a cause which is beyond the control of the party invoking the said of the provisions; that the cause for delay in filing the appeal which could have been avoided, cannot be a cause within the meaning of the limitation provisions; that the cause for delay in filing appeal, which could have been avoided by due care and attention cannot be a sufficient cause within the meaning of limitation provisions. The relevant observations of the Tribunal in the said cases are as under: “The delay cannot be condoned simply because the appellant's case is hard and calls for sympathy or merely out of benevolence to the party seeking relief. In granting the indulgence and condoning the delay, it must be proved beyond the shadow of doubt that the appellant was diligent and was not guilty of negligence, whatsoever. The sufficient cause within the contemplation of the limitation provision must be a cause which is beyond the control of the party invoking the aid of the provisions. The cause for the delay in filing the appeal, which by due care and attention, could have ITA No.160/Ahd/2020 10 been avoided, cannot be a sufficient cause within the meaning of the limitation provision. Where no negligence, or inaction, or want of bona fides can be imputed to the appellant, a liberal construction of the provisions has to be made in order to advance substantial justice. Seekers of justice must come with clean hands. In the instant case, the assessee justified the delay only with reference to the affidavit of its director. In the said affidavit it was stated that the Commissioner (Appeal) 's order was misplaced and forgotten. It was found while sorting out the unwanted papers and thereafter steps were taken for the preparation of the appeal and consequently the delay was caused. That clearly showed that the delay was due to the negligence and inaction on the part of the assessee. The assessee could have very well avoided the delay by the exercise of due care and attention. There existed no sufficient and good reason for the delay of 310 days. Therefore, reasonings adduced by the Accountant Member were to be concurred with. [Para 8]” 11. What can be culled out from the above is that the in matters of condonation of delay the principles to be applied rest on the basic premise that : • Rule of limitation is to provide certainty to litigations and thus avoid consequential anarchy due to unending period for launching litigationsand isthus for benefit of general public. • It is not for denying rights of parties to legal remedy but only to ensure prompt redressal by litigants to the remedy available and to prevent any dilatory tactics being adopted . • That expiry of period of limitation does not render a bad cause good. That therefore based on the above premise, section 5 of the Limitation Act and section 253(5) of the Act provides power to condone delay on demonstrating sufficient cause to the satisfaction of the courts. This satisfaction accordingly has been held by Courts to be interpreted liberally, for advancement of substantial justice. ITA No.160/Ahd/2020 11 That at the same time, considering the rights which accrue to the other party to the litigation on the expiry of limitation, to treat the dispute as settled and arrange its affairs accordingly, this right can be disturbed only in the circumstances that it is demonstrated that the delay was a bona fide delay and not on account of any laxity and negligence in pursuing litigations Thus, the crux of the principle laid down by Hon’ble Courts for exercising the power for condoning delays is that there has to be sufficient and reasonable cause adduced by the assessee for the delay and the assessee should not appear to have acted negligently and in a mala fide manner. 12. Having said so, we shall now apply this principle to the facts before us leading to the delay of 283 days in filing of the appeal before us. The affidavits of the assessee, explain the reason for delay is reproduced as under: ITA No.160/Ahd/2020 12 ITA No.160/Ahd/2020 13 13. As is evident from perusal of the above, the assessee has pleaded ill-advice on the part of his first legal consultant, as the cause for the delay in filing appeal; that on his advise he had not filed appeal against the impugned order of the ld.Pr.CIT passed under section 263 of the Act, and it was only when consequent assessment was framed under section143(3) of the Act resulting in income being assessed at Rs.1.28 crores, which was multiple times the income retuned by the assessee of Rs.17.41 lakhs, raising a whopping demand of Rs.66.83 lakhs, that the assessee rushed to another counsel who, when became aware that the assessee had not filed appeal against the order under section 263 advised him to do so, and it was on his advice that the appeal was filed resulting in the delay of 284 days in the filing of the appeal. ITA No.160/Ahd/2020 14 In the affidavit, the assessee has reasonably demonstrated length of period of delays or 284 days pointing out of the fact that on the date of receipt of order under challenge before us of the ld.Pr.CIT under section 263 of the Act on being 6.3.2019, the date by which the appeal was filed before the ITAT being on or before 5.5.2019; that consequential assessment order under section 143(3) was passed on 30.12.2019 after which he approached the second counsel who advised him to file appeal against the order under section 263 and in regard to which he filed an appeal on 12.2.2020 resulting delay of 284 days. 14. Above facts, relating to the chronology of events have not been controverted by the ld.DR before us. Therefore, it can be safely read from the same that the assessee promptly pursued the legal action which was advised by the second legal counsel on receipt of consequential order under section 143(3)/263 and filed appeal against the order passed by the ld.Pr.CIT under section 263. What has to be seen now is whether, this explanation of the assessee for the delay was bona fide, reasonable and did not exhibit any negligence or laxity in pursuing its appeal in appellate remedy. The facts as stated by the ld.counsel for the assessee that he was advised by the earlier counsel not to file appeal against the order passed u/s 263 of the Act has not been found to be false by the Revenue. Also it is highly plausible also for a legal consultant to have advised against filing appeal against the revisionary order under section 263 of the Act. There can be two reasons for it; (i) that the legal consultant found no financial implication in the revisionary order, since all the issues had been restored back to the AO for reconsideration and he would have presumed that no appeal lie against said order and the appellate remedy lie only against the consequential assessment order passed or in his wisdom, he ITA No.160/Ahd/2020 15 thought that it would be best if the appeal was filed only against an order which had direct financial implications, since there was a possibility that the assessee would have remained unaffected in consequential assessment proceedings as far as his assessed income was concerned, therefore, the consultant in his wisdom thought it best wait for consequential order and file appeal only against the same. Therefore, this explanation of the assessee that he was advised not to file appeal against the order passed under section 263 to us, appears to be a plausible explanation, and there is no doubt that in the consequent assessment, the assessee was assessed multiple times to its returned income, which forced him into action and he came to the consult another legal adviser on whose advise the present appeal was filed before us. The delay in filing of appeal therefore in these circumstances cannot be attributed to any laxity or negligence on the part of the assessee. In fact the assessee, has all along acted on the advice of legal consultant, the first one advising him not to file appeal and the second one advising him to do so. It is also very pertinent to note here that various courts have held that wrong legal advice given or mistake made by the assessee’s counsel may constitute a good reason or sufficient cause for condoning the delay in filing appeal. In other words, a cause should not be dismissed due to ill-advice given by the counsel. The following case laws support this proposition: i) Concord Ins Vs. Nirmaladevi, 118 ITR 507 (SC) ii) IAC Vs. Kedarnath, 133 ITR 746 iii) Arun Vs. Twigg, 153 ITR 131 iv) Avtar Vs. CIT, 133 ITR 338 Also there is no benefit accruing to the assessee by not filing appeal in the first instance itself but on the contrary the assessee ITA No.160/Ahd/2020 16 has been inflicted with serious consequences of huge demand raised on him on account of the consequential assessment framed which there was a possibility of avoiding if appeal were filed against the order passed u/s 263 of the Act. Therefore noting that there is no negligence or laxity attributable to the assessee for the delay in filing appeal, and to subserve the ends of justice we find that it is a fit case for condoning the delay of 283 days in the present appeal. The impugned delay in filing the present appeal is accordingly condoned. 15. We shall now proceed to deal with the appeal before us. 16. As transpires from order of the ld.Pr.CIT the assessee was deriving income from dealing in water purifier, water RO and water treatment plant under the name and style of proprietorship concern viz. “M/s.Unitech Water Solutions”. For the impugned year i.e.Asst.Year 2014-15, the assessee had filed return of income declaring income at Rs.17,01,720/-. The assessee’s case was selected for scrutiny under CASS and assessment ultimately finalized under section 143(3) of the Act at an income of Rs.17,41,830/-, making minor addition on account of disallowance of interest on TDS of Rs.30,577/- and disallowance of 10% telephone expenses of Rs.9,548/-, thus resulting in total addition to the income of Rs.40,105/-. The ld.Pr.CIT on examination of records of assessment found that the impugned order passed was erroneous since as per the ld.Pr.CIT the AO had made no inquiry on the issues for which the case of the assessee was selected for scrutiny. He noted that the assessee’s case was selected for scrutiny on account of large commission expenses and low net profit returned by the assessee and that despite specific reasons for selecting the ITA No.160/Ahd/2020 17 assessee’s case for scrutiny, the AO neither made inquiry vis-à-vis the commission expenses claimed by the assessee nor had examined or made any inquiry regarding various expenses claimed by the assessee, which were disproportionately higher to what he assessee had claimed in the preceding year. The specific expenses so noted by the ld.Pr.CIT were relating to labour and freight expense, salary expenses, kasar-vatav expenses and direct expenses. He also noted that the assessee’s claim of prior period expenses of Rs.1,63,511/- was also not examined by the AO. His finding inthis regard at para- 5 and 6 of his order are as under: “5. The A.O. has not conducted any enquiry into the genuineness, reasons and justification for the commission payments like what services were rendered by the payees to earn the commission in question. The confirmations found on record do not have the addresses of the payees which clearly show that the AO did not conduct any independent enquiry into the genuineness of these payments. Two of the PANs were subsequently found invalid. 6. No enquiry has been conducted by the A.O. into: (a) the genuineness of the labour and freight expenses claimed at Rs. 8,85,150/- (which were NIL in the preceding year), (b) the substantial rise in the salary expenses (Rs. 33,67,523/- as compared to Rs. 9,92,800/- in the preceding year) and kasar-vatav expenses (Rs. 9,34,966/-, as compared to Rs. 34,704/- in the preceding year) (c) reasons for more than 300% increase in direct expenses (Rs.13,61,771/-, as compared to Rs. 3,19,337/- in the preceding year) (d) justification for claiming prior period expenses totaling Rs.1,63,511/-.” 17. The ld.PCIT further noted that the AO had not called for any details regarding the source and nature of addition to the capital of the proprietary of Rs.12,08,080/- or the unsecured loans of Rs.11,78,000/- from Hiralal R. Shah. He also noted that the issue of disallowance under section 40A(3) of the Act for payments made in cash also not been examined by the AO. His findings in this regard at para-7 of his order are as under: ITA No.160/Ahd/2020 18 “7. The A.O. has not called for any details regarding the source or nature of addition to capital of Rs. 12,08,080/- or the unsecured loan of Rs.11,78,000/- from Mr.Hiral R. Shah. Even the confirmation has not been called for. The issue of disallowance u/s 40A(3) out of payments in cash exceeding Rs. 20,000/- has also not been examined.” 18. Thus, finding that the AO had completed assessment without conducting necessary inquiries as warranted by the facts of the case, he held the assessment order to be erroneous and prejudicial to the interest of the Revenue, and accordingly he set aside the order passed by the AO under section 143(3) of the Act to the file of the AO to be framed de novo. His findings in this regard at para-8of his order are as under: “8. As discussed above, the Assessing Officer has completed the assessment in a summary manner without conducting necessary and proper enquiries as warranted by the facts of the case. Hence, the order passed by the Assessing Officer is held to be erroneous and prejudicial to the interest of revenue . The order of the Assessing Officer u/s 143(3) dated 21/04/2016 is hereby set aside to the file of Assessing Officer to be framed denovo The Assessing Officer is directed to make all necessary enquiries/investigations and examine all the issues afresh after giving reasonable opportunity of being heard to the Assessee and complete the assessment afresh, as per Income Tax Act, 1961.” 19. Before us, several arguments were made by the ld.counsel for the assessee against order of the ld.Pr.CIT, both orally and by giving brief synopsis which was filed before us. We shall deal with each of the arguments of the assessee hereinafter. 20. The first contention made by the ld.counsel for the assessee before us was that it was the case of limited scrutiny assessment, and the AO could have gone beyond the issue identified for the limited scrutiny, and therefore, order of the ld.Pr.CITon the other aspects was not in accordance with law. His contention in brief was that the limited scrutiny was directed for examination of commission expenses and low net profit, and therefore, the ld.Pr.CIT was not justified in invoking jurisdiction under section 263 of the Act in ITA No.160/Ahd/2020 19 respect of the issues other than the commission expenses. His submissions in brief in this regard are as under: “In the case of Limited scrutiny”, the AO could not have gone beyond issues identified for limited scrutiny and hence, CIT cannot pass order u/s.263 on other aspects and remit the matter to AO. The case of the assessee was selected for "scrutiny assessment" and the specific "reason for selection of case for scrutiny under CASS" was "large commission expenses & low net profit", as is evident from followings. It is a settled law that in case of "limited scrutiny", AO could not have gone beyond issues identified for limited scrutiny and hence, CIT cannot pass order u/s 263 on other aspects and remit the matter to AO. Reliance is placed on followings: • ChaitanyNagori vs. PCIT - ITA 377/Ahd/2020; • Dharmin Thakkar vs. ITO - ITA 1378/Ahd/2019 • Kumar vs. PCIT -187 iTD 454 (Del.); • Spotlight Vaniya Ltd. PCIT - ITA 353/Kol/2020; • Dharmin N. Thakkar vs. ITO - ITA 1378/Ahd/2019 • Shri Narendrakumar R. Patel vs. DCIT - ITA 981/Ahd/2019; • CBDT's Instruction No.7/2014 dated 26.09.14; • CBDT's Instruction No.20/2015 dated 29.12.15; • CBDT's Instruction No.5/2016 dated 14.07.16; In view of the above, CIT was not justified in invoking jurisdiction u/s 263 of the Act in respect of issues other than "commission expenses": 21. We are not in agreement with this contention of the ld.counsel for the assessee. The facts and documents on record before us and placed in PB by the ld.counsel for the assessee comprising of 170 pages itself demolishes the very premise and basis of the assessee’s arguments for setting aside the ld.Pr.CIT order that it was a case of limited scrutiny. On page No.4 to 6 is placed screen-shot of the reasons for scrutiny selection in the present case, which categorically mentions “Type of Scrutiny : COMPLETE” and “Reasons for scrutiny selection”: “Non-Corporate assessees having income from business to which section 44AB applies” “large commission expenses and low net profit”. As per the documents placed before us by the ld.counsel for the assessee, it is clear and evident that it was a case of complete scrutiny and not ITA No.160/Ahd/2020 20 limited scrutiny as canvassed by the ld.counsel for the assessee before us. Therefore, argument of the ld.counsel for the assessee that the ld.Pr.CIT’s order on issues other than those mentioned for scrutiny selection was beyond the scope of revisionary power, does not survive. Even otherwise, the finding of the error by the ld.PCIT of non-examination of disproportionately large claim of expenses by the assessee in the impugned year, as compared to the preceding year is in relation to and has direct bearing on the aspect of low net profit earned by the assessee which was one of the reasons for scrutiny selection. Therefore, for this reason also the contention of the assessee that other than the issue of commission no other issues could have been dealt by the ld.Pr.CIT, we find, has no merit, and is therefore rejected. 22. Next argument made by the ld.counsel for the assessee was that the issues on hand were examined by the AO at the original assessment stage, and therefore, it was not open for the ld.Pr.CIT to invoke revisionary jurisdiction on the same. Concurrently, he also argued that the AO having examined the issue during the assessment and where two views were possible, revision under section 263 of the Act is not justified. His submissions in brief in this regard are as under: o “The issues on hand were threadbare examined at the original assessment o When an issue has been examined at the original assessment stage, it is not open to the Department to invoke revisionary jurisdiction. o Where an issue has been examined at the original assessment stage but the same does not get reflected in the final assessment order, then that, by itself, would not lead to a conclusion that order of AO calls for interference by CIT u/s 263 of the Act. Reliance is placed on following decisions for the aforesaid contentions raised by the assessee: CIT vs. Nirma Chemicals Works (P.) Ltd. - 309 ITR 67 (Guj) Gujarat Power Corporation vs. ACIT - 350 ITR 266 (Guj) Rayon Silk Mills vs CIT - 221 ITR 155 @ 158-159 (Guj) ITA No.160/Ahd/2020 21 Hari Iron Trading Co. v. CIT [2003] 263 ITR 437 (P&H) CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom) CIT vs. Vikas Polymers - 341 ITR 537 (Del) CIT vs Honda Siel Power Products - 333 ITR 547 @ 557-558 (Del) It is settled law that if two views are possible as regards a particular issue and AO adopts either of two such views, then CIT cannot invoke jurisdiction u/s 263. Mere fact that different view could have been taken doesn't justify proceedings u/s 263. Reliance is placed on the followings: • Malabar Industrial Co. Ltd. vs. CIT - 243 ITR 83 (SC); • Kwality Steel Suppliers vs. CIT - 395 ITR 1 (SC); • CIT vs. Mehsana District Co-op. Milk Producers Union Ltd. • 263 ITR 645 (Guj) • CIT vs. D. P. Karia-266 ITR 113 (Guj); • CIT vs. Arvind Jewellers - 259 ITR 502 (Guj); • Sir Dorabji Tata Trust vs. DCIT(E) - (2021) 188 ITD 38 (Mum); Torrent Pharmaceutical, vs DCIT -(2021) 173 ITD 130 (Ahd); 23. The contention of the ld.counsel for the assessee that the issues were examined threadbare at the original assessment stage was made out from Annexure-A, filed alongwith written submissions before us as under: 24. We are not in agreement with this contention of the Ld.Counsel for the assessee. In fact on going through the evidences and ITA No.160/Ahd/2020 22 documents filed before us, regarding queries raised during the assessment proceedings, we agree with the ld.Pr.CIT that the AO had conducted no inquiry at all during the assessment proceedings with regard to any of the issues for which the assessee’s case was selected for scrutiny assessment i.e. the issue relating to commission expenses or the aspect of low net profit returned by the assessee. As per the assessee own admission as above, (Annexure - A) the only aspect examined by the AO during the assessment proceedings, if any, was in relation to commission expenses. Therefore, it is a clear and admitted case that the issue of low net profit was not examined by the AO at all. Having said so, on the commission expenses also, we have noted from the query raised during the assessment proceedings and submissions made by the assessee before the AO, that the AO simply accepted whatever submissions were made by the assessee without making any inquiry on the issue of commission expenses claimed. The assessee had submitted to the AO that it was in the business of dealing in water RO plant and was fully dependent upon the commission payment and had incurred 3.74% commission expense as compared to the sales, while in the preceding year, its ratio was 2.99%, thus, showing a normal increase of only 0.75%. The ledger account of commission expenses was filed and confirmation and TDS certificate were filed along with Form No.26AS. It is clear that no query or inquiry was conducted by the AO on the issue. The ld.Pr.CIT, on the other hand, noted that during the impugned year, the assessee had paid commission of Rs.22,40,340/- to the following parties: Name Amt. (Rs.) Kamlesh S.Desai 66 ,750/ - NabaDaka 7,00,000/- ITA No.160/Ahd/2020 23 RajeshPatidar 1,58,000/- Rakesh Panchal 46,100/- Samarth D.Shah (HUF) 1,28,400/- Radha S.Shah 48,000/- Tushar Gohil 1,00,000/- Menakshi TusharGohil 2,50,070/- MureshbhaiJuthani 6,56,577/- Manish Raina 80,000/- Total 22,40,340/- 25. That the PAN of the same of the commission agents mentioned in their confirmation was found to be invalid and in some cases PAN was not found mentioned. Moreover, he noted that the purpose of paying commission to the said persons and the nature of services rendered by these parties was not inquired into by the AO. His show cause notice, noting the above facts are produced hereinunder at para-3.2. “3.2) The case records show that you have debited the following commission expenses amounting to Rs.22,40,340/- to P&L account for the year under consideration. Name Amt. (Rs.) Kamlesh S.Desai 66,750/- Naba Daka 7,00,000/- RajeshPatidar 1,55,000/- Rakesh Panchal 46,100/- Samarth D.Shah (HUF) 1,28,400/- ITA No.160/Ahd/2020 24 Radha S.Shah 48,000/- Tushar Gohil 7 1,00,000/- Menakshi Tushar Gohil 2,50,070/- Mureshbhai Juthani 6,56,577/- Manish Rama 80,000/- Total 22,40,340/- From the above chart, it is seen that you have paid Rs.7,00,000/-to Shri Naba Daka. However, the PAN of Shri Naba Daka (BJWPD9099M) mentioned in the confirmation is found invalid. The PAN is also not mentioned in the confirmation ledger of Radha S.Shah. Similarly, in the confirmation of Tushar Gohil who has been paid commission of Rs.1,00,000/- and salary of Rs. 1,41^200/j, the PAN mentioned on ledger a/c is found invalid. Moreover, the purpose for paying commission/salary to the above mentioned persons and the nature of services rendered by these parties have not been clarified by you nor has the Assessing Officer made any enquiries in this regard.” 26. When confronted with these facts, the submissions made by the assessee before the ld.Pr.CIT were only to the effect that the higher commission is justified on account of increase in sales as compared to the preceding year by 7.2% and the PAN of NabaDaka is not invalid. The submissions of the assessee in this regard are reproduced at para 3(ii) of the order as under: ITA No.160/Ahd/2020 25 It is abundantly clear from the same that despite the assessee’s case having been selected for scrutiny for the reason that huge commission expenses were claimed by the assessee, the AO merely accepted the explanation of the assessee without making any inquiry or reasons or other question on the explanation of the assessee, and this despite the fact that the commission expenses showed an increase from 2.99% of sales to 3.74%; increasing from ITA No.160/Ahd/2020 26 Rs.10,34,440/- incurred in the present year to Rs.22,40,340/- in the present year. Surely, the increase in the commission expenses is not justified merely by the increase in sales. Further no inquiry was done by the AO regarding the services rendered by the agents and even their confirmations, mentioned incorrect or no PAN number. Though it has been pointed out to us that TDS certificates of the commission agents mentioning their correct PAN Nos. was filed to the AO but the fact that the confirmation of one commission agent NEBADERA mentioned a different PAN number to the one stated in the TTDS certificate has been remained uncontroverted. Considering that the assesses case was selected for scrutiny on account of large commission expenses, the facts before us reveal that the AO merely accepted whatever reply was filed by the assessee, which as noted above by us did not even justify the increase in commission expenses but contrarily revealed infirmities which should have prompted further inquiry by the AO. The finding of the ld.Pr.CIT, we hold, are correct that the assessment order was erroneous on account of no inquiry at all having been conducted on the issue of large commission expenses claimed. Thus, with respect to both the issue of commission expenses and the issue of low net profit, we find that there was no inquiry conducted by the AO at all, and therefore, the ld.Pr.CIT was right in holding that the assessment order was erroneous causing prejudice to the Revenue. The assessee’s arguments therefore that the issues were examined during the assessment proceedings is dismissed. Also since we have found the AO to have not conducted any inquiry on the issues for which complete scrutiny was directed in the present case, there cannot be any question of any view formed by the AO on the issues and hence the argument advanced on behalf of ITA No.160/Ahd/2020 27 the assessee that where two views were possible, revisionary proceedings are unjustified, needs to be rejected. 27. Next contention of the ld.counsel for the assessee before us that there is no finding of error by the ld.Pr.CIT in the assessment framed by the AO and twin conditions viz. assessment order is erroneous and prejudicial to the interest of the Revenue not being satisfied, the exercise of revisionary jurisdiction under section 263 was not in accordance with law. His submissions in brief in this regard are as under: “It is settled law that if two views are possible as regards a particular issue and AO adopts either of two such views, then CIT cannot invoke jurisdiction u/s 263. Mere fact that different view could have been taken doesn't justify proceedings u/s 263. Reliance is placed on the followings: Malabar Industrial Co. Ltd. vs. CIT - 243 ITR 83 (SC); Kwality Steel Suppliers vs. CIT - 395 ITR 1 (SC); • CIT vs. Mehsana District Co-op. Milk Producers Union Ltd. 263 ITR 645 (Guj) CIT vs. D. P. Karia- 266 ITR 113 (Guj); CIT vs. Arvind Jewellers - 259 ITR 502 (Guj); Sir Dorabji Tata Trust vs. DCIT(E) - (2021) 188 ITD 38 (Mum); Torrent Pharmaceutical, vs DCIT -{2021) 173 ITD 130 (Ahd); 28. We are not in agreement with the contentions also. As held by us above. In the absence of any inquiry conducted by the AO on the issues for which the assessee’s case was selected for scrutiny assessment the order we hold ,beyond any doubt, was in error. Therefore, the plea the ld.counsel for the assessee that there was no finding of error by the Ld.PCIT in the assessment, is without any merits and is rejected. His arguments therefore of the twin conditions for invoking jurisdiction under section 263 not being satisfied in the present case is accordingly also dismissed. 29. Other contentions of the ld.counsel for the assessee about inadequate inquiry by the AO cannot be ground for revision under section 263. In this regard, he has relied on the following decisions: ITA No.160/Ahd/2020 28 • CIT vs. Sunbeam Auto Ltd. - 332 ITR 167 (Delhi); • CIT vs. Anil Kumar Sharma - 335 ITR 83 (Delhi); • CIT vs. Vikas Polymers - 341 ITR 537 (Delhi); 30. This contention of the ld.counsel for the assessee also deserves no consideration. As pointed out by us, it is not a case of inadequacy of the inquiry, but a case of no inquiry at all by the AO on the issue for which the assessee’s case was selected for scrutiny. Therefore, the decisions relied upon by the ld.counsel for the assessee are of no assistance to the assessee, and the assessment order, we hold, has been rightly held by the ld.Pr.CIT to be erroneous on account of no inquiry conducted by the AO. 31. Next contention raised by the ld.counsel for the assessee is that even on merits, no addition was called for the in present case. His submissions in brief and in writing before us, in this regard are as under: • “Even on merits, no addition is called for in respect of issue raised by CIT in view of contentions forming part of Annexure –“B”. • Thus, even on merits, there is no error in the order passed by AO in the case of the assessee for the year under consideration. 32. The same were reiterated during the course of oral arguments made before us. This contention of the ld.counsel for the assessee also merits no consideration. On merits, the case of the ld.counsel for the assessee is merely with respect to the issue of commission expenses. With respect to the other issues relating to disproportionately large expenses claimed by the assessee, noted by the ld.Pr.CIT to have not been examined by the AO relate to the case being selected for low net profit. No submissions on merits are there by the assessee on this count. Therefore, vis-à-vis the issue of disproportionately large expenses claimed by the assessee, the assessee surely has no case on merits, since it has not even been examined by the AO during assessment proceedings, and even ITA No.160/Ahd/2020 29 before the ld.Pr.CIT the assessee failed to give any reasonable explanation for justifying the increase in expenses. 33. As for the commission expenses, as noted above by us, the same was not examined by the AO at all during the assessment proceedings, and even before the ld.Pr.CIT the assessee was unable to justify the genuineness of its claim. Therefore, the contention of the ld.counsel for the assessee, that even on merits, no addition is called for in respect of the issues raised by the ld.Pr.CIT, we find, is devoid of any merits, and therefore is rejected. 34. The next contention raised by the ld.counsel for the assessee is that ld.Pr.CIT without invoking Explanation 2 to section 263 of the Act, could not have applied the same for holding the assessment order as erroneous. The contention of the ld.counsel for the assessee is that the ld.Pr.CIT had held the assessment order to be erroneous on account of having been completed without conducting necessary and proper inquiries as per Explanation 2 to section 263. And without invoking the said Explanation he could not have held the assessment order erroneous on account of the said explanation. He has relied upon the decision of Hon’ble Apex Court in the case of Pr.CIT Vs. Shreeji Prints P.Ltd. (2021) 130 taxmann.com 294. This issue has been dealt with by the ITAT exhaustively in the case of Shri Rajkot District Cooperative Bank Ltd. Vs. Pr.CIT, 123/RJT/2016 order dated 15.02.2023, wherein identical contention raised was dismissed holding that Hon’ble Apex Court judgment cannot be read holding that Explanation 2 to section 263 needs to be invoked before applying the same. The relevant portion of the order is as under: ITA No.160/Ahd/2020 30 “33. To understand the import of the argument that the invocation of Explanation 2 to section 263 was to be confronted before being applied, it is necessary to see what Explantion-2 to section 263 is all about. For this purpose, provision of section 263(1) of the Act along with the Explanation2 to the same are reproduced hereunder: 263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, [including,— (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section]. Explanation 1.—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— .... ..... ..... .... Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.” 34. As is evident from the above, section 263 empowers Commissioners/ Pr.Commissioners to exercise revisionary power where they find any order passed by the AO to be erroneous so as to cause prejudice to the interest of the Revenue. Explanation 2 to the section lists circumstances in which the assessment order passed will be deemed to be erroneous, which amongst other, includes an order passed without making inquiries or verification which should have been made as per clause (a) of the Explanation, which clause has been invoked by the ld.Pr.CIT in the present case. 35. Having said so, it is but obvious that what Explanation 2 does is only clarify and enlist the circumstances specifically where an assessment order will be deemed to be erroneous. It only explains the scope of the section and clearly by no stretch expands its scope. The import or object of an Explanation was explained by the Hon’ble apex court in the case of Sundaram Pillai v Pattabiraman AIR 1985 SC 582,593 as : The object of an Explanation has been explained in an earlier case as follows:— ITA No.160/Ahd/2020 31 (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. Explanations are not substantive provisions and are inserted to clear up any ambiguity in the section. They only clarify an existing law. Normally Explanations do not enlarge the scope of the section but only explain the scope. Explanation 2 to section 263, clearly provides additional support to the dominant object of section 263, specifically pointing out situations where assessment orders will be deemed to be erroneous. The main provision of the section and its import has not been altered by the explanation. Therefore where section 263 itself has been invoked and the reason for finding the assessment order erroneous clearly pointed out to the assessee during revisionary proceedings to the effect that adequate inquiries were not conducted by the AO on the issue in question, Explanation 2 to section 263 (a) also being to the same effect of assessment orders being deemed to be erroneous on account of lack of adequate inquiry, we see no reason why pointedly the Explanation also needs to be brought to the notice of the assessee while applying it to the case. 36 Once the ld.Pr.CIT brings to the notice of the assessee the reason why he finds the assessment order to be erroneous, which in the present case was inadequate inquiries conducted by the AO on the nature of disclosure made by the assessee during the survey in excess stock found, he need not specifically point out that he has invoked Explanation-2 to sub-clause (a) to the section which is to the same effect of inadequate inquiries conducted qualifying as error in assessment order. The fact that he clearly brings out the reason why he found assessment order erroneous, is sufficient in itself and self-explanatory. It need not to be technically qualified by pointing out the specific clause in respect to which the reason pertained. The entire objectives of confronting anything to the assessee in the process of rendering justice is to offer an opportunity to other party to come up with his/her arguments or contentions in defense. In the present case, it is not disputed that the assessee had been specifically pointed out the error in the order of the AO of non-conducting inquiry relating to the particular issue. The assessee was required to respond to the same, which he did by pointing out that due inquiry was conducted. The fact of mentioning Explanation 2 sub-clause (a) in the notice by the ld.Pr.CIT which dealt with this specific reason or error in the order of the AO of non-conducting of inquiry, therefore, is of no consequence or relevance, since the assessee in very simple words has been confronted with the error. Mentioning of Explanation 2 to sub- ITA No.160/Ahd/2020 32 clause (a) is therefore only technical addendum to the same. As we mentioned above, the Explanation did not expand the scope of section but only explained the scope of section, and therefore, once the specific section has been invoked, it is not necessary to mention any specific Explanation thereto which has been invoked. Therefore, this contention of the ld.counsel for the assessee is rejected outrightly that the order needs to be set aside for the reason that ld.Pr.CIT did not confront the assessee before invoking Explanation 2 to sub-clause (a) to section 263 of the Act. 37. As for the decision of the jurisdictional High Court in the case of Shreeji Prints (supra), relied upon by the ld.counsel for the assessee in support of this contention, the assessee, we hold, cannot derive any benefit from the same. 38. On going through the decision of the Hon’ble High Court ,we find that the decision is not on the question framed before it whether Explanation to section 263 of the Act can be said to be validly invoked without first confronting it to the assessee. In the case before Hon’ble High Court in the decision relied upon by the Ld.AR, the Revenue had proposed the following questions as substantial question of law before the Hon’ble High Court: "(a) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is correct in holding that the PCIT was not empowered and entitled to revise assessment order u/s. 263 of the Act r/w Explanation 2 thereto by ignoring that the order passed by the AO is erroneous in so far as it is prejudicial to the interest of revenue in as much as the Assessing Officer has passed the assessment order without making inquires/verification in the light of the unsecured loans of Rs. 2.49 Crores received from M/s. Georgette Tradecom Pvt. Ltd (GTPL) and M/s. PurbaAgro Food Pvt. Ltd (PAFPL)? (b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is correct in cancelling the impugned order u/s. 263 of the I.T. Act and allowing all the grounds of the Assessee?" 40. The Revenue had challenged the order of the ITAT setting aside the order passed by the ld.Pr.CIT under section 263 of the Act on account of inadequate inquiry made by the AO on unsecured loans received by it from two parties. The question framed before the Hon’ble High Court was therefore whether the ITAT order was correct when adequate inquiries were not made by the AO. The Hon’ble High Court answered the question against the Revenue, noting that the ITAT had given a finding of fact that the AO had made full inquiries in detail and accepted the genuineness of the loans received by the assessee, and such view of the AO was plausible view, and therefore the assessment cannot be said to be erroneous or prejudicial to the interest of the Revenue. Hon’ble High Court held that in view of such finding of the fact arrived at by the Tribunal, no question of law arose and the appeal of the Revenue was accordingly dismissed. 41. At para-5 of the judgment, Hon’ble Court has noted that the Tribunal observed that the ld.Pr.CIT had not mentioned in the show cause notice the invocation of Explanation 2 to section 263 of the Act, though it passed the order invoking the said section and the Tribunal found the order to be not appropriate and sustainable in law. Para-5, as above, is just a noting by the Hon’ble High Court of the findings of the ITAT while allowing the assesses appeal. We find that it is only on the facts of the case as found by the ITAT that the issues were all duly examined ITA No.160/Ahd/2020 33 by the AO and the AO had taken plausible view, that Hon’ble Court had upheld order of the Tribunal dismissing the appeal of the Revenue. 42. Thus it is apparent from the above that the decision of the Hon’ble High Court was not to the effect that Expl 2 to section 263 not being confronted to the assessee its invocation was invalid. Neither was the decision rendered in the backdrop of this question before the Hon’ble High Court, nor does the Hon’ble High Court hold so in its order. What is noted in the order to this effect is only its noting of the findings of the ITAT while setting aside the order passed u/s 263 of the Act. Therefore the decision of the Hon’ble jurisdictional High Court cannot be read as holding that order passed u/s 263 of the Act is invalid when Expl to section 263 is invoked without confronting it to the assessee. 43. It is settled law that a precedent is an authority only for what it actually decides and a decision on a question that has not been argued cannot be treated as a precedent. Judgments must be read as a whole and observations in judgements should be considered in the context in which they are made and in the light of the questions that were before the court. The Hon’ble apex court has held so in the case of CIT vs Sun Engineering Works Pvt. Ltd.198 ITR 297 (SC). In the case of Padma Sundra Rao v State of TN 255 ITR 147(SC) the Hon’ble Apex Court had laid down that a ratio laid down by the Court have to be read in the context of the entire facts leading to the said ratio. 44. In view of our elaborate discussion as above, we hold that the assessee cannot derive any benefit from the judgment of Hon’ble High Court in the case of Shreeji Prints P. Ld. (supra), to the effect that non-mentioning of Explanation 2 to section 263 in the show cause notice will render entire revisionary order as non- est in the eyes of law. This contention raised by the ld.counsel for the assessee, is therefore, rejected.” 27. In view of the above, we do not find any merit in the contention of the ld.counsel for the assessee that the order u/s 263 of the Act needs to be set aside for not having confronted the assessee with invocation of Explanation 2 to the said section.” In view of the contentions of the ld.counsel for the assessee that in the absence of Explanation 2 to Section 263, the provision contained in clause (a) cannot be relied upon, is dismissed. 35. The last contentions of the ld.counsel for the assessee before us was that theld.CIT(A) could not have set aside the issue to the AO to denovo assessment. In this regard he has relied uponthe decision of Hon’ble Delhi High Court in the case of ITO Vs.D.G. Housing Projects Ltd., (2012) 343 ITR 329 (Delhi). His submissions in brief in this regard are as under: o In any case, CIT himself ought to have examined the order passed by AO on merits and then ought to have established that AO's order is erroneous and prejudicial to the interest of the revenue. Without ITA No.160/Ahd/2020 34 doing so, CIT could not have set aside the issue to the file of AO with a direction to conduct further inquiries. Reliance is placed on "ITO Vs. D.G. Housing Projects Ltd. -(2012) 343 ITR 329 (Delhi). o In view of the above, learned CIT was not justified in invoking revisionary jurisdiction u/s 263 of the Act. 36. We have gone through the judgment of Hon’ble Delhi High Court in the case of D.G. Housing Projects Ltd.(supra) and the proposition laid down in the said case is that before holding the assessment erroneous, the ld.CIT himself ought to examine the order passed by the AO on merits, and establish whether it is erroneous. Without undertaking this exercise, the ld.CIT cannot hold the assessment order erroneous and set aside to the file of the AO with a direction to conduct further inquiry. This proposition, we find is not applicable to the facts of the present case. In the present case, the show cause notice issued by the ld.Pr.CIT pointed out the reasons found by the ld.Pr.CIT for finding the assessment order passed in the present case to be erroneous. Due reply was filed by the assessee, and finding no satisfactory reply given by the assessee, the ld.Pr.CIT went on to hold that the assessment order as erroneous. Therefore, in the present case, the ld.CIT had examined the order passed by the AO on merits, giving assessee due opportunity during the revisionary proceedings to establish its case on merits, but clearly, the assessee failed to do so. Therefore, his order restoring the case to the file of the AO for denovo assessment is in accordance with law, and we do not find any infirmity in the same. 37. In view of the above, all the contentions raised by the ld.counsel for the assessee, as above, are dismissed by the assessee, and the order passed by the ld.Pr.CIT is upheld. ITA No.160/Ahd/2020 35 Appeal of the assessee is accordingly dismissed. 38. In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 26 th May, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 26/05/2023