Kendrapara Credit Co-Operative Society, Kendrapara V. Pr. CIT-1, Bhubaneswar

ITA 47/CTK/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1016 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 21-04-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Question of law; Difference of opinion; Prejudicial to interest; Change of opinion; TDS
• Section: 263; 143(3); 40(a)(ia); 251; 264; 113; 13; 101

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI ARUN KHODPIA, AM आयकर अपीऱ सं./ITA No.47/CTK/2021 (नििाारण वषा / Assessment Year: 2016-2017) Kendrapara Credit Cooperative Society Limited, At: New Bus Stand, PO: Kendrapara, Dist-Kendrapara Vs Pr.CIT, Bhubaneswar PAN No. : AABAK 6558 P (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ननधाारिती की ओर से /Assessee by : Shri D. Parida & C. Parida, ARs िाजस्व की ओर से /Revenue by : Sh r i Ma n o j Ku m a r G o u t a m, CI T-DR स ु नवाई की तािीख / Date of Hearing : 05/04/2022 घोषणा की तािीख/Date of Pronouncement : 27/05/2022 आदेश / O R D E R Per Arun Khodpia, AM: This appeal by the assessee made against the order dated 22.03.2021, passed by the ld. Pr.CIT, Bhubaneswar for the assessment year 2016-2017, on the following grounds of appeal :- 1. That, the order passed by the learned Pr. Commissioner of Income Tax, Bhubaneswar-1 u/s 263 of the LT. Act, 1961 is excessive, arbitrary and bad in law. 2. That, the learned Pr. CIT, Bhubaneswar-1 failed to appreciate that the appellant has disclosed fully and truly all the material facts necessary for the assessment and that the original assessment was made by the then AO under section 143(3) of the Act after due and proper consideration of non-deduction of TDS on commission payments, which is evident from the Assessment Order u/s.143(3) of the Act. 3. That, the learned Pr. CIT, Bhubaneswar-1 failed to appreciate that there was no failure on part of the appellant to disclose fully ITA No.47/CTK/2021 2 and truly all material facts necessary for the assessment and all the material evidences regarding non-deduction of TDS on commission payment were already on the record of department. Hence the issue of Notice under section 263 of the Act is bad in law being void ab-initio, invalid, beyond the authority of law and devoid of legal force. 4. That, on the facts and in the circumstances of the case and in law, the learned Pr.ClT erred in invoking jurisdiction under Section 263 and setting aside the assessment order u/s.143(3) of the Act for reviewing and re-examining the facts, details, documents, evidences already examined by the learned AO, who had already made judgment based on the same and had passed the order of assessment under section 143(3) of the Act. It is well settled that revision cannot be undertaken for re- examining and directing fresh inquiry due to change of opinion. 5. That, on the fact and circumstances of the case and in law, the revisionary proceeding u/s 263 of the I.T.Act, 1961 is bad in law in absence of any new fact, information, corroborative evidence or materials being made available by the Learned Pr. ClT, Bhubaneswar-1, the impugned order u/s 263 of the Act be annulled and quashed. 6. That the appellant may add, alter, delete or modify any of the grounds at the time of hearing. 2. Brief facts of the case are that the assessee Kendrapara Credit Co-operative Society Limited registered under the Odisha Cooperative Society Registration Act, 1962. The society derives income from doing business of banking and filed its return of income for A.Y.2016-2017 on 21.03.2018 disclosing showing total income at Rs.58,89,905/-. Thereafter case of the assessee was selected for scrutiny under CASS and statutory notices were issued to the assessee. Accordingly, the AO completed the assessment u/sd.143(3) of the Act determining the total income at Rs.12,91,95,220/- by disallowing Rs.9,05,48,572/- and Rs.3,86,46,649/- u/s.40(a)(ia) and provision for bad and doubtful ITA No.47/CTK/2021 3 debts respectively, the former addition u/s.40(a)(ia) of the Act later reduced to Rs.2,71,64,572/- i.e. 30% of Rs.9,05,48,572/- by an order u/s.154 of the Act on 19.03.2019. Finally, the AO determined the total income of the assessee at Rs.6,58,11,220/-. 3. Subsequently, the Pr.CIT u/s.263 of the Act called for the assessment record and after examination of the same, found that the assessment order passed by the AO is erroneous and prejudicial to the interest of revenue. Consequently the Pr.CIT partly set aside the assessment with a direction that the mistake in computation and disallowance on account of commission to agents etc. be taken up afresh. 4. Now, the assessee is in further appeal before us. 5. Ld. AR before us filed written submission, wherein he submitted as under:- 1. The Ld. AO has disallowed the deduction claimed U/S sec 80P and brought the income to tax( page 13 of the Assessment Order) and the Assessee has gone for appeal against this disallowance and for this issue no revision proceeding can be initiated U/S 263 as per the provision of Act Clause c of Explanation 1 to Sec 263. 2. The Ld. PClT has not verified the records as regard to non- deduction of TDS on agent commission but opined that assessee has failed to produce documents in support of its claim when the assessee has submitted the required details/documents in support of its claim and deducted TDS to the tune of Rs.10,89,016/- page 5 & 7. 3. This cannot be a case of no enquiry nor inadequate inquiry for invocation of revision proceeding U/S 263. The Ld. A.O. has taken a plausible view and allowed the claim of commission after verifying the TDS deducted on ITA No.47/CTK/2021 4 commission payments held in the case of PCIT vs Shreeji Prints (p) Ltd ,2021130 taxmann.com 294 (Se). 4. As per the provision of law the Ld. PClT has to verify himself to record the finding that the asst order is erroneous when all the records were readily available before him. The assessee relies upon the following case laws: a) The honourable coordinate bench in the case of Surekha Builders & Developers (p) Itd respectfully following the principles laid down by Honourable Delhi High Court in the case of DG Housing project & Jyoti Foundation. b) The honourable coordinate bench in the case of Nanda Kishore Agarwal. c) Honourable Delhi High Court in the case of DG Housing Projects Ltd. d) Honourable Delhi High Court in the case of Jyoti Foundation. e) Honourable Delhi High Court in the case of Delhi Airport Metro Express(P) Ltd. f) Honourable ITAT, Indorein the case of M/S Radhiswari Developers (P) Ltd. 5. The case law relied upon by The Ld PCIT will not applicable in the assesse's case as held by The Honourable Supreme Court in the case of CIT vs. Vegetable products Itd. 88 ITR 192(SC) that if two divergent views are expressed by two different Honourable High Courts, none of which are jurisdictional High Court, then the view favourable to the assessee should be followed. 6. In addition to the above, ld. AR of the assessee submitted that against the assessment order passed by the AO, the assessee has preferred appeal before the CIT(A), therefore, when the appeal is pending before the CIT(A), the Pr.CIT has no jurisdiction to revise the assessment order as per Explanation (c) to Section 263(1) of ITA No.47/CTK/2021 5 the Act and on this ground also the impugned order passed u/s.263 of the Act deserves to be quashed. 7. Ld. CIT-DR, on the other hand, relied on the order of Pr.CIT and submitted that the Pr.CIT has rightly set aside the order of AO as the AO while computing taxable income, amount of deduction u/s.80P(2)(a)(i) of the Act i.e. Rs.56,89,905/- was required to be added to the return income of the assessee. However, the gross total income before deduction under Chapter VIA was taken as NIL instead of Rs.56,89,905/-, which amounts to underassessment. It was also submitted by the ld. CIT-DR that as per the provisions of Section 194H of the Act, any person who is responsible for paying commission or brokerage to a resident is required to deduct tax thereon at the rate in force at the time of credit of such income to the account of payee if the amount of such payment exceeds Rs.15,000/- during the financial year. Therefore, the ld. CIT-DR submitted that under the provisions of Section 40(a)(ia) of the Act, 30% of expenditure towards payment shall not to be allowed where TDS has not been deducted. It was also submitted by the ld. CIT-DR that payment of commission less than Rs.15000/- to individual agents during the previous year cannot be ruled out. But onus lies with the assessee to prove that Section 194H has been followed in paying commission with documentary evidence, however, the ITA No.47/CTK/2021 6 assessee could not furnish anything in support of non-deduction of TDS on payment of commission. Without verifying and examining the same, the AO framed the assessment order which amounts to erroneous and prejudicial to the interest of revenue. Therefore, the ld. CIT-DR submitted that the appeal of the assessee deserves to be dismissed. 8. We heard rival contentions, perused the material place on record and from the various ground of the appeal we feel it practical to check the contentions and grievance of the assessee in two parts:- (1) Whether on the facts and circumstances of the case and in law, the Learned PCIT erred in invoking jurisdiction under section 263 and setting aside the assessment order u/s 143(3) of the Act. Specially while the matter is pending before the CIT(A) for adjudication? (2) Whether the revisionary proceedings u/s 263 of the IT Act 1961 are bad in law in absence of any new fact, information, corroborative evidence or materials being made available by the Ld PCIT? 9. In order to discuss and decide the first issue whether proceedings u/s 263 can be initiated when the matter is already pending for appeal with the CIT(A), it is prudent refer to [2021] 132 taxmann.com 302 (Jaipur - Trib.) IN THE ITAT JAIPUR BENCH 'B', in the case of JR Industries v. Principal Commissioner of Income- tax, wherein this issue is discussed and dealt with after due deliberations of decisions of the Hon’ble Apex Court, various Hon’ble High Courts and with reference to language of provisions of Act and relevant Finance bill 1988, where in it is observed as under:- ITA No.47/CTK/2021 7 11. We have heard the rival contentions of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From the facts of all these cases, we noticed that the main contention of the ld. AR that if an appeal against the assessment order passed by the AO is filed by the assesssee and is pending before CIT(A), then the PCIT has no jurisdiction u/s 263 of the Act as the C1T(A) can enhance income u/s 251 of the Act. In this context, it would be appropriate to reproduce clause (c) of Explanation 1 of section 263 of the Act, as amended from time to time, as under: "263(1)(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or afier the 1st day of June, 1988], the powers of the [Principal Commissioner or Commissioner under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.]" It would be appropriate to reproduce hereunder the relevant clauses of Notes on Clauses and Memorandum to Finance Bill 1988 relating to the amendments in section 263 of the Act by the Finance Act, 1988 through which the above Explanation was introduced as under: "Notes on Clauses to Finance Bill, 1988 "Clause (c) of the Explanation clarifies that where any order passed by the Assessing Officer has merger with the order of Commissioner(Appeals) or the Appellate Tribunal, the Commissioner and revise that part of the order which has not been considered and pronounced upon by the appellate authority." Memorandum to Finance Bill, 1988 48(b) Regarding the circumstances under which order of an Assessing Officer merges with that of an appellate authority: Here again, there have been conflicting decisions on the question as to whether the entire order of assessment passed by an Assessing Officer merges with the order of the first appellate authority or the merger is only with respect to that part of the order of the Assessing Officer which relates to the matters considered and decided by the appellate authority. Some High Courts have held that there is complete merger once an appeal is decided against an order even on one or two points alone, while a number of High Courts have held that there is only partial merger and not the merger of the whole order in case where only one or some particular aspects have been contested. To eliminate litigation and to clarify the legislative intent in respect of the provisions in the three Direct Tax Acts, it is proposed to clarify the legal position in this regard in the Explanation to the relevant sections. The proposed amendments are intended to make it clear that "record" would include all records ITA No.47/CTK/2021 8 relating to any proceedings under the concerned direct tax laws available at the time of examination by the Commissioner. Further, as held by several High Courts, the Commissioner will be competent to revise an order of assessment passed by an Assessing Officer on all matter except those that have been considered and decided in appeal." 12. It is evident from the above, that the power of PCIT u/s 263 extends to such matters which had not been considered and decided in such appeal. The use of the word "considered and decided" leaves no room for doubt that if some issue is decided by CIT(A) in an appeal against the assessment order passed by the AO. Then, that issue cannot be subject matter of proceedings u/s 263 of the Act. Thus, it is evident from the above that the Explanation 1(c) is based on the Doctrine of Merger, according to which there cannot he more than one decree or an operative order governing the same subject-matter at a given point of time. The Doctrine of Merger can be better understood from the following observations of the Supreme Court in a landmark decision in the case Kunhayammed v. State of Kerala [2000] 113 Taxman 470/245 ITR 360 [1]. 1. Where an appeal or revision is provided before a superior forum against an order passed by a Court, Tribunal or any other authority and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges with the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. 2. The doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge. Thus, we are of the view that where an issue in the assessment order has neither been agitated before the Commissioner (Appeals) nor considered by him, in such a scenario that portion of the assessment order will not merge with the order of the Commissioner (Appeals) and therefore, the Commissioner will have the jurisdiction under section 263 to revise the assessment order with respect to that particular issue. To make it clear, let us assume that in a particular case, the AO had made addition on account of three issues A, B and C, against which the assessee filed appeal to CIT(A) on two issues i.e. B and C and the CIT(A) has also passed an appellate order. Thus, in view of the Explanation as reproduced above, the PCIT cannot assume jurisdiction in respect of issue 13 and C u/s 263 of the Act, however, the PCIT can assume jurisdiction in respect of issue A which has not been agitated before CIT(A) as the assessment order merge's with the order of CIT(A) in respect of issue B and C only but not in respect of the issue. If the contention of the ld. AR is accepted then during the pendency of the PCIT has ITA No.47/CTK/2021 9 no jurisdiction to cancel the assessment order even in respect of issue A also as the CIT(A) can enhance the income u/s 251 of the Act on issue A but after passing of the appellate order by the CIT(A), now the PCIT can assume jurisdiction u/s 263 of the Act as the Ld. CIT(A) has not considered and decided such issue A in the appellate order. This cannot be the intention of the legislature as time limit is there for passing order u/s 263 of the Act, whereas there is no such limit for the CIT(A) for adjudicating an appeal and this interpretation makes the provisions of section 263 of the Act practically redundant during the pendency of appeal before CIT(A). 13. In another circumstances, if an appeal, against the assessment order passed by the AO, has been filed with the CIT(A) but has not been decided and is pending before CIT(A), then the Doctrine of Merger will even otherwise not apply as there is no order of CIT(A) with which the assessment order could merge and thus, the PCIT will surely have jurisdiction u/s 263 of the Act in respect of all the issues whether contested before CIT(A) or not. Although, it was argued by ld. AR that once an appeal is filed by the assessee against the order of AO, then he surrenders himself to the jurisdiction of CIT(A). Thus, this surrender is unconditional and the assessee has no right to withdraw the appeal or to take a U-turn. The power of enhancement to CIT(A) are akin to powers of revision to PCIT conferred u/s 263 of the Act. In this regard, ld. AR has placed reliance on the following judicial pronouncements in support of these contentions: ♦ Rai Bahadur Hardutory Motilal Chamaria (supra) ♦ McMillan & Co. (supra) ♦ Pawan Kumar Singhal (supra) After analyzing the above decisions, we found that in these judgments, it has been held that the CIT(A) has power of enhancement and the assessee cannot withdraw appeal and the CIT(A) has to decide the appeal on merit and cannot dismiss the appeal in limine. We may point out that the two judgements of Hon'ble Apex Court as relied upon by the ld. AR are related to provisions of old Income-tax Act of 1922. It is important to mention that section 31 of 1922 Act corresponds to section 251 of 1961 Act and under section 31 of 1922 Ac as well as under section 251 of the Act, the CIT(A) can enhance the income. Similarly section 33A of 1922 Act corresponds to section 263 and 264 of 1961 Act and the provisions of section 33A of 1922 Act are not identical with the provisions of section 263 of the 1961 Act. Therefore, it would be appropriate to reproduce the relevant provisions of section 33A of 1922 Act which corresponds to section 263 of 1961 Act as under: "33A. Power of revision by Commissioner.— (1) The Commissioner may of his own motion call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this ITA No.47/CTK/2021 10 Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit: Provided that the Commissioner shall not revise any order under this sub-section if— (a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal, the time within which such appeal may be made has not expired, or (b) the order is pending on an appeal before the Appellate Assistant Commissioner or has been made the subject of an appeal to the Appellate Tribunal, or (c) the order has been made more than one year previously." 14. Thus, it is evident from the above that in view of the proviso to section 33A of 1922 Act. the PCIT cannot exercise jurisdiction u/s 33A of the Act, (a) if the appeal against the order lies to CIT(A)/ITAT and the time to file such appeal has not expired or (b) the order is pending on an appeal before the CIT(A) or has been made the subject of an appeal to the ITAT or (c) the order has been made more than one year previously. It may be mentioned that the above proviso to section 33A of 1922 Act is conspicuous by its absence in section 263 of the Act of 1961. Thus, these judicial pronouncements of Hon'ble Apex Court as relied upon by the ld. AR are of no help to the assessee. In the case of Shri Arbuda Mills Ltd. (supra), the assessment of the assessee-company was completed under section 143(3) read with section 144B wherein the ITO made certain additions and disallowances and also accepted certain claims relating to three items. The assessee-company filed an appeal and the three items in respect of which the decision was in its favour were not the subject-matter of the appeals. In respect of these three items, the Commissioner exercised his power U/s 263. The assessee contended that the order of the ITO regarding the said three items in respect of which the assessee had no occasion to prefer an appeal had merged in that of the Commissioner (Appeals) so as to exclude the jurisdiction of the Commissioner under section263. The Hon'ble Apex Court after considering the Explanation 1(c) to section 263 of the Act has held as under: "The consequence of the said amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall he deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the Commissioner under section263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred. 6. The question referred is, therefore, answered in the negative, in favour of the revenue and against the assessee." In the case of Ratilal Bacharilal & Sons (supra) it has been held by the Hon'ble High Court that: ITA No.47/CTK/2021 11 "21. Having said so, turning to the facts of this case, so far as allowance under section 35B to the extent it was allowed by the ITO is concerned, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to such matter because the same had not been considered and decided in the appeal filed by the assessee. At the instance of the assessee, the allowance on the sum of Rs. 5,63,350 could not have been the subject-matter of appeal before the CIT(A) as the assessee was never aggrieved with that part of the order. In other words, solar as weighted deduction under section 35B in the sum of Rs. 5,63,350 is concerned, the same was 7201 a subject-matter of the appeal before the CIT(A). Factually in this case, the doctrine of merger could not, have been applied by the Tribunal to that part of the order, which was not a subject- matter of appeal as indicated, so as to exclude revisional jurisdiction of the Commissioner of Income-tax under section 263 of the Act. In the case of South India Shipping Corpn. Ltd. (supra) it has been held by the Hon'ble High Court that: "19. In so far as the second question of law is concerned, it relates to the question of merger. In our view, the order of the ITO which was the subject-matter of revision before the Commissioner under section 263 did not merge with the order of the first appellate authority as the subject-matter of appeal before the first appellate authority was different. Therefore, on the basis of the decisions of the Supreme Court in the case of CIT v. Shri Arhuda Mills Ltd. [1998] 231 ITR 50/98 Taxman 457 and Shree Manjunathesware Packing Products & Camphor Works case (supra), the Tribunal was not correct in holding that there was a merger of the order of the ITO with the order of Commissioner (Appeals) precluding the Commissioner from exercising his revisional powers. Our answer to the second question of law also is in the negative and in favour of the revenue." 15. We noticed from perusal of the record that vide its letter dated 15-9-2021, the ld. AR has relied upon the following judicial pronouncements: ♦ CIT v. Vam Resorts & Hotels (P.) Ltd. [2019] 111 taxmann.com 62/418 ITR 723 (All.) ♦ Smt. Renuka Philip v. ITO [2019] 101 taxmann.com 119/[2018] 409 ITR 567 (Mad.) ♦ ACC Ltd. v. CIT (LTU) [IT Appeal No. 3576 (Mum.) of 2019, dated 8-7-2020. In this regard, we noticed that the judicial pronouncements as relied upon by the ld. AR, the important words "considered and decided in such appeal" appears to have skipped the attention of their lordships. In fact, it appears that in these judgements, the Notes on Clauses and Memorandum to Finance Bill, 1988 as reproduced earlier, were not placed before the Hon'ble Courts and consequently were not considered by the Hon'ble High Court. It is trite law that while interpreting provisions of a statute, no word ITA No.47/CTK/2021 12 should be added or omitted. We also noticed that the judgement of Hon'ble Apex Court in the case of CIT v. Shri Arbuda Mills Ltd. (supra) was not considered in these judgements. In our view, the legislative history of section 263 of the Act, viz-a-viz section 33A of the IT Act, 1922 as referred earlier was not placed before the Hon'ble Courts and consequently, was not considered in these judgements. We also reiterated that there is no proviso in section 263 of 1961 Act corresponding to proviso of section 33A of the old Act of 1922. It clearly reflects the intention of the legislature in the 1961 Act that even during the pendency of appeal before CIT(A), the PCIT can assume jurisdiction u/s 263 of the Act. Further, in view of the Explanation (c) to section 263(1) of the Act, the PCIT can assume jurisdiction Lifts 263 of the Act in respect of the issues which have not been considered and decided by CIT(A). The coordinate Bench with the same combination in the case of Virendra Singh Bhadauriya v. Pr. CIT [IT Appeal No. 255 (JP) of 2020 wherein the similar ground was raised in appeal, vide order dated 25/03/2021 had decided the issue in favour of the revenue. It would be appropriate to reproduce the relevant ground of appeal in the said case as under: "Ground No. 4:-Assessee humbly prays that the order dt. 16- 3- 2020 passed by Ld. Pr. CIT--3, Jaipur u/s 263 of Income-tax Act, 1961 and its operation may he stayed as assessee has already preferred IT appeal against order dt. 26-12-2017 passed by ld. A0 u/s 143(3) and such appeal (IT No. 568/17- 18) is being listed and pending hearing before ld. CIT(A)-3, Jaipur. It is further prayed that necessary order may be issued to ld. Pr. CIT-3, Jaipur and Dy. CIT, Circle -7, Jaipur. "On page 19/20 of the above referred order, it has been held by the Coordinate Bench of the Tribunal that: "We had considered the said objection raised by the assessee before us. We are conscious of the fact that in respect of arguments of the assessee to the effect that he has already filed income tux appeal before the ld. CIT(A) against the order of the assessment dated 26/12/2017 and the entire issue was at large now before the Appellate Commissioner and that the ld. CIT(A) while hearing the assessee 's appeal has power to enhance the assessment. If he was of the opinion that not only limited additions made by the A.O. hut much larger additions were justified., then in that eventuality, he could have certainly exercised such powers by putting the assessee to notice. For ready reference, we reproduce clause (c) of Explanation 1 of section 263 of the Act as under: "263(1) (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the [Principal Commissioner or] Commissioner under this sub-section shall extend [and shall he deemed always to have ITA No.47/CTK/2021 13 extended] to such matters as had not been considered and decided in such appeal.]" From the above proposition of law, we noticed that the power of ld. Pr.CIT or the ld. CIT under the provisions of Section 263 shall extend to such matters as had not been considered and decided in such appeal. Admittedly, the appeal filed by the assessee against the order of the assessment passed u/s 143(3) dated 26/12/2017 has so far not been considered or decided by the ld. CIT(A), therefore, the objection of the assessee that no proceeding Ws 263 of the Act can he initiated or taken when the appeal is pending before the ld CIT(A), is not sustainable and is thus, rejected." Thus, considering the entirety of facts and circumstances of the case and the discussions made above by us (supra), we are of the view that the ld. PCIT was well within his rights to invoke provisions of Section 263 of the Act under the facts of the present case. Thus, this ground of appeal raised by the assessee stands dismissed. 10. Respectfully following the decision of Coordinate bench of ITAT Jaipur which is squarely applicable in the present case, accordingly provisions of Section 263 are correctly and lawfully invoked by the Ld PCIT and therefore, we dismiss this ground of the assessee. 11. Now to decide the second issue “Whether the revisionary proceedings u/s 263 of the IT Act 1961 are bad in law in absence of any new fact, information, corroborative evidence or materials being made available by the Ld PCIT?”. In this context, it is required to discuss order of the Ld PCIT, hence relevant portion of the order is reproduced as under:- 4. From the Examination of the relevant record, the following facts became discernible- (a) On verification it is found that the A.O. vide his order u/s 143(3) dated 28.12.2018 has disallowed deduction/exemption u/s ITA No.47/CTK/2021 14 80P(2)(a)(i) [Para No.11 of page No.13]. While computing taxable income, amount of deduction u/s 80P(2)(a)(i) of Rs.56,89,905/- was required to be added to the return income of the assessee. The gross total income before deduction under Chap VIA was taken as NIL instead of Rs. 56,89,905/-, thus resulting in underassessment. (b) Commission to Agents :- As per the audited profit and loss account for the year ending 31.03.2016, Commission to Agents is seen to be of Rs.3,34,79,902/- and the same has been allowed by the A.O. during the scrutiny assessment. The tax auditor in sI. No.- 34(a) of Form No. 3CD has ' certified that assessee is not required to deduct or collect tax as per the provision of Chapter XVII-B or XVII-BB and no tax has been deducted as well. It may be kept in mind that as per the provisions of section 194H of the Act, any person who is responsible for paying commission or brokerage to a resident is required to deduct tax thereon at the rate in force at the time of credit of such income to the account of payee if the amount of such payment exceeds Rs. 15,000/-((Rs.5,000/- up to May 31, 2016) during the financial year. Under the provisions of section 40(a)(ia) of the Act, 30% of expenditure towards payment shall not be allowed where TDS has not been deducted. Here, Payment of commission less than Rs.15,0001-(Rs.5,OOOI- up to May 31, 2016) to individual agents during the previous year cannot be ruled out. But onus lies with the assessee to prove that section 194H has been followed in paying commission with documentary evidence. But assessee has not furnished anything in support of non-deduction of TDS on payment of commission. Hence, the issue of non-deduction of TDS on payment of commission was required to be examined. 5. Thus, in view of the above, it appeared that the order dt. 28.12.2018 passed by the A.O. as discussed above is erroneous in so far as it is prejudicial to the interest of revenue and it was proposed to revise the said assessment order passed by the A.O. as per the provisions of sec. 263 of the Income Tax Act, 1961. 6. Accordingly, notice u/s 263 dated 23.02.2021 was issued with the date of hearing fixed to 01.03.2021 and it was indicated that a reply online would also suffice. Since there was no compliance another notice dtd. 02.03.2021 was issued fixing the date of compliance, on 09.03.2021. No compliance was obtained this time too. 7. Therefore, I proceed to decide the matter based on facts available on record, being fully conscious of the position that Section 263 has been understood not to require any specific show cause notice to be served on the Assessee. Rather, what is required under the said provision is an opportunity of hearing to the Assessee, CIT vs Amitabh Bachhan Civil Appeal NO.5009 of 2016 (SC) and Taradevi Agrawal 76 ITR 496 (SC). ITA No.47/CTK/2021 15 8. It is well settled that an order involving lack of enquiry or a case of no enquiry on a vital issue which requires verification that should have been carried out by a prudent officer would constitute an order erroneous and prejudicial to interest of revenue within the meaning of Sec 263(1) of the Act. In this context, reference may be had to Explanation -2 to Sec 263(1) that reads as under: Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer 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 Commissioner or Commissioner,- 1. the order is passed without making inquiries or verification which should have been made; . The position is a mere affirmation of what has been confirmed by the Apex court and several HCs earlier & few of such decisions beg mentioning. In Rampyari Devi Sarogi 67 ITR 84(SC) and Smt Taradevi Agarwal 88 ITR 323(SC), it was held that lack of enquiry or due verification at the relevant time by the AO would satisfy the requirements of the provision of Sec 263. Where an Assessing Officer, who is supposed to protect the interest of revenue as a tax collector and does not perform his job in the right spirit and has passed the assessment order perfunctorily which shows lack of application of mind, failure to conduct enquiry with due diligence before passing the order would make the order erroneous. Reference in this context is invited to the decision of Delhi High Court in the case of Duggal & Co v. CIT (1996) 226 ITR 456(Del), wherein it has been held as under: "The ITO is not only an adjudicator but a/s() an investigator. He cannot remain passive in the face of a return which is apparently in order but calls further enquiry It is incumbent on the AO to further investigate the facts stated i(l the return, when circumstances would makes such an enquiry prudent. The word "erroneous" in section 263 includes the failure to make such enquiry." . . In Malabar Industrial Co Ltd. Vs. CIT 243:ITR 83(SC), the Hon'ble Apex Court observed: There can be no doubt that he 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 is not an expression of art and is not defined in the Act. Understood in its ITA No.47/CTK/2021 16 ordinary meaning it is of wide import and is not confined to loss of tax. '" 9. In the light of facts as narrated supra and on the anvil of judicial views on the matter, and non-compliance by Assessee in the present proceeding, I hold that the order is erroneous & prejudicial to interest of revenue & partly set aside the assessment with a direction that the issues discussed supra in para 4 i.e. mistake in computation and disallowance on account of commission to agents etc be taken up, keeping in mind, inter alia, the observations made therein and submissions of the Assessee during the assessment and that may be furnished during course of hearing of assessment to be done afresh. 12. On perusal of the Order of CIT, it is emerged that the Ld AO has under assessed the income of the assessee which is evident from records that a disallowance was made U/s 80P(2)(a)(i) for Rs. 56,86,905/- but the same has been escaped to be added in the taxable income of the assessee. Therefore the assessment order passed by the AO is deemed to be erroneous in so far as it is prejudicial to the interest of revenue and revisionary powers assumed by the PCIT in this case are justified. 13. Second issue in the order of Ld PCIT regarding Deduction of Tax at Source from the Commission to Agents to the tune of Rs. 3,34,78,902/- was not responded by the assessee, however the same has been restored back to the AO with directions to make fresh assessment with a reasonable opportunity of being heard and to furnish required details and submissions. We observe that Ld PCIT has rightly decide the matter in the interest of justice, therefore ITA No.47/CTK/2021 17 we do not find it fit to interfere with the order of the Ld PCIT, accordingly this ground of assessee is also dismissed. 14. In the result, the appeal of the assessee stands dismissed. Order pronounced in the open court on 27/05/ 2022. Sd/- (C.M.GARG) Sd/- (ARUN KHODPIA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 27/05/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack 1. अऩीलाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकि आय ु क्त(अऩील) / The CIT(A), 4. आयकि आय ु क्त / CIT 5. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, Cuttack 6. गार्ा पाईल / Guard file. सत्यावऩत प्रनत //True Copy//