Dabur India Limited Vs PCIT (ITAT Delhi)
263 Quashed: ITAT Delhi Holds PCIT Cannot Order Roving Enquiries Without Proving AO’s View Was Erroneous & Prejudicial
Dabur India Ltd appealed against the revisionary order passed u/s 263, wherein PCIT held that the assessment u/s 143(3) dated 29.10.2021 was “erroneous & prejudicial to the interests of Revenue” because the AO allegedly failed to make proper enquiries on deductions claimed u/s 80IA, 80IC, 80JJAA, 80G, 35(1), 35(2AB), 14A, ICD adjustments & duty drawback reconciliation.
Assessee argued that its units claiming deduction u/s 80IA/80IC were long-established units, deductions were consistently allowed in earlier & later years, all required documents including audit reports, Form 10CCB, 10DA, 3CL etc. were placed before the AO, & the AO had taken a plausible view after due enquiry. It was submitted that PCIT invoked section 263 solely on the ground of “inadequate enquiry”, but without demonstrating how the assessment order was both erroneous & prejudicial, as mandated by the Supreme Court in Malabar Industrial Co. & Max India Ltd.
ITAT noted that:
- PCIT did not record any specific finding on how the AO’s view caused prejudice to Revenue.
- PCIT merely directed the AO to conduct fresh, roving, open-ended enquiries on all issues–without concluding that existing claims were incorrect.
- Section 263 cannot be invoked to substitute the PCIT’s opinion for the AO’s, especially when the AO’s view is one of the possible legally sustainable views.
- Explanation 2(a) to s.263 does not confer unfettered powers; lack of enquiry must be demonstrated from the record, not assumed.
- PCIT repeatedly stressed absence of Form 3CL, although its issuance is outside the assessee’s control & all supporting documents were already filed.
- The impugned 263 order amounted only to suspicion & fishing enquiries, contrary to DG Housing Projects Ltd (Del HC).
Holding that the AO had carried out due verification & taken a reasonable view, & the PCIT failed to show actual error or prejudice, the Tribunal quashed the 263 order.
