Fortis Hospitals Ltd. Vs PCIT (ITAT Delhi)
ITAT Slams ‘Sweeping’ 263 Revision – PCIT Cannot Order Fishing Enquiries After Detailed Scrutiny by AO
The Delhi ITAT quashed the revision order passed u/s 263 against Fortis Hospitals Ltd., holding that the Principal CIT wrongly assumed that the Assessing Officer had conducted “no enquiry” on various issues, whereas the assessment records clearly showed extensive scrutiny, repeated questionnaires and detailed replies running into hundreds of pages. The Tribunal observed that the AO had specifically examined issues relating to bad debts written off, doubtful receivables, liabilities, administrative expenses, depreciation on intangible assets, related party transactions, TDS compliance, finance costs and various other heads of expenditure before accepting the returned loss. Therefore, the case did not fall within Explanation-2 to section 263.
The Tribunal strongly criticised the PCIT for making broad and vague allegations that enquiries were not conducted, without specifically identifying any actual lapse in the assessment proceedings. It held that revisionary jurisdiction cannot be invoked merely to order roving and fishing enquiries or because the PCIT desires deeper verification. The ITAT further remarked that such “sweeping statements” and “irresponsible conclusions” ought not to have been drawn by a senior officer without proper factual foundation. Since the AO had in fact applied his mind and conducted enquiries on all major issues, the twin conditions of an order being “erroneous” and “prejudicial to the interests of the Revenue” were absent. Accordingly, the entire section 263 order was quashed.
FULL TEXT OF THE ORDER OF ITAT DELHI
