S.
263: Even if AO applies mind and decides not to assess expenditure as
unexplained u/s 69C because the assessee withdrew the claim for
deduction, the CIT is entitled to revise the assessment on the ground
that the matter needed further investigation
(i) The CIT took the view that notwithstanding the withdrawal of
the claim by the assessee, in view of the earlier stand taken that the
said expenses were incurred for security purposes of the assessee, the
Assessing Officer ought to have proceeded with the matter as the
assessee was following the cash
system of accounting and the filing of
the re-revised return, prima facie, indicated that the additional
expenses claimed had been incurred. Withdrawal of claim by assessee can
be for variety of reasons and this does not mean that Assessing Officer
should abandon enquiries regarding sources for incurring expenses.
Assessee follows cash system of accounting and the claim regarding
additional expenses was made through duly verified revised return. The
claim was pressed during assessment proceedings carried on by A.O. after
filing revised return and it was specially stated in letter dated
13.02.2004 that expenses were for security purposes and that payments
have been made out of cash balances available etc. Under the
circumstances, the Assessing Officer was expected to examine the matter
further to arrive at a definite finding whether assessee incurred
expenses or not and in case, actually incurred, then what were sources
for incurring these expenses. Assessing Officer was satisfied on
withdrawal of the claim and in my view, his failure to decide the matter
regarding actual incurring of additional expenses and sources thereof
resulted into erroneous order which is prejudicial to the interest of
revenue.”
(ii) There can be no doubt that so long as the view taken by the
Assessing Officer is a possible view the same ought not to be interfered
with by the Commissioner under Section 263 of the Act merely on the
ground that there is another possible view of the matter. Permitting
exercise of revisional power in a situation where two views are possible
would really amount to conferring some kind of an appellate power in
the revisional authority. This is a course of action that must be
desisted from. However, the above is not the situation in the present
case in view of the reasons stated by the learned C.I.T. on the basis of
which the said authority felt that the matter needed further
investigation, a view with which we wholly agree. Making a claim which
would prima facie disclose that the expenses in respect of which
deduction has been claimed has been incurred and thereafter
abandoning/withdrawing the same gives rise to the necessity of further
enquiry in the interest of the Revenue. The notice issued under Section
69-C of the Act could not have been simply dropped on the ground that
the claim has been withdrawn. We, therefore, are of the opinion that the
learned C.I.T. was perfectly justified in coming to his conclusions
insofar as the issue No.(iii) is concerned and in passing the impugned
order on that basis. The learned Tribunal as well as the High Court,
therefore, ought not to have interfered with the said conclusion.