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2022 (5) TMI 945 - ITAT DELHIRevision u/s 263 - AO had not carried out requisite inquiry regarding advances from customers and also introduction of fresh capital - Assessee had simply submitted a verbal narration without furnishing any documentary evidence in support of its claim as further observed that assessee did not submit copy of bank statement reflecting the repayment of liabilities due to M/s Maa Kaila Foundries Private Limited in support of the confirmation of accounts - HELD THAT:- As per clause (a), if the order is passed without making inquiries or verification which should have been made, shall be deemed to be erroneous in so far as it is prejudicial to the interests of the Revenue, if so opined by the Pr.CIT. In the present case, in the opinion of Pr.CIT, the assessment order was passed without making requisite inquiries/ verification which should have been made. As per Pr.CIT, AO failed to make necessary inquiry. It is also recorded that the assessee has simply submitted verbal narration without furnishing any documentary evidence. Hence, it was held that the assessment order dated 31.05.2017 passed u/s 143(3) was erroneous and also prejudicial to the interest of revenue - we find that the AO issued a questionnaire along with notice u/s 142(1) dated 19.12.2016. In response thereto, the assessee had filed his reply regarding the queries raised by the AO. It is also transpired from record that notices u/s 133(6) of the Act were issued. Thereafter, he framed the assessment. We find that the assessee in response to notice u/s 263, had duly explained the transaction related to M/s Maa Kalika Foundaries Pvt. Ltd., introduction fresh capital and also description “CAS CHQ XFER WD”. Looking to the material placed before us, the Pr.CIT has not made out a case of any prejudice caused to the Revenue. The law is well settled that for exercising power u/s 263 twin conditions are required to be satisfied – (i) that the order should be erroneous and; and (ii) it should cause prejudice to the interests of Revenue. It is not the case where the assessee failed to substantiate his claim, rather the explanation along with supporting evidences were placed before the assessing officer and the learned Pr.CIT. In our considered view merely on the basis of suspicion, invoking of powers u/s 263 would not be justified. The concluded assessment should be revised where there is blatant error committed by the assessing officer, which culminated into the prejudice to the interest of Revenue. But where the Assessing Officer made necessary inquiry and satisfied itself about the explanation offered to him, revising such an order is highly unjustified and contrary in the case of M/s Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT]. Therefore, in the present case the action of the learned Pr.CIT is unjustified and the same is hereby set aside and the assessment is restored.- Decided in favour of assessee.
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