2022 (8) TMI 1386 - AT - Income Tax

Revision u/s 263 - As per CIT AO finalised assessment without verifying the identity, genuineness and credit worthiness of the AOP and the genuineness of the investment by the members of the AOP - HELD THAT - It is an admitted fact that the AO has not examined about the source of investment and he has not examined the genuineness and credit worthiness of the AOP. Pr.CIT has given direction to the AO to examine this aspect. We do not find any infirmity in the order passed by thePr.CIT u/s 263 and hence dismiss the grounds raised by the assessee.

Summary

Issues:
1. Validity of order passed under section 263
2. Justification of passing order under section 263
3. Basis of passing order under section 263
4. Consideration of explanation submitted by the assessee
5. Denial of transaction between AOP and the assessee
6. Justification of initiating proceedings under section 263
7. Examination of source of investment and genuineness of AOP

Analysis:

Issue 1: Validity of order passed under section 263
The appeal was filed against the order of the Principal Commissioner of Income Tax (Pr.CIT) under section 263 for the Assessment Year 2014-15. The assessee contended that the order under section 263 was barred by limitation.

Issue 2: Justification of passing order under section 263
The assessee argued that the order under section 263 was unjustified as the Assessing Officer (AO) had passed the order under section 143(3) properly, which was not prejudicial to the interests of the department. However, the Pr.CIT found the assessment order to be erroneous and prejudicial to the revenue's interest due to lack of proper inquiries or verifications.

Issue 3: Basis of passing order under section 263
The Pr.CIT initiated proceedings under section 263 based on the lack of proper inquiries and verifications in the assessment order passed by the AO. The order under section 263 was passed after considering the submissions of the assessee and directing the AO to redo the assessment as per law.

Issue 4: Consideration of explanation submitted by the assessee
The assessee contended that the Pr.CIT did not consider the explanation submitted by them before passing the order under section 263. However, the Tribunal found no infirmity in the order passed by the Pr.CIT and dismissed the grounds raised by the assessee.

Issue 5: Denial of transaction between AOP and the assessee
The assessee raised concerns about the denial of a transaction between them and an Association of Persons (AOP) by the Pr.CIT. However, the Tribunal did not find merit in this argument and upheld the order passed under section 263.

Issue 6: Justification of initiating proceedings under section 263
The assessee argued that the proceedings under section 263 were unjustified as the facts and circumstances of the case were not considered by the Pr.CIT. However, the Tribunal upheld the Pr.CIT's decision to initiate proceedings based on the lack of examination of the source of investment and genuineness of the AOP by the AO.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the order passed under section 263 by the Pr.CIT for the Assessment Year 2014-15.