2022 (11) TMI 424 - AT - Income Tax

Revision u/s 263 by CIT - As per CIT, AO has not examined properly in respect of unsecured loans received from M/s. Rams Estate for the assessment year 2016-17 - HELD THAT - In response to the show cause notice dated 12.03.2021, assessee filed a letter dated 19.03.2021 by stating that all the details were filed before the AO and after examining the details, AO completed the assessment order u/s 143(3) and therefore, the assessment order is neither erroneous nor prejudicial to the interest of Revenue. In this case, PCIT issued show-cause notice to the assessee on the ground that the Assessing Officer has not examined properly in respect of unsecured loans received from M/s. Rams Estate for the assessment year 2016-17. DR has filed a copy of the return of income for the assessment year 2016-17 in respect of M/s. Rams Estate, wherein, under Col. 3 (b) Loans and advances, no details were mentioned. Therefore, considering the return of income of M/s. Rams Estate, we are of the considered opinion that the AO has not examined the issue properly and the assessment order is erroneous and prejudicial to the interest of the Revenue. PCIT has rightly exercised his power conferred u/s 263 and directed the AO to pass fresh assessment order in accordance with law after verification of the records. We find no reason to interfere with the order passed by the PCIT. Appeal filed by the assessee is dismissed.

Summary

Issues:
Assessment order under section 263 of the Income Tax Act, 1961 regarding unsecured loans from M/s. Rams Estate for the assessment year 2016-17.

Analysis:
The appeal was against the order of the Principal Commissioner of Income Tax, Coimbatore, under section 263 of the Income Tax Act, 1961, related to the assessment year 2016-17. The assessee's return of income was initially accepted under section 143(3) of the Act. However, the Principal Commissioner found issues with the verification of an unsecured loan from M/s. Rams Estate amounting to &8377;1,99,38,277. The Principal Commissioner set aside the assessment order and directed a fresh assessment after issuing a show-cause notice. The assessee contended that the original assessment was proper, while the Department argued that the assessment order was erroneous as the details of the loan were not properly verified. The Tribunal noted that the Assessing Officer did not adequately examine the issue of the unsecured loan, as evidenced by the lack of details in the return of income filed by M/s. Rams Estate. Consequently, the Tribunal upheld the Principal Commissioner's decision, stating that the assessment order was indeed erroneous and prejudicial to the Revenue's interest. The Tribunal dismissed the appeal, affirming the Principal Commissioner's directive for a fresh assessment.

In conclusion, the Tribunal upheld the Principal Commissioner's decision under section 263 of the Income Tax Act, 1961, regarding the unsecured loan from M/s. Rams Estate for the assessment year 2016-17. The Tribunal found that the original assessment order was erroneous as the Assessing Officer did not properly verify the loan details. Therefore, the Tribunal dismissed the appeal and upheld the directive for a fresh assessment to be conducted in accordance with the law.