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2023 (4) TMI 181 - AT - Income TaxRevision u/s 263 - Validity of jurisdiction assumed by the PCIT u/s 263 - scope of elaborate discussion - unexplained loan creditors - HELD THAT - The assessee has referred to the queries raised by the AO in notice u/s 142(1) of the Act. The assessee has also drawn our attention to the acknowledgment of the replies uploaded during assessment proceedings. From perusal of the aforesaid replies it emanates that the assessee has time and again given details of the loan creditors. The documents on record clearly shows that the AO has examined the issue during scrutiny assessment proceedings. Merely for the reason that the AO has not given any finding in the assessment order would not mean that the issue was not examined by the AO in scrutiny assessment. As in the case of CIT vs. Gabriel India Ltd. 1993 (4) TMI 55 - BOMBAY HIGH COURT has held that where the claim of the assessee was allowed by the AO on being satisfied with the explanation of the assessee, the assessment order cannot be held to be erroneous simply because in the assessment order, he did not make an elaborate discussion in that regard. Thus documents placed on record by the assessee explicitly indicates that the AO had made some enquiries with regard to unsecured loans during the relevant period. The jurisdiction u/s 263 cannot be invoked - Decided in favour of assessee.
Issues:
Jurisdiction of Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961 regarding assessment order for AY 2017-18. Analysis: 1. The appeal by the assessee challenged the order of the Principal Commissioner of Income Tax (PCIT) dated 16/03/2022 for assessment year 2017-18 passed under section 263 of the Income Tax Act, 1961. The assessee contended that the PCIT invoked revisional jurisdiction based on a proposal from the Assessing Officer (AO) without independent examination, rendering the jurisdiction under section 263 defective. The AR relied on the decision of the Tribunal in a similar case to support this argument. 2. The AR argued that the AO had conducted detailed inquiries during the assessment proceedings, particularly regarding unsecured loans. The assesse's replies and documents submitted during the assessment showed that the AO had examined the issue of unsecured loans, even though it was not explicitly mentioned in the assessment order. Citing relevant case law, the AR contended that the absence of detailed discussion in the assessment order does not render it erroneous if the AO was satisfied with the explanations provided by the assesse. 3. In response, the Department representative defended the impugned order, emphasizing that the PCIT had validly exercised jurisdiction under section 263. However, the Tribunal found that the PCIT's jurisdiction was defective as it was based solely on a proposal from the AO without independent examination. The Tribunal referred to legal principles emphasizing that the PCIT must examine records and consider an assessment order erroneous and prejudicial to the revenue before invoking section 263. 4. Ultimately, the Tribunal held that the PCIT had exceeded jurisdiction in invoking section 263 without proper examination and consideration, leading to the quashing of the impugned order. The Tribunal concluded that the documents submitted by the assessee indicated that the AO had indeed made inquiries regarding unsecured loans, and the jurisdiction under section 263 cannot be invoked on an issue already examined during assessment proceedings. As a result, the appeal of the assessee was allowed, and the impugned order was quashed. This detailed analysis covers the issues regarding the jurisdiction of the PCIT under section 263 of the Income Tax Act, 1961, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's decision based on legal principles and precedents.
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