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2023 (6) TMI 31 - AT - Income TaxRevision u/s 263 - as per CIT AO has not made the relevant enquiry regarding identity creditworthiness and genuineness of the transaction of unsecured loan taken by the assessee - HELD THAT - The findings of the ld PCIT that cash payment is not accounted for in books of account is not borne out of records. We find that the assessee would still be eligible to claim availability of funds to the extent of intangible additions which has suffered taxation and also attained finality given that the assessee s application under the VSV scheme has been accepted by the Competent authority on payment of due taxes. Apparently the said fact which is clearly emerging from the records has not been considered by the ld PCIT and in our overall analysis his findings in this regard therefore need to be set-aside. We are of the considered view that the matter has been duly enquired into by the AO specific queries has been raised from time to time and after taking into consideration the submissions of the assessee the explanation of the assessee which is duly corroborated by documentation has been accepted by the AO and in view of the same the findings of ld PCIT that proper and complete enquiry has not been conducted by the AO and the latter has erroneously accepted the version of the assessee without relevant documentation is not borne out of records and the same is set-aside and therefore the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of PCIT under section 263 of the Income Tax Act, 1961. 2. Adequacy of the Assessing Officer's (AO) inquiry during the assessment proceedings. 3. Examination of the unsecured loan from Shri Iqbal Singh. 4. Examination of the cash payment of Rs. 25,00,000/-. 5. Validity of PCIT's order under section 263. Summary: 1. Jurisdiction of PCIT under section 263 of the Income Tax Act, 1961: The assessee contested the jurisdiction of the Ld. PCIT(Central), Ludhiana, to issue a notice under section 263 and to cancel the assessment framed by the AO. The Tribunal found that the PCIT's assumption of jurisdiction was not justified as the AO had conducted a proper inquiry and the assessment order was neither erroneous nor prejudicial to the interest of the revenue. 2. Adequacy of the Assessing Officer's (AO) inquiry during the assessment proceedings: The Tribunal noted that the AO had issued various questionnaires and the assessee had provided detailed replies along with relevant documents. The AO had duly considered the information and documentation furnished by the assessee before completing the reassessment under section 153A r.w.s 143(3). 3. Examination of the unsecured loan from Shri Iqbal Singh: The Ld. PCIT argued that the AO failed to verify the creditworthiness and genuineness of the unsecured loan of Rs. 1.25 Crores from Shri Iqbal Singh, as the assessee did not provide the Income Tax Return or confirmation from Shri Iqbal Singh. The Tribunal found that the AO had made specific inquiries, and the assessee had provided sufficient documentation, including the PAN and bank statement of Shri Iqbal Singh, which showed the availability of funds. The Tribunal held that the AO had conducted a proper inquiry and the PCIT's findings were not justified. 4. Examination of the cash payment of Rs. 25,00,000/-: The Ld. PCIT held that the AO did not properly verify the source of the cash payment of Rs. 25,00,000/-. The Tribunal found that the assessee had submitted a copy of the cash book and cash flow statement, which showed sufficient cash in hand. The AO had considered this evidence and made an addition of Rs. 59,16,628/- as unexplained cash credits, indicating that the AO had conducted a thorough inquiry. 5. Validity of PCIT's order under section 263: The Tribunal concluded that the AO had made relevant inquiries, and the assessee had provided sufficient documentation to explain the transactions. The PCIT's order under section 263 was set aside, and the AO's assessment order was sustained. Conclusion: The appeal of the assessee was allowed, and the order of the Ld. PCIT was set aside. The Tribunal found that the AO had conducted a proper inquiry, and the assessment order was neither erroneous nor prejudicial to the interest of the revenue.
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