9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (6) TMI 343 - AT - Income TaxRevision u/s 263 - addition made u/s 68 of the Act in respect of unsecured loan received which is pending before ld CIT(A) - HELD THAT - In the assessee s case under consideration, Ld. PCIT has mainly exercised his jurisdiction u/s 263 for enhancement of the addition, which can be enhanced by ld CIT(A) u/s 251 of the Act. Since the assessee has filed the appeal before ld CIT(A) against the addition u/s 68 and ld CIT(A) by exercising his power u/s 251 of the Act may enhance the assessment. Hence, PCIT by exercising his jurisdiction u/s 263 need not to enhance the assessment especially when the appeal of assessee is pending for adjudication before ld CIT(A). Therefore, respectfully following the above legal precedents, the order of ld PCIT u/s 263 of the Act should be quashed. As from the assessee s facts, it is abundantly clear that during the assessment stage, the AO asked the assessee to furnish the details and documents. In response, the assessee submitted reply with evidences before AO. Thus, all the documents, details and the explanations required by the AO were submitted by the assessee. Just because the AO does not bring these documents and details in his assessment order does not mean that AO has not conducted proper enquiry during the assessment stage. In fact, AO has applied his mind. Assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . As in the assessee s case, it cannot be said that it is a case of 'lack of inquiry'. In view of the facts of the case and judicial pronouncements relied upon, it is well established that the impugned assessment order passed u/s. 143(3) dated 11.02.2021, was passed by AO after calling for relevant information and after detailed examination of the same. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under Section 263 of the Income Tax Act, 1961. 2. Addition of unexplained cash credits under Section 68 of the Act. Summary: Issue 1: Validity of the order passed under Section 263 of the Income Tax Act, 1961 The assessee challenged the correctness of the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961 for the assessment year 2018-19. The assessee argued that the PCIT erred in initiating and passing the order under Section 263, claiming it was invalid, beyond the scope of law, and contrary to the law. The PCIT exercised jurisdiction under Section 263, noting that the Assessing Officer (AO) failed to disallow an additional amount of Rs. 44,03,060/- in the assessment order, which the PCIT deemed erroneous and prejudicial to the interest of the Revenue. The PCIT issued a show cause notice and, after rejecting the assessee's contentions, set aside the AO's assessment order, directing a fresh assessment. The assessee contended that the issue was already subject to an appeal before the CIT(A), and thus, the PCIT should not have exercised jurisdiction under Section 263. The Tribunal referred to several judicial precedents, including the Gujarat High Court's ruling in Haryana Paper Distributors (P) Ltd. Vs. PCIT and Nirma Chemicals Works (P.) Ltd., which held that when an issue is subject to appeal, the PCIT cannot exercise revisional powers under Section 263. The Tribunal concluded that the PCIT's jurisdiction under Section 263 was not warranted, especially when the appeal was pending before the CIT(A). Therefore, the Tribunal quashed the PCIT's order dated 12.01.2023 under Section 263 of the Act. Issue 2: Addition of unexplained cash credits under Section 68 of the ActThe AO had made an addition of Rs. 1,82,46,940/- under Section 68 of the Act for unexplained cash credits, which the assessee had appealed before the CIT(A). The PCIT observed that the AO should have made an addition of Rs. 2,26,50,000/-, leading to a shortfall of Rs. 44,03,060/-. The PCIT argued that the AO's assessment was erroneous and prejudicial to the Revenue's interest due to inadequate verification of the unsecured loan from a company whose registration was canceled by the MCA. The assessee contended that the AO had conducted sufficient inquiry and that the PCIT was merely taking a different view. The Tribunal noted that the AO had issued notices and obtained relevant documents from the assessee during the assessment proceedings. The Tribunal emphasized the distinction between "lack of inquiry" and "inadequate inquiry," stating that if there was any inquiry, even if inadequate, it would not justify the PCIT's intervention under Section 263. The Tribunal found that the AO had applied his mind and conducted sufficient inquiry, and thus, the assessment order could not be termed erroneous and prejudicial to the interest of the Revenue. Consequently, the Tribunal quashed the PCIT's order under Section 263 and allowed the assessee's appeal. Conclusion:The Tribunal quashed the order passed by the PCIT under Section 263 of the Income Tax Act, 1961, and allowed the assessee's appeal, concluding that the AO had conducted sufficient inquiry and that the PCIT's intervention was not warranted.
|
