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Issues:
Challenging order under s. 263 - Proper examination of issues - Share capital raised and purchases of electrical equipment - Enquiry by AO - Compliance by assessee - Explanation on share capital and investments - Central Excise Act proceedings - Purchases from M/s Parro Electrica - Unaccounted income report - Legal validity of order under s. 263 - Nature of enquiry required - Setting aside assessment order. The judgment involves an appeal challenging the order under section 263 of the Income Tax Act, 1961, relating to the assessment year 1999-2000. The key issue revolves around the proper examination of issues by the Assessing Officer (AO), specifically regarding the share capital raised and purchases of electrical equipment. The appellant argued that the AO conducted thorough enquiries, considered evidence, and accepted additions to assets after due verification. The appellant contended that the order under section 263 was unjustified and lacked specifics on the necessary enquiries. Additionally, the appellant provided explanations on share capital allotment and investments, clarifying discrepancies highlighted by the Commissioner of Income Tax (CIT). The appellant further clarified that the Central Excise Act proceedings were related to a sister concern, not directly involving the appellant's activities. Regarding purchases from M/s Parro Electrica, the appellant demonstrated that the concern was assessed by the same AO, indicating no irregularities in the transactions. Moreover, the appellant disputed claims of unaccounted income based on a report from the Investigation Wing-II, Raipur, which was not part of the initial notice under section 263. The appellant cited legal precedents to support the argument that the order under section 263 lacked specificity on required enquiries, rendering it unsustainable. The judgment emphasized that if the AO had considered one of the possible views and conducted necessary examinations, the order could not be deemed erroneous, aligning with established legal principles. Citing the decision in the case of Malabar Industrial Co. Ltd. vs. CIT, the judgment highlighted that the AO's assessment, based on thorough examination and satisfaction on issues, was valid. The judgment also referenced the jurisdictional High Court's ruling in CIT vs. Mehrotra Brothers, supporting the appellant's position that the order under section 263 was not in accordance with the law. Ultimately, the judgment concluded that the order under section 263 was unsustainable and set it aside, restoring the assessment order passed by the AO under section 143(3). The decision favored the appellant, highlighting the importance of proper examination and satisfaction of issues by the AO to avoid being labeled as erroneous or prejudicial to revenue interests.
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