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2017 (11) TMI 1428 - HC - Income TaxRevision u/s 263 - AO accepted the factum of gifts without making any further inquiry - Held that - Clearly an inquiry had been conducted by the Assessing Officer on the material aspect of the transaction. The identity of the donors, as also the genuineness of the transaction and the creditworthiness of the donors had been questioned by the Assessing Officer. As to the identity of the donors and genuineness of the transaction there is no dispute and the CIT has also not doubted the correctness of the approach for the finding reached by the Assessing Officer. The only doubt that has been created is as to the creditworthiness of the donors. In this regard we find that the Assessing Officer had questioned the donors as to the source of money from which the gifts had been made to the assessee. The donors on their part explained that the money had come to them upon sale of certain properties. Thus, the inquiry had been made by the Assessing Officer and the conclusion drawn by him is consistent with the information provided by the donors. It cannot also be lost sight of that the amount of donation is only ₹ 75,000/- for each gift. Thus, the total disputed amount is only ₹ 1,50,000/-. Thus where certain inquiry appears to have been made pertinent to the issue in hand and the conclusion drawn by the Assessing Officer was consistent that the material that came on record as a result of those inquires and the total amount itself be small, we find that in view of the judgment in the case of Krishna Capbox(2015 (3) TMI 17 - ALLAHABAD HIGH COURT), the reasoning of CIT that further inquiry should have been conducted by the Assessing Officer cannot be sustained. - Decided in favour of the assessee and against the revenue.
Issues involved:
1. Interpretation of Section 263 of the Income Tax Act regarding the jurisdiction of the Commissioner. 2. Consideration of interest under Section 234 A, 234B, and 234 C of the Income Tax Act in proceedings under Section 263. Analysis: 1. Interpretation of Section 263 of the Income Tax Act: The case involved an appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal for the assessment year 2001-02. The appeal raised questions of law regarding the jurisdiction of the Commissioner under Section 263 of the Act. The Commissioner initiated proceedings under Section 263, questioning the correctness of the Assessing Officer's acceptance of gifts received by the assessee. The Commissioner believed that further inquiries should have been made by the Assessing Officer regarding the source of the gifts. The Tribunal upheld the Commissioner's decision, leading to the present appeal. The High Court analyzed the facts, emphasizing that the Assessing Officer had conducted a proper inquiry into the gifts. The donors confirmed the gifts, which were made through banking channels and recorded in their books of account. The Court referred to precedents and held that the Commissioner's reasoning for additional inquiries was not justified. The Court set aside the order under Section 263 in favor of the assessee. 2. Consideration of interest under Section 234 A, 234B, and 234 C: The second issue raised in the appeal was the consideration of interest under Section 234 A, 234B, and 234 C of the Income Tax Act in the proceedings under Section 263. However, due to the Court's decision in favor of the assessee regarding the primary issue of jurisdiction under Section 263, the consideration of interest under these sections became academic. The Court allowed the appeal based on its findings related to the primary issue, rendering the secondary issue irrelevant for determination. In conclusion, the High Court's judgment in this case clarified the interpretation of Section 263 of the Income Tax Act regarding the Commissioner's jurisdiction. The Court emphasized the importance of proper inquiry by the Assessing Officer and upheld the decision in favor of the assessee. Additionally, the Court rendered the consideration of interest under Section 234 A, 234B, and 234 C as academic due to the primary issue's resolution.
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