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2023 (2) TMI 419 - AT - Income TaxRevision u/s 263 - assessment framed u/s 143(3) as erroneous insofar prejudicial to the interest of the Revenue - Addition u/s 68 - assessee during the year received unsecured loan and identity, credit worthiness and genuineness was not fully established - HELD THAT - All the details were available or in the knowledge of the learned PCIT with respect to the loan transaction. Despite that the PCIT has restored the issue to the AO for further verification which is not desirable under the provisions of law. Once the AO after considering the materials available on record has taken one of the plausible view, then there is no reason to set aside the same issue to the file of the AO for fresh verification. We hold that there is no error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quash the same. Hence, the ground of appeal of the assessee is allowed.
Issues Involved:
1. Delay in filing the appeal. 2. Legitimacy of the assessment order under section 143(3) of the Income Tax Act, 1961. 3. Examination of unsecured loans received by the assessee. 4. Validity of the revisionary proceedings under section 263 of the Act by the Principal Commissioner of Income Tax (PCIT). Detailed Analysis: 1. Delay in Filing the Appeal: The assessee filed the appeal with a delay of 343 days, which fell during the COVID-19 period. The delay was condoned based on the Supreme Court's judgment in the case of Cognizance for Extension of Limitation, which extended the limitation period for filing appeals due to the pandemic. The Revenue did not object to this condonation. 2. Legitimacy of the Assessment Order under Section 143(3): The only issue raised by the assessee was that the PCIT erred in holding the assessment framed under section 143(3) as erroneous and prejudicial to the interest of the Revenue. The assessee had declared an income of Rs. 6,69,25,280, which was assessed at Rs. 6,88,26,540 after scrutiny. 3. Examination of Unsecured Loans: The PCIT found discrepancies in the unsecured loans received by the assessee from SN Shah HUF and Shivalik (Ambli) Co-Operative Society Ltd. The PCIT noted that the identity, creditworthiness, and genuineness of these transactions were not fully established. The AO had accepted the genuineness of the loans without proper examination, leading to the initiation of proceedings under section 263. 4. Validity of the Revisionary Proceedings under Section 263: The PCIT argued that the AO failed to make necessary inquiries regarding the unsecured loans, thus rendering the assessment order erroneous and prejudicial to the Revenue. The PCIT directed the AO to conduct specific inquiries to verify the genuineness and creditworthiness of the loan transactions. Tribunal's Findings: - The Tribunal emphasized that an order is not erroneous if the AO has made inquiries and applied the law correctly, even if the inquiries are deemed inadequate by the PCIT. - The Tribunal cited various judgments, including those from the Delhi High Court and the Supreme Court, to support the principle that the adequacy of inquiry is at the AO's discretion. - The Tribunal noted that the AO had indeed made inquiries during the assessment proceedings, as evidenced by the notices and responses on record. - The Tribunal found that the PCIT had not invoked Explanation 2 of section 263 in the show cause notice, which was a procedural lapse. - The Tribunal observed that the PCIT had all the necessary details regarding the loan transactions but still remanded the matter to the AO for further verification, which was not justified. Conclusion: The Tribunal concluded that the AO had made adequate inquiries and taken a plausible view based on the materials available on record. Therefore, the assessment order was not erroneous or prejudicial to the interest of the Revenue. The revisionary order passed by the PCIT was quashed, and the appeal filed by the assessee was allowed. Order Pronounced: The appeal was allowed, and the order was pronounced in the Court on 10/02/2023 at Ahmedabad.
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