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2023 (4) TMI 139 - AT - Income Tax


Issues involved:
The appeal challenges the order passed under section 263 of the Income Tax Act, 1961 for Assessment Year 2017-18.

Grounds of Appeal:
1. The Principal CIT erred in holding the assessment order as prejudicial to the interest of revenue.
2. The Principal CIT failed to appreciate the earlier assessment completed after due consideration.
3. The Principal CIT erred in invoking provisions of s. 263 without adequate enquiry by the AO.
4. The Principal CIT was unjustified in invoking s. 263 based on inadequate enquiry.
5. The appellant reserves the right to amend the grounds of appeal.

Summary of Judgement:
The appellant's case was selected for limited scrutiny due to cash deposit during demonetization and increase in sales. The AO raised queries and the assessee provided relevant documents. The AO was satisfied with the explanation and no adverse inference was drawn. The PCIT's decision to invoke s. 263 without specific defects or errors is deemed unlawful. The PCIT failed to establish the twin conditions required for invoking s. 263. The judgment cites the Malabar Industrial Co. Ltd. case emphasizing the necessity for an order to be both erroneous and prejudicial to Revenue for s. 263 to apply. In this case, the AO's view was plausible and not erroneous, thus PCIT's decision was deemed infirm. The appeal of the assessee was allowed, and the PCIT's order was held bad in law and annulled.

 

 

 

 

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