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TMI Blog2020 (3) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... 009-10. 2. The Revenue has proposed the following two questions of law for the consideration of this Court: [A] Whether the Appellate Tribunal has erred in law and on facts in reversing the order passed under Section 263 of the Act by holding that the assessment order cannot be branded as erroneous as there has been enquiry with regard to claims made and mere inadequacy cannot be ground for taking action under Section 263 of the Act? [B] Whether the Appellate Tribunal has erred in law and on facts in not appreciating the fact that interest expenditure amounting to Rs. 57,37,042/was not incurred by the assessee wholly and exclusively for the purpose of earning interest income but was in fact utilized for making investment in shares/secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed funds had been utilized for making the investment in shares/securities. In such circumstances, the CIT in its order observed as under: "5. The reply of the assessee has been carefully considered. Assessment records of the A.O. have also been perused. The arguments put forth by the assessee are not found tenable. Further, the judicial pronouncements relied upon by the assessee are also not squarely applicable in the instance case. On verification of records, it is noticed that the claim of the assessee has been allowed by the A.O. without verifying its allowability as per Income-tax Act, thereby the AO has made inadequate enquiries before allowing the above claim of the assessee. The assessing officer, upon the receipt of the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of revenue. 6. Further, during the course of assessment as well as proceedings u/s.263 of the Act, the assessee has also contended that the AO had no power u/s.153 r.w.s.143(3) of the Act to examine the issue of allowability of the expenditure on the ground that the assessment for the year under consideration had already abated on the date of search. And the assessment under consideration, being made u/s.153A in consequence of search, is required to be restricted to the documents/ incriminating material found in the course of search for assessing the undisclosed income. As per the assessee, the subject matter of revision u/s.263 of the Act does not fall within its preview. 6.2 In the case in hand, the AO has, upon receipt of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords of the assessee for A.Y.200910, it is noticed that the assessee has shown to have received Rs. 42,11,011/as interest income in the year under consideration. He has also claimed interest expenditure of Rs. 57,37,042/resulting into declaration of loss of Rs. 15,26,031/under the head "Income from Other Sources". Further, perusal of records reveal that the borrowed funds have been utilized for making investment in shares/securities. Thus, the interest payment/expenditure has not been utilized wholly and exclusively for the purpose of earning interest income. On perusal of his reply dated 23.12.2015 submitted on 29.12.2015 during course of assessment proceedings, it is noticed that the assessee has .... submitted the ledgers of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of framing of assessment, Assessing Officer had access to all records of assessee, after pursuing such record Assessing Officer framed assessment, such assessment could not have been reopened in exercise of revision power u/s.263 for making further inquiries." 8. In this case, assessee cannot be branded as erroneous as there has been inquiry with regard to claims made and mere inadequacy cannot be ground for taking action u/s.263 of the Income Tax Act. 9. Ld. A.R. also cited a case of Pr. CIT Vs. Saumya Construction Pvt. Ltd. 81 taxmann.com 292 (Guj.) wherein has been held that assessment "u/s.153A, relation to material disclosed during search or requisition; if no incriminating material is found during search, no addition can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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