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TMI Blog2022 (2) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by AO dated 08.05.2017 is not erroneous neither prejudicial to the interest of revenue. Order passed by PCIT U/s. 263 is liable to be set aside. 2. That while invoking the provisions of sec 263 of Income Tax Act , PCIT has not appreciated that the AO while passing the order U/s. 143(3) has examine the books of account, vouchers and also required details of the balance sheet with other relative documents, After that has pointed out the discrepancies therein, taking into consideration all these has passed the order U/s. 143(3) by making the adhoc addition for Rs. 5,00,000/- which shows that the AO, after application of his mind has passed the order U/s. 143(3) which is not erroneous within the meaning of sec 263 of Income Tax Act order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the decisions of jurisdictional High Court or of Hon'ble Supreme Court, In absence of such specific finding in the order U/s. 263, The order passed by the AO U/s. 143(3) Dated 08.05.2017 is nor erroneous as per explanation 2 of the Sec 263 of Income Tax Act. The order passed by PCIT U/s. 263 is bad in law, against the provisions of sec 263, liable to be cancelled. 6. That the order passed by the AO U/s. 143(3) dated 08.05.2017 is passed after due verification and making enquiries and passed as per provisions of sec 143(3) having power vested with him in accordance with law same can not be said to be erroneous within the definition exp. 2 to the sec 263 of Income Tax Act, order passed by PCIT U/s. 263 dated 21.03.2021 ignoring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer was erroneous and it should be prejudicial to the interest of the revenue. It was submitted that in the absence of one of the conditions, the jurisdiction under section 263 cannot be invoked by the lower authorities. 5. Per contra DR for the revenue had vehemently relied upon the order passed by the lower authority. Ld. D.R. for the revenue had drawn our attention to paragraph 8 of the order passed by the lower authority, it was mentioned in the order as under: "The earlier replies submitted by the assessee have been carefully considered vis-a-vis the material available on record. lt is seen that the case was selected under scrutiny for the reasons including "large increase in sundry creditors", "mismatch in sales turnover rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 6. The assessing Officer has failed to make any enquiry for the verification of the creditors and therefore the order passed by the assessing officer is erroneous. She had also submitted that there was increase of amount in respect to sundry creditor in comparison to the previous years and therefore the verification of the sundry creditors by the AO was essential. In the absence of no verification by the assessing officer, the order passed by the assessing officer had become erroneous in view of the Explanation 2 to Section 263 of the Act. 7. The Ld. DR, had further submitted that the order was passed within the period of limitation as provided by the Act. 8. We have considered the rival contention of the parties and perused the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittedly the limitation provided by subsection 2 of section 263 for passing the order under section 263 is two years from the date of passing of the order by the assessing officer. No order extended the, Of limitation was brought to our notice issued by CBDT, prior to 31 March 2020, was brought to our notice by the revenue, however the Ld. A.R. had fairly submitted that the limitation for passing of the order has been extended by the board. In our view this issue is required to be examined in the appropriate case by the bench, as in our understanding the extension of limitation period, by the board should be made when the limitation was available to the board to pass the order and the extension of limitation cannot take place after the lapse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted that no verification were made by the during the assessment proceedings. In our considered opinion once the assessing officer came to the conclusion that the addresses of the creditors are unverifiable then the assessing officer was required to estimate the income of the assessee based on past history or other cogent basis. 14. In the present case on the facts of the unverifiable addresses, the assessing officer had made the ad hoc addition of Rs. 5 lakhs to the income of the assessee. 15. The Ld. PCIT, in the order in para 3 had mentioned as under" "3. Adhoc addition of Rs. 5,00,000/- was made in the assessment order to cover possible leakage of revenue on account of 'purchases from unregistered vendors and cash expenses. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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