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TMI Blog2022 (10) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... made during the year. The balance sheet attached with the ROI reflects Housing loan from HDFC bank and payment of interest on housing loan reflects in capital account. Therefore, since entire facts are available on records, the AO did not require any further details particularly where the assessment is selected for limited scrutiny . It is a well settled position of law that if from the assessment records, it is evident that the Ld. AO has made due enquiries in response to which assessee has filed detailed submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication[ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , Smt. Anupama Bharat Gupta [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , Goyal Private Family Specific Trust [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] , CIT v. Mahendra Kumar Bansal [ 2007 (7) TMI 149 - HIGH COURT, ALLAHABAD] - We, thus, find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s. 57(iii) of the Act. The provisions of section 57(iii) of the Act clearly stipulates that the expenditure must be laid out or expended fully and exclusively for the purpose of making or earning of income. The evidences and materials produced on record are not sufficient to discharge onus upon the assessee to prove justification of such large interest expenditure. It is a settled legal proposition that when the claim of exemption / deduction is made the onus is on the assessee to demonstrate the genuineness of such claim. The nexus between the interest expenditure and interest income earned is not properly established. Hence, the conditions to claim the benefit u/s. 57(iii) of the Act are not satisfied. Further, on going through the balance sheet of the assessee, it is seen that the assessee has made investment in immovable property amounting to Rs. 1,24,46,585/-. The assessee could not produce any documentary evidences to establish that the loan amount was not utilized for purchasing immovable properties. Further, the assessee has also made investment in the firm in which he is a partner to earn share of profit which is not included in the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted any verification / inquiries inrespect of interest expenditure claimed against the interest income in view of the provisions of section 57(iii) of I T Act. As has been noticed that the funds have been utilized for granting interest free loans, investment in related firms / companies, investment in immovable properties. So, while granting the claim of interest, the AO ought to have enquired that no interest bearing funds have been utilized for the purpose other than interest generating assets / investments. The A O ought to have examined / verified the rotation of the funds i.e. in flow and corresponding outflow with the help of bank statement / bank book so as to exactly know the utilization of the borrowed funds and the purpose thereof. However, no such enquiry / verification have been carried out by the AO in the assessment proceedings. Such cases where the assessment has been completed without conducting any inquiries tantamount to erroneous orders as also order prejudicial to the interest of Revenue. For such proposition of law. 4. The assessee is in appeal against the aforesaid order passed by Principal CIT. The Counsel for the assessee argued that the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies and Assessing Officer had made inquires in detail and accepted genuineness of same, such view of Assessing Officer being a plausible view could not be considered erroneous or prejudicial to interest of Revenue. The facts of this case were that respondent assessee has filed its Return of Income showing total income of Rs. 62,55,900/- which was assessed under Section 143(3) of the Act, 1961 by an assessment order dated 14thMarch 2016. The respondent company received unsecured loans from M/s. GeorgettTradecom Pvt. Ltd. and M/s. PurbaAgro Food Pvt. Ltd. amounting to Rs. 2.49 Crore and the Assessing Officer allowed these unsecured loans. The Principal Commissioner of Income-tax invoked Section 263 of the Act, 1961 for revising the assessed income of the respondent assessee. It was noticed by the PCIT that the unsecured loans obtained by the respondent assessee are shown as investment in the name of the assessee in the share application as well as in the balance sheet of the respective companies. The PCIT passed an order under Section 263 of the Act directing the Assessing Officer to pass fresh assessment order under Section 143(3) of the Act, 1961 on the aspect of unsecured loans s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed 9. The Supreme Court in the recent case of Principal Commissioner of Income-tax-2, Meerut v. Canara Bank Securities Ltd[2020] 114 taxmann.com 545 (SC) , dismissed the Revenue s SLP holding that 263 proceedings are invalid when AO had made enquiries and taken a plausible view in law, with the following observations: Having heard learned counsel for the parties and having perused the documents on record, we see no reason to interfere with the view of the Tribunal. The question whether the income should be taxed as business income or as arising from the other source was a debatable issue. The Assessing Officer has taken a plausible view. More importantly, if the Commissioner was of the opinion that on the available facts from record it could be conclusively held that income arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed 10. The Supreme Court in the case of Principal Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order of assessment passed by ITO cannot be interfered with only because another view is possible. 12. The Karnataka High Court in the case of CIT v. Gokuldas Exports [2012] 20 taxmann.com 491 (Karnataka) held that the phrase 'prejudicial to the interests of the revenue' under section 263 has to be read in conjunction with the expression 'erroneous' order by the Assessing Officer. Every loss of the revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. 13. Now coming to the present of the case, the return of income was selected for limited scrutiny for verification of Large deduction claimed under Section 57 . Accordingly, the AO issued notice dated 13-08-2019, wherein issue of deduction against income from other sources was asked. Thereafter, vide notice under Section 142(1) dated 28.01.2019 the AO called for various details in respect of deduction under Section 57 of the Act. Subsequently notice under Section 142(1) were issued on 17.06.2019 raising query as to how the interest paid for loans taken is directly attributable to the interest income earned from the loans given i.e. t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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