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TMI Blog2025 (3) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted any enquiry, but while doing so he has applied his mind and taken a plausible view on the matter. That view so taken being not erroneous and prejudicial ld. PCIT merely cannot impose her view that the ld. AO should have considered that income so offered u/s 69 as Unexplained Investment for Rs. 66,50,000 (45,50,000+21,00,000) and Rs. 9,50,000/- (Unexplained Money) u/s 69A of the Act.
It is noted that even the amendment [i.e.Expl. 2(a)] does not confer blind powers and it is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the Expl. 2(a) in the facts of the present case.
Thus, it is not at all a case where the subjected assessment should be alleged to be erroneous in so far as prejudicial to the interests of the revenue. There is neither error of law nor of facts. There is no erroneous assumption by the AO of either the facts or of law, as alleged by the ld. PCIT. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... d income for the Assessment Year 2019-20 was identified by the Revenue. 1. Undisclosed debtors 45,50,000/- 2. Excess cash found 9,50,000/- 3. Unaccounted construction 21,00,000/- It is further noted that the assessee had filed its return of income for A.Y.2019-20 on 31-10-2019 declaring total income of Rs. 83,70,380/- after offering the above additional income as business income for taxation. Thus the case of the assessee was selected for ''Complete Scrutiny '' on the issue that case is pertaining to survey us/ 133A of the Act.' In this case, notice u/s 143(2) of the Act was issued on 15-10-2020 and subsequently notice u/s 142(1) was issued on 21-01-2012 and 08-09-2021 through Email / E-filing portal which were duly served upon the assessee. In response to the notices, the assessee submitted the requisite details before the AO who after considering the submissions and documents filed by the assessee assessed the returned income at Rs. 83,70,380/-. It appears from the assessment order that the AO had not found anything against the assessee from the requisite details submitted by him in response to statutory notices and thus the assessment was completed by passing an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vish Singhal vs ITO [ITA No 142 to 146/Jodh/ 2018 for 2014-15 dated 25 May 2018) were related to taxing the additional sum on account of "Excess Stock" found/determined and accepted by the assessee WHEREAS, in the case of assessee, the additional income were determined/surrendered on account of "Undisclosed Debtors", Excess Cash Found" and "Unaccounted Construction", which have had direct nexus of chargeability of tax u/s 69 and 69A of the I.T. Act, 1961 and therefore, the applicable tax was chargeable u/s 115BBE of the Act, accordingly. The reply of the assessee is found not acceptable as it is not in conformity with the facts of the case vis- à-vis the provisions of law in this regard. (vi) In view of the above, the reply of the assessee is not accepted for the reasons mentioned herein above The above mentioned incorrect assumptions of facts and incorrect application of law resulted in undercharging of tax of Rs. 33,45,949 plus applicable interest u/s 234 in the case of assessee which was erroneous and prejudicial to the interest of revenue. (vii) In view of the above, since the Income was not charged/considered under the Correct Head/Section and the correct tax was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural justice or without application of mind. (ii) In case of TTK LIG Ltd., v/s. ACIT(Mad) 51 DTR 228 it has been held that Order would be erroneous if it is based on an incorrect assumption of facts or an incorrect application of law or non-application of mind or based on no or insufficient materials. (iii) In the case of Arvee international vis. Addl. CIT (ITAT, Mum) 101 ITD 495, it has been held that Unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, an Assessing Officer is not only an adjudicator but also an investigator He cannot remain passive on the face of a return which is apparently in order but calls for further enquiry- It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke inquiry - If there is failure to make such enquiry, order is erroneous and prejudicial to revenue - CIT need not prove that it is erroneous and he can revise it u/s 263. (iv) CIT v/s. Raisons Industries Ltd., 288 ITR 322 (SC): The Hon'ble Supreme Court held as under: "The power of revision under section 263 is exercised by a higher authority. It is a special provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further chargeability of income-tax thereupon u/s 115BBE of the I.T. Act, 1961". Therefore, the AO is directed to verify this issue while finalizing the assessment considering the observations mentioned herein above. Thereafter, based on outcome of such enquiries and verification, necessary additions, wherever required, may be made to the total Income of the assessee as per law by modifying the assessment order u/s 143(3) /144B of the Act dated 29.09.2021. However, the AO is directed to ensure that ample opportunities of being heard are provided to the assessee before passing such order.'' 5. Feeling dissatisfied with the above finding of the ld. PCIT, the assessee preferred the present appeal on the grounds as reiterated herein above. Ld. AR of the assessee vehemently argued that the issue which the ld. PCIT raised in her order has already been verified by the National Faceless Assessment Unit while passing the order and for that specific notice was issued by the ld. AO. Thus, he relied upon the assessment order and submitted that there is no flaw in the assessment order and the impugned order u/s 263 of the Act passed by the ld. PCIT needs to be quashed for which he submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law." Ratio of these cases fully apply on the facts of the present case in principle and therefore, invoking of sec.263 was not legally justified also for the detailed reasons being submitted herein below issues wise: 2. Due Enquiry Made with full application of mind In the facts and circumstances of the case, it cannot be alleged that the AO did not verify the facts and particularly w.r.t the source of the additionally declared income, vis-a-vis non- applicability of S.115BBE of the Act thereon in as much as, the ld.AO was fully conscious of the issue and therefore even a show cause notice was raised, specifically on the aspect of applicability of or otherwise of section 115BBE vide its show cause notice come draft assessment order dated 24.09.2021 bearing DIN: ITBA/AST/F/143(3) (SCN)/2021-22/1035876830(1), in the following words: "2. In your ITR for the year 2019-20, you have offered such income as business income for taxation at normal rates, whereas the above-mentioned income needs to have following treatment as per Table A Below: S.NO Particulars Amount To be treated Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure as referred in S. 68,69,69A of the Act being the income from other sources. Therefore, subjected income has essentially to be classified u/s 14 of the Act as income from other sources and that is possible only when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession. 2.2 A combined reading of S. 14 with S. 56 of the Act makes is evidently clear that for the assessment of an income it must have to be classified under four heads of income as enumerated u/s 14 and if it doesn't fall under any specific head of income as per item A to E of S. 14, such income has to be assessed under the residuary head of income i.e. item F of S. 14. Therefore, income added u/s 68 or 69 etc. has to be given a specific head in terms of S. 14. 2.3 The Hon'ble Supreme Court in case of Karanpura Development Co Ltd vs. CIT [1962] 44 ITR 362 (SC) held that these heads are in a sense exclusive to one another and income which falls within one head cannot be brought to tax under another head. Further, the Hon'ble Supreme Court in case of Nalinikant Ambalal Mody v CIT [1966] 61 ITR 428, has held that whether an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estate business and has to be classified u/s 14 r.w.s 28 as business income only and not income from other sources, for the following reasons: 6.1.1 It is submitted that whatever, was disclosed was nothing but additional income only and it cannot be termed as excess/undisclosed/unaccounted income for the simple reason that survey was carried out on 19.01.2019 i.e. before close of the relevant previous year ending on 31.03.2019 or in other words, during the currency of the previous year only. The assessee did not yet close the previous year's books of accounts therefore, unless a comparison is made between the completely prepared books of accounts with the stock, cash or debtors etc. as physically found during the course of survey, it can't be termed as excess-shortage /undisclosed/unaccounted money, quantity etc. Even the return of income was not filed. At the best it was only additional income stated during survey. Moreover, the assessee admittedly accounted for such income also in regularly maintained books of accounts and also in its ROI. Therefore, once a comparison is made between the income shown in the accounts and the additional income, there will be no difference. Conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned books of accounts as evident from the fact that in its Income and Expenditure account as sum of Rs. 76 Lakh stands credited. Subsequently in the computation also the admitted additional income has been shown under the head income from business and profession. 7. Judicial Guideline: The Hon'ble Rajasthan High Court, ITAT Jaipur and various other courts have held that where the additional income/ undisclosed income declared during the course of survey is relatable to some business activity then it cannot be considered to be income from other sources and consequently S. 115BBE cannot be invoked. 7.1 The Hon'ble Ahmedabad Tribunal in case of Chokshi Hiralal Maganlal vs DCIT (ITA No. 3281/Ahd/2009 AY 2004-05 dated 5 August 2011) held that for invoking deeming provisions under sections 69, 69A, 69B & 69C there should be clearly identifiable investment or asset or expenditure (i.e. in our understanding not connected with business so as to make convenient to invoke aforesaid sections). In case source of investment or asset or expenditure is clearly identifiable and has no independent existence of its own where a case arises to claim that it cannot be separated from business then fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to tax under another head. Further, the Hon'ble Supreme Court in case of Nalinikant Ambalal Mody v CIT [1966] 61 ITR 428, has held that whether an income falls under one head or another is to be decided according to the common notions of practical man because the Act does not provide any guidance in the matter. Of course, lot of judicial precedents are available to a taxpayer to arrive at a conclusion about determination of appropriate head of income. 4.1. No error when AO acted in accordance with binding decisions: In addition, the legal position and the judicial guideline through the various decisions of Hon'ble Rajasthan High Court and ITAT Jaipur, is well settled. The AO acted in accordance with the judicial guideline and the ratio laid in the cases of: 1. CIT vs Bajargan Traders [ITA No. 258/2017 dated 12/09/2017] - (DC 42-56) 2. Chokshi Hiralal Maganlal vs DCIT (ITA No. 3281/Ahd/2009 AY 2004-05 dated 5 August 2011) 3. Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014- 15 dated 25 May 2018) and applying the same on the facts of the case in hand, decided that the provisions of S.115BBE were not applicable and hence did not therefore apply high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and also show caused the assessee as to why the same should not be charged at a higher rate of tax as per the provisions of s. 115BBE. After considering the submissions and explanations of the assessee the AO accepted the contention of the assessee that the surrendered income was out of the business income of the assessee. Principal CIT has not pointed out as to why the explanation offered by the assessee to the AO was not satisfactory and what more enquiries were required to be conducted in this case which the AO failed to conduct. The Principal CIT has simply based his opinion and order on the audit objections/report as pointed out even in the audit report that since the 1 / 7 same was undisclosed income of the assessee which was surrendered by the assessee during the survey action the same was to be assessed under the provisions of ss. 68 to 69D. The above reasoning of the survey party is not in accordance with the relevant provisions of the Act. Therefore, there is no justification on the part of the Principal CIT in invoking the revisionary jurisdiction. In view of the discussion made above, the revision order has been passed by the Principal CIT by wrongfully exercising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering that the additional income fell under the purview of ss. 68 and 69 and that tax was chargeable under s. 115BBE as against normal rates-Hence, the proceedings initiated under s. 263 and the impugned order are quashed." 7. Dealing with the objection of the ld. PCIT: The ld. PCIT, in the impugned order [Para 6 page 14], has observed that the AO was wrong while assessing the additional income declared by the appellant during survey under the head "Business income", without verifying the sources of income and in particular, the business nexus of such unexplained admitted income. She further distinguished the judicial precedents cited before her being CIT vs Bajargan Traders [supra] and Lovish Singhal vs ITO (Supra) on the alleged ground that in those cases, the admitted income was in relation to excess stock whereas in the present case, the additional income was admitted on account of undisclosed debtors, excess cash found and unaccounted construction expenses which, in her opinion, had a direct nexus of chargeability u/s 69 & 69A of the Act and therefore section 115BBE was applicable. However, such an observation/finding by the Ld. PCIT got no legal basis, rather simply twisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made in this case. However, we find that the Pr. CIT has not mentioned in the show-cause notice issued under section 263 that he is going to invoke the Explanation 2 to 263 hence, invocation of Explanation in the order without confronting the assessee is not appropriate and sustainable in law in support of this contention, the ld. Counsel has placed reliance on the following decision: CIT v. Amir Corporation 81 CCH 0069 (Guj.), CIT Mehrotra Brothem -270 ITR 0157 (MP,CIT v. Ganpet Ram Bishnoi - 296 ITR 0292 (Raj.), Cadila healthcare Ltd. v. Cl 7, Ahmedabadh-1 [ITA no. 1096/Ahd/2013 & 910/Ahd/2014], Sri Saí Contractors v. ITO [ITO no. 109Nizag/2002] and Pyare lal Jaiswal v. CIT, Vamnesi [(2014) 41 taxmann.com 27 & (AII Trib.)]. It was contended by the Learned Counsel that clause -(a) & (b) of Explanation 2 of Section 263 are not applicable as the Assessing Officer has made enquiry and verification which should have been made. Further, in the show cause notice, the Explanation-2 of section 263 was not invoked by the PCIT and it was referred in the order u/s. 263 of the Act. Therefore, in the light of decision of the Co-ordinate Bench of Mumbai ga in the case of Naraya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 is permitted, Revisional Commissioner can possibly find fault with each and every assessment order without himself making any inquiry or verification and without establishing that assessment order is not sustainable in law. This would inevitably mean that every order of the lower authority would thus become susceptible to section 263 of the Act and, in turn, will cause serious unintended hardship to the tax payer concerned for no fault on his part. Apparently, this is not intended by the Explanation. Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. The AO in the present case has not accepted the submissions of the assessee on various issues summarily but has shown appetite for inquiry and verifications. The AO has passed after making due enquiries issues involved impliedly after due application of mind. Therefore, the Explanation 2 to section 263 of the Act do not, in our view, thwart th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails so placed on record by the assessee in the assessment proceeding to disbelieve the averments about the source of the said demonetized currency. Merely the PCIT said that in his opinion the ld. AO has not properly addressed the issue. The observation so made is very general and routine without pinpointing any specific defect the action of the PCIT u/s. 263 is nothing but a review of the order of the ld. AO. It has been held in so many cases by the various High Courts and Tribunal that the amendment made in section 263 does not confer blind and uncontrolled power to the PCIT, despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT. The newly inserted explanation 2(a) to section 263 does not authorize or give unfettered powers to Commissioner to revise each and every order, if in his opinion same has been passed without making enquiry or verification. Here in this case the ld. AO has made enquiry at four instance and recorded his satisfaction after examined the books of account, bank statement and purchase and sales records of the assessee. Here in this case even there is no specific observation of the PCIT pinpointing any specific defect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 133A of the I.T. Act, 1961 on 16.01.2019 and Rs. 76,00,000/- were identified as undisclosed Income by the search team of the revenue, which comprise of undisclosed debtors Rs. 45,50,000/-, Excess cash found Rs. 9,50,000/- and unaccounted construction Rs. 21,00,000/-. For the year under consideration assessee filed return of Income on 31.10.2019 declaring total Income of Rs. 83,70,380/. -Thereafter, case was selected for scrutiny under "Compulsory Scrutiny" criterion. Thus the AO/NFAC completed scrutiny assessment u/s 143(3) r.w.s. 144B of the Act, on 29.09.2021 at the total assessed income at Rs. 83,70,380/-. While examining the assessment record ld. PCIT noted that assessee-appellant had accepted undisclosed income of Rs. 76,00,000/- in the statement recorded during survey proceedings. In the ITR, filed the assessee-appellant declared the aforesaid sum of Rs. 76,00,000/- under the head 'Business Income'. The A.O/NFAC while completing the assessment u/s 143(3)/144B of the Act, accepted the same without verifying the sources of that income, particularly the business nexus of such Unexplained (Admitted to be as additional Income) sums, respectively and thus she no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the ld. AO should have considered that income so offered u/s 69 as Unexplained Investment for Rs. 66,50,000 (45,50,000+21,00,000) and Rs. 9,50,000/- (Unexplained Money) u/s 69A of the Act. From the orders of the lower authorities and the submissions of the assessee, it is found that the pre-requisites to the exercise of jurisdiction by the CIT u/s 263, is that the order of the AO is established to be erroneous in so far as it is prejudicial to the interest of the Revenue. The ld. PCIT has to be satisfied the twin conditions, namely the order of the AO sought to be revised is erroneous; and it is prejudicial to the interests of the Revenue. If any one of them is absent i.e. if the assessment order is not erroneous but it is prejudicial to the Revenue, Sec.263 cannot be invoked. It is noted that this provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to revenue's interest, that the provision will be attracted. The Bench noticed that an incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) (SCN)/2021- 22/1035876830(1), in the following words: "2. In your ITR for the year 2019-20, you have offered such income as business income for taxation at normal rates, whereas the above-mentioned income needs to have following treatment as per Table A Below: S.NO Particulars Amt To be treated Taxability as 1. Undisclosed debtors 45,50,000/- Debtors being undisclosed income u/s 69 To be tax @ 60% u/s 115BBE 2. Excess Cash Found 9,50,000/- Unexplained Money u/s 69A To be tax @ 60% u/s 115BBE 3. Unaccounted Construction 21,00,000/- Unexplained Expenditure u/s 69C To be tax @ 60% u/s 115BBE In response thereto, assessee filed detailed submission on dated 27.09.21, running into 9 pages (PB 7-16) explaining the entire legal & factual position, touching each and every relevant aspect therein. It cannot be said nor it is so alleged that the AO did not raise this Show cause notice and the AO did not apply its mind on the issue in hand. The reply dated 27.09.2021 is reproduced hereunder in verbatim: "A. Proposed taxing at higher rate u/s 115BBE: Through the above captioned show cause notice and draft assessment order, the assessee has been asked a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Development Co Ltd vs. CIT [1962] 44 ITR 362 (SC) held that these heads are in a sense exclusive to one another and income which falls within one head cannot be brought to tax under another head. Further, the Hon'ble Supreme Court in case of Nalinikant Ambalal Mody v CIT [1966] 61 ITR 428, has held that whether an income falls under one head or another is to be decided according to the common notions of practical man because the Act does not provide any guidance in the matter. Of course, lot of judicial precedents are available to a taxpayer to arrive at a conclusion about determination of appropriate head of income. 3. The scheme of sections 68, 69, 69A, 69B and 69C provides that in cases where the nature and source of investments or acquisition of money, bullion or expenditure incurred are not explained at all, or not satisfactorily explained, then, the value of such investments and money, or value of articles not recorded in the books of accounts or the unexplained expenditure may be deemed to be the income. In view of the above, it can be said that for triggering section 115BBE what is relevant is whether income remains disclosed or undisclosed or explained or unexplained. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was only additional income stated during survey. Moreover, the assessee admittedly accounted for such income also in regularly maintained books of accounts and also in its ROI. Therefore, once a comparison is made between the income shown in the accounts and the additional income, there will be no difference. Consequently, it cannot be said that there was some excess - shortage/undisclosed/unaccounted income, etc. 6.2 Although the certified copies of the statement recorded during the survey is not supplied to us despite repeated request yet however, the assessee based on his recollection is able to submit that all the related question answers were towards the additional income if any arising from the real estate business or its ancillary activities etc. and the assessee also admitted additional income of the current year as a matter of abundant precaution as arising from the real estate business. 6.3 Even the heads under which the additional income was admitted also, supported the contention that the entire additional income pertained to /arose from business activities only. 6.4 It is submitted that the profit arising from the real estate transaction of the purchase and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure (i.e. in our understanding not connected with business so as to make convenient to invoke aforesaid sections). In case source of investment or asset or expenditure is clearly identifiable and has no independent existence of its own where a case arises to claim that it cannot be separated from business then first 'what is to be taxed is the undisclosed business receipt. Only on failure of such exercise, it would be regarded as taxable under section 69 on the premises that such excess investment or asset or expenditure is unexplained and unidentified, satisfying the mandate of the law. 7.2 The Hon'ble Rajasthan High Court in case of CIT vs Bajargan Traders [ITA No. 258/2017 dated 12/09/2017] has held that when the assessee is dealing in sale of food grains, rice and oil seeds and the excess stock which is found during survey is stock of rice then, it can be said that investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. Therefore, the investment in the excess stock is to be brought to tax under head "business income" and not under the head income from other sources. 7.3 In case of Shri Lovish Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l vs DCIT (ITA No. 3281/Ahd/2009 AY 2004-05 dated 5 August 2011) 3. Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014- 15 dated 25 May 2018) and applying the same on the facts of the case in hand, decided that the provisions of S.115BBE were not applicable and hence did not therefore apply high rate of tax. 4.2. The law is well settled that once the AO has acted as per the decision available at that point of time, his order cannot be found fault with u/s 263 (even where such decision might have been reversed by the apex court later on) this also held in the case of CIT vs G.M. Mittal Stainless (2003) 130 taxman.com 679 (SC). Pertinently, the ld. PCIT herself termed the income of Rs. 76,00,000/- of additional income at Para 9 - Pg 18 and if so, there is no justification yet to consider the same as open to the applicability to S. 69 & 69A of the Act. It is, evident that the AO has taken a plausible view on the issue in hand and thus, has committed no error at all. 5. No substitution of opinion permissible: The law is well settled that the ld. CIT acting u/s 263 cannot substitute his/ her own opinion for that of the AO. In this case the AO made pointed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the survey party is not in accordance with the relevant provisions of the Act. Therefore, there is no justification on the part of the Principal CIT in invoking the revisionary jurisdiction. In view of the discussion made above, the revision order has been passed by the Principal CIT by wrongfully exercising the jurisdiction under s. 263 and the same is, therefore, held as bad in law and is accordingly, quashed. -Gandhi Ram vs. Principal CIT (ITA No. 121/Chd/2021, dt. 4th Aug., 2022) followed." 6.2. In Smt. Rekha Shekhawat vs. PCIT (2022)219 TTJ (Jp) 761(DC 3-41) it was held that: "Revision-Erroneous and prejudicial order-Lack of proper enquiry vis-a-vis assessment of additional income as business income-During the course of survey under s. 133A assessee's husband admitted unrecorded income in the case of his wife i.e., assessee which was stated to be advances made for property in the course of her real estate business-Unrecorded trade advances and cash in hand were brought in the books of accounts and formed part of business assets and thereafter used in day-to-day business activities-Questions which were raised and the answers given during the survey show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted on account of undisclosed debtors, excess cash found and unaccounted construction expenses which, in her opinion, had a direct nexus of chargeability u/s 69 & 69A of the Act and therefore section 115BBE was applicable. However, such an observation/finding by the Ld. PCIT got no legal basis, rather simply twisting of facts or over stretching or else, a case of misinterpretation. This issue was fully explained before the AO, during the course of the assessment proceeding itself in reply dated 27.09.2021 (PB 5-72) wherein, in Para 5 onward it has been elaborately submitted as to how these three items of additional incomes were part of business incomes and the AO has rightly considered them as part of business. The Ld. PCIT unfortunately completely ignored, what to talk of dealing with/ meeting with such contentions. Interestingly, she considers additional income from excess stock as business income whereas these 3 items being the debtors, cash and expenses which are, in the very name and nature, part of the business activities, and has been hold as not a case of business income. Even she did not record any categorical findings that these items of income could be assessed under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has made enquiry and verification which should have been made. Further, in the show cause notice, the Explanation-2 of section 263 was not invoked by the PCIT and it was referred in the order u/s. 263 of the Act. Therefore, in the light of decision of the Co-ordinate Bench of Mumbai ga in the case of Narayan Tatu Rane - 70 taxmann.com 227 (Mum. Trt.) [PB 153-1561 wherein held that explanation cannot laid to have over ridden the law as interpreted/the various High Courts where the High Courts have held that before reaching the conclusion that the order of the Assessing Officer is erroneous prejudicial to the interest of Revenue. The CIT himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue. The ld. Counsel relied on the decision of M/s. Amira Pure Foods Pvt. Ltd., v. PCIT in ITA No.3205/Del/2017 and Ahmedabad Tribunal in the case of Torrent Pharmaceuticals Ltd. v. DCIT [2018] 97 taxmann.com 671 (Ahd. - Trib.). it is clear from the enquiries made by the Assessing Officer and submissions made by the assessee that the Assessing Officer has taken the plausible view which is valid in the eyes of law. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not accepted the submissions of the assessee on various issues summarily but has shown appetite for inquiry and verifications. The AO has passed after making due enquiries issues involved impliedly after due application of mind. Therefore, the Explanation 2 to section 263 of the Act do not, in our view, thwart the assessment process in the facts and the context of the case. Consequently, we find that the foundation for exercise of revisional jurisdiction is sorely missing in the present case. 18. In the light of above facts and legal position, we are of the considered view that the AO had made detailed enquiries and after applying his mind and accepted the genuineness of loans received from GTPL and PAFPL, which is also plausible view. Therefore, we find that twin conditions were not satisfied for invoking the jurisdiction under section 263 of the Act. The case laws relied by the ld. CIT(D.R.) are distinguishable on facts and in law hence, by the ld. Counsel as well and we concur the same hence not applicable to present facts of the case. Therefore, in absence of the same, the ld. CIT ought to have not exercised his jurisdiction under section 263 of the Act. Therefore, we cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiry or verification. Here in this case the ld. AO has made enquiry at four instance and recorded his satisfaction after examined the books of account, bank statement and purchase and sales records of the assessee. Here in this case even there is no specific observation of the PCIT pinpointing any specific defect in the records that has been placed on record instead he has simply stated that AO has not addressed the issue this observation is very much in general and without specifying any faults in the assessment records, details submitted and verified by the ld. AO. In fact on perusal of the assessment order we have noted the following observation of the ld. AO." It is noted that even the amendment [i.e.Expl. 2(a)] does not confer blind powers and it is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the Expl. 2(a) in the facts of the present case. Before referring to that Explanation, one has to understand what the true meaning of the Explanation in the context of application of mind by a quasi-judicial authority was. It is further noted that in the above case and ..... 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