PCIT's Section 263 order upheld due to AO's verification failure. Appeal dismissed.

The Tribunal upheld the Principal Commissioner of Income Tax's order under Section 263, finding that the Assessing Officer's failure to conduct necessary verifications and inquiries during the assessment proceedings warranted setting aside the Assessment Order. The PCIT's decision was deemed justifiable as it was based on the grounds of the order being erroneous and prejudicial to revenue. Consequently, the appeal challenging the PCIT's revision under Section 263 was dismissed.

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Issues:
Challenge to Order under Section 263 of the Income Tax Act, 1961 - Condensation of delay in filing appeal - Assessment Order set aside for non-verification of reconciliation - Twin conditions for revision under Section 263 - Application of Explanation 2 to Section 263 - Grounds challenging revision by PCIT - Inquiry and verification during assessment proceedings - Justification of PCIT in setting aside Assessment Order.

Detailed Analysis:

Issue 1: Challenge to Order under Section 263
The appeal challenges the Order passed by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, setting aside the Assessment Order passed under Section 143(3) of the Act. The Appellant sought condonation of delay in filing the appeal due to the COVID-19 lockdown, which was accepted.

Issue 2: Assessment Order Set Aside
The PCIT set aside the Assessment Order as the Assessing Officer failed to verify the credit of tax deducted at source from Professional Receipts and Contract Receipts before accepting them. The PCIT invoked Section 263 due to non-verification and lack of proper inquiry, considering it erroneous and prejudicial to revenue.

Issue 3: Application of Explanation 2 to Section 263
The PCIT invoked Explanation 2 to Section 263, stating that the order was erroneous and prejudicial to revenue as the Assessing Officer did not carry out necessary inquiries or verifications. The PCIT referred to judicial decisions emphasizing the importance of the Assessing Officer's application of mind.

Issue 4: Grounds Challenging Revision by PCIT
The Appellant raised 9 grounds challenging the PCIT's revision under Section 263, arguing that the Assessing Officer conducted proper inquiries during the assessment proceedings. The Appellant contended that the PCIT reviewed the order under the guise of revision, warranting its setting aside.

Issue 5: Justification of PCIT's Decision
The Departmental Representative supported the PCIT's decision, arguing that the Assessment Order was erroneous and prejudicial to revenue. The PCIT's decision to set aside the issue for fresh consideration was deemed justifiable.

Conclusion
The Tribunal upheld the PCIT's order under Section 263, finding that the Assessing Officer failed to conduct necessary verifications and inquiries during the assessment proceedings. Therefore, the PCIT's exercise of revisionary powers was legally justified, leading to the dismissal of the appeal challenging the same.

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