Revision under Section 263 challenging verification of unsecured loans quashed where revisional officer merely changed opinion and failed jurisdictional requisite

Article addresses revisionary jurisdiction under Section 263 in relation to verification of unsecured loans and confirms that revision can be invoked only when the assessment order is both erroneous and prejudicial to revenue; as the AO had obtained ledger, confirmations, PANs, ITRs and bank statements and completed assessment u/s 143(3), the AOs enquiry was held adequate and PCITs invocation amounted to impermissible change of opinion, lacking identification of any specific deficiency or reference to requisite Explanation, thereby invalidating the revision direction and resulting in quashment of the revisional order.

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Issues: (i) Whether delay of 207 days in filing the appeal should be condoned and the appeal admitted; (ii) Whether the revisionary order passed under Section 263 of the Income-tax Act, 1961 setting aside the assessment dated 27-09-2021 in respect of unsecured loans is sustainable.

Issue (i): Whether the delay of 207 days in filing the appeal is to be condoned.

Analysis: The delay arose from issuance of multiple revision orders on the same date creating uncertainty as to which order was appealable, attempts to obtain clarification from the department went unanswered, and there is no suggestion of mala fide or deliberate neglect.

Conclusion: The delay of 207 days is condoned and the appeal admitted.

Issue (ii): Whether the invocation of jurisdiction under Section 263 to set aside the assessment in relation to unsecured loans is justified.

Analysis: The assessment was completed under Section 143(3) after inquiries including a specific notice under Section 142(1) and submission of lender details; no specific clause of Explanation 2 to Section 263 was identified as breached; the revisional action amounted to substituting a different view for the assessing officer without demonstrating that the AO's conclusion was unsustainable in law or that the order was erroneous and prejudicial to revenue; the revisional order did not show specific deficiencies in the AO's enquiries and relied on expectations of deeper inquiries rather than a demonstrable legal error.

Conclusion: The Section 263 order is quashed and the assessment revived; the revisionary exercise is not sustainable and the appeal on merits is allowed in favour of the assessee.

Final Conclusion: The overall effect is that the appeal is admitted after condonation of delay and the revision under Section 263 is set aside, restoring the assessment order passed under Section 143(3) for the year under consideration.

Ratio Decidendi: Section 263 can be invoked only when the assessment order is shown to be both erroneous and prejudicial to the interests of the revenue by reference to the specific grounds in Explanation 2; mere disagreement or desire for deeper inquiry does not justify revision where the assessing officer has made enquiries and taken a plausible view.

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