2025 (2) TMI 1412 - AT - Income Tax

Revision under section 263 on alleged accommodation loan found based on incorrect factual premise; revisional order set aside and appeal allowed.

Revision under section 263 challenged an assessment reopened as alleged accommodation loan; the revisional order rested on an incorrect factual ... Revision u/s 263 - case of the assessee was reopened u/s 147 on the ground that the assessee had obtained a “fictitious” loan by way of an accommodation entry a known professional entry provider associated with the Dishman Group - HELD THAT:- Firstly the 263 proceedings were initiated on an incorrect presumption of fact that the assessee had received accommodation transaction from Dishman group during the relevant period, whereas there is nothing on record to demonstrate that the assessee had taken any accommodation entry by way of loan during the impugned year under consideration for the aforesaid amount. Secondly, this aspect was specifically enquired by the assessing officer during the course of reassessment proceedings, wherein the assessee had submitted that the assessee had not taken any loan from the Dishman group for the aforesaid amount and in fact, the assessee had repaid a loan of ₹ 35 lakhs, along with interest during the impugned year under consideration to the Dishman group. Accordingly, no additions were made in the hands of the assessee. Thus, since the 263 order itself has been passed on an incorrect assumption of facts, the same is liable to be set aside. Also, the aforesaid aspect was specifically enquired in the course of reassessment proceedings and hence, there is no lack of enquiry on the part of assessing officer on this aspect and neither any incorrect view was taken in the course of assessment proceedings by the assessing officer, so as to make the assessment order as being erroneous insofar as prejudicial to the interest of Revenue. Appeal of the assessee is allowed. Issues: Whether the order passed under Section 263 of the Income-tax Act, 1961 treating the original assessment as erroneous and prejudicial to the interests of revenue, in respect of alleged accommodation-entry loan of Rs. 52,02,531/-, is justified.Analysis: The factual record shows no material placed on file by the Department establishing that the assessee received a loan of Rs. 52,02,531/- from the alleged entry-provider. During reassessment proceedings under Section 147, the assessing officer examined the transaction and the assessee produced bank statements, confirmations and a repayment certificate evidencing that an earlier loan of Rs. 35,00,000/- was repaid with interest in the year under consideration. The revision under Section 263 was initiated on the premise that the assessee benefited from an accommodation-entry transaction of Rs. 52,02,531/-, but that premise is not supported by evidence on record. The issue had been specifically inquired into in the reassessment proceedings and no addition was made by the assessing officer; there is therefore no demonstration of an incorrect view or lack of enquiry that would render the assessment order erroneous and prejudicial to revenue.Conclusion: The order under Section 263 is set aside. The revisional action is not justified as the assessment order is not shown to be erroneous or prejudicial to the interests of revenue; decision is in favour of the assessee.