TaxTMI 
TaxTMI 
2022 (10) TMI 164
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....inquiry & verification in respect of allowability of interest expenses claimed against the interest income in terms of provision of section 57(iii) of the Act and thereby setting aside the order passed u/s. 143(3) of the Act dated 27.08.2019. The order u/s 263 of the Act is totally unjustified on facts as also in law therefore the same may kindly be quashed. 4. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal." 3. The brief facts of the case are that the assessee filed Return of Income for Assessment Year 2017-18 disclosing income of Rs. 39,45,100/-. The assessment was completed under Section 143(3) of the Act accepting the returned income of Rs. 39,45,100/-. The Principal CIT initiated proceedings under Section 263 and set-aside the assessment order is being erroneous and prejudicial to interest of Revenue, with the following observations: "2. On particular examination of the records, it is observed that the assessee has shown gross income of Rs. 29,04,777/- in the head of income from other sources and claimed expenditure of Rs. 35,73,682/- on borrowed money taken from bank and various p....
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....as rendered the order erroneous as well as prejudicial to the interest of the revenue. ......... It has been noticed that in the present revisionary proceedings the assessee has submitted submission of 11 pages while in the original assessment proceedings it has made the submission of half page as extracted above. Thus, various points have been raised in the submission before this office needs factual verification with the records of the assessee and it is not possible to examine the same by this office in the present revision proceedings. Various points raised before this office have never been before the AO due to the reason that neither the assessee has submitted those facts to the AO nor the AO has called for and examined in detail such aspects in the assessment proceedings. It has also been noticed that the assessee has paid the5 interest rate to Kotak Mahendra Bank Ltd @ 13% but to the various group concerns the advances / lendings have been given at the lower interest rate i.e. @ 12%. Thus, the assessee has charged the less interest rate as compared to thehigher rate of interest paid to the bank for which no justification has been provided. The above facts will indicat....
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....t all the queries forming part of the notice under Section 263 of the Act was already enquired into by the AO during the course of assessment proceedings and the assessee had filed a detailed reply explaining the same. Accordingly, it is not a case where the AO had not made enquiry as required and assessee had also furnished detailed replies to the same. Therefore, the assessment order was passed after making due enquiries and due application of mind by the Assessing Officer to the given set of facts. In response, the Ld. DR relied upon the observations made by the Principal CIT in the 263 order. 5. We have heard the rival contentions and perused the material on record. 6. Before deciding the issue, it would be useful to refer to some Supreme Court decisions on this subject which would throw useful light on the scope of enquiry under Explanation (a) to Section 263 of the Act. 7. Recently the Supreme Court of India in the case of Principal Commissioner of Income-tax, Surat-2 v. Shreeji Prints (P.) Ltd.[2021] 130 taxmann.com 294 (SC) dismissed SLP filed by the assessee against order passed by High Court holding that where assessee-company had received unsecured loans from two diff....
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....case were that pursuant to search proceedings, assessee filed its return declaring certain unaccounted income. The Assessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revisional order under Section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee'son-money transactions and Tribunal thus set aside revisional order passed by Commissioner. The High Court upheld Tribunal's order. The Supreme Court while dismissing the SLP filed by the Department held as under: "We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that th....
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....upreme Court made the following observations, while passing the order: "It is by now well settled that, the Commissioner can exercise revisional powers under Section 263 of the Act only when it is found that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. In the present case, the Tribunal noted the observations of the Assessing Officer in the order of remand to the effect that Jain munis do not advocate spread of religion through use of computers, source of electronic media is usually shunned, very small section of the community uses computer technology for religious purposes as plenty of printed literature is available in the market. All these factors led to the market value of the CDs declining dramatically. It was on account of these reasons, that the assessee had incurred substantial loss arising out of reduction in the value of stock lying at the end of the year. The Tribunal, therefore noted that the Assessing Officer had carried out detailed enquiries and taken a plausible view." 11. The Supreme Court in the case of CIT v. Greenworld Corporation [2009] 181 Taxman 111 (SC)/[2009] 314 ITR 81 (SC) held that an order of asses....