2023 (4) TMI 91

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....e Act is bad in law. 2. The learned Pr. CIT has erred in law as well as on facts in not considering the submissions of the appellant on the strength of which the assessment order was neither erroneous nor prejudicial to the interest of revenue and therefore, the provisions of Section 263 of the Act were not applicable to the case of the appellant. 3. The learned Pr. CIT has erred in law as well as on facts in setting aside the assessment order passed by the ld. A.O. u/s. 143(3) of the Act and directing de-novo assessment regarding verification with regard to the allowability of claim of deduction u/s. 57(iii) of the Act. The appellant craves leave to add, alter, amend, delete or withdraw one or more grounds of appeal." 3. The bri....

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....nsecured loan of Rs. 3.34 crores was required to be disallowed from the total interest expenditure of Rs. 85.40 lakhs, which comes to Rs. 43.31 lakhs. In view of the above discussion, the PCIT observed that during the course of assessment the Assessing Officer has simply accepted the submission of the assessee without going into the detailed verification and hence this amounted to a "lack of enquiry" by the Assessing Officer. Accordingly, the PCIT held that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. 4. The assessee is in appeal before us against the aforesaid order passed by the PCIT. Before us, the Counsel for the assessee drew our attention to Page 4 & 5 of the Paper Book (Copy....

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....pect was not examined / verified by the Assessing Officer during the course of assessment proceedings. Further, the Counsel for the assessee drew our attention to Page 59 of the Paper Book and submitted that by way of the reply dated 24.06.2019, the assessee had filed detailed reply in response to this query wherein the assessee had submitted that the assessee incurred interest expenditure of Rs. 85.40 lakhs on unsecured loans during the year under consideration. The said unsecured loans were utilized for the purpose of meeting with the day-to-day working capital requirements of the business and other business purposes. Therefore, the said interest expenditure is allowable under Section 36(1)(iii) of the Act. However, in the return of incom....

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.... observation made by the PCIT in the 263 order. 6. We have heard the rival contention and perused the material available on record. We are of the considered view that in the instant set of facts the order passed by the Ld. AO is not erroneous and prejudicial to the interest of Revenue. We observe that the assessment of the assessee was taken up under "limited scrutiny" under CASS for verifying the following CASS reasons "large deduction claimed under Section 57, higher turnover reported in Service Tax Return as compared to ITR". Accordingly, the very purpose of initiating assessment proceedings under "limited scrutiny assessment" was with a view to examine large deduction claimed under Section 57 of the Act. We further observe that notice ....