TaxTMI 
TaxTMI 
2024 (9) TMI 1190
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.... 147 r.w.s. 144B passed by learned Assessing Officer inspite of the fact that full inquiry was made by the learned Assessing Officer during the course of reassessment proceeding, and thereafter, the assessment order was passed. It is submitted that what the learned Assessing Officer had done in the reassessment order was taking a plausible view of the matter, and therefore, the said reassessment order was neither erroneous nor prejudicial to the interest of revenue, and hence, the order passed by the learned PCIT u/s. 263 is bad in law and liable to be quashed. It be so held now. (ii) The learned PCIT erred in law and on facts in applying Explanation 2 inserted w.e.f. 01.06.2015 in section 263 to the year under consideration i.e. Asst. Year 2013-14. 3. The learned PCIT grossly erred in observing in para 7.1 of his order that the Assessing Officer has failed to make addition in accordance with the provisions of the Act, and thus, came to the conclusion by himself that the matter in dispute requires addition to be made to the income of the Appellant without the learned PCIT himself carrying out any verification in respect of the written submissions as well as supporting documents....
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...., Principal CIT noted that the A.O. accepted the income solely due to the impending time-barring date and did not thoroughly consider the issue of accommodation entries. This omission rendered the A.O.'s order erroneous and prejudicial to the interests of the Revenue. Consequently, a notice under Section 263 of the Income-tax Act was issued to the assessee. In response, the contention of the assessee was that the A.O. had passed the assessment order after considering the objections raised by the assessee and requested that the current proceedings under Section 263 of the Act be dropped. Principal CIT noted that upon perusal of available data, it is seen that during the search at the premises of Shri Sanjay Shah and Jignesh Shah, various incriminating documents and soft data were found and seized. Among this data, it was seen that the assessee had engaged in trading of scrips managed by the Jignesh Shah Group for the purpose of accommodation entries, specifically trading in the scrip named Dhvanil Chemicals Ltd. During post-search proceedings, Shri Sanjay Shah, an entry operator associated with Jignesh Shah and Sanjay Shah Group, admitted to providing accommodation entries and o....
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....eration no exempt Long term capital gains was earned by the assessee in the first instance. Thirdly, the counsel for the assessee submitted that there is no specific finding in the order of Principal CIT as to how the assessing officer has passed an erroneous order. The only reason why the assessment order passed under section 147 of the Act was sought to be revised was for the reason that since the case was getting time-barred, therefore, the assessing officer did not get adequate opportunity of examining the issue. The counsel for the assessee submitted that it is a well settled law that the principal CIT cannot resort to proceedings under section 263 of the Act only to extend the time of completion of assessment under section 143(3) of the Act. 5. In response, Ld. DR placed reliance on the observations made by the principal CIT in the 263 order. 6. We have heard the rival contentions and perused the material on record. First , we shall deal with a legal contention put forth by the counsel for the assessee that principal CIT is precluded from resorting to proceedings under section 263 of the Act, only with a view to extend the timelines for completing the assessment under secti....
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....nce Act, 2015 in the case of Narayan Tatu Rane v. ITO [2016]70 taxmann.com 227 to hold that the said Explanation cannot be said to have overridden the law as interpreted by the Hon'ble Delhi High Court, according to which the Ld. PCIT has to conduct an enquiry and verification to establish and show that the assessment order is unsustainable in law. The Tribunal has further held that the intention of the legislature could not have been to enable the ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the Ld. PCIT referred to in section 263 of the Act has to be understood as legal and judicious opinion and not arbitrary opinion. The law interpreted by the Hon'ble courts makes it clear that Ld. PCIT before holding the order of the Ld. A.O as erroneous in so far as prejudicial to the interest of revenue should have to conduct necessary enquiries or verification in order to show that the findings given by....
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....ssessing Officer should have adopted the said formula/method. The aforesaid reasoning cannot be accepted and does not show or establish that the assessment order was erroneous. In view of the aforesaid reasoning, the question of law is answered in favour of respondent assessee and against the Revenue and the appeal is accordingly dismissed. No costs. 8. Thirdly, we observe that vide reply dated February 22, 2022 in response to notice under section 143(2) of the Act issued by the assessing officer dated 21-10- 2021, the assessee had given a specific reply to the issue under consideration, which is reproduced for ready reference: (iii) I may further state that even factual information of my having 30 any transaction with Mr. Jigar Shah and Sanjay Shah is absolutely wrong. For this purpose, I am enclosing herewith my statement of total income along with the acknowledgement of the return filed for Asst. Year 2013-14 at Annexure-A (Pages 1 to 3) and copy of my balance sheet and profit and loss account for the said year at Annexure-B (Pages 4 to 5). While going through Annexure-A, page 2, your goodself would find that there is no claim made by me in respect of any long term capital ga....