Court Rules PCIT Lacked Authority for Section 263 Order; AO's Original Assessment Stands Unchallenged, Favoring Assessee.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The High Court held that the Principal Commissioner of Income Tax (PCIT) lacked jurisdiction to pass an order u/s 263 of the Income Tax Act in this case. The Assessing Officer (AO) did not raise any queries regarding the Tax Deducted at Source (TDS) claim without declaring corresponding interest income during the assessment proceedings, nor did the assessee provide justification for the same. The PCIT sought to make an addition u/s 68 on a transaction that was not part of the reasons recorded for reopening the assessment. The Court observed that the PCIT's powers u/s 263 are in the nature of review and can be exercised only if the AO's order is erroneous and prejudicial to the Revenue's interests. Since the AO accepted the assessee's explan.........