TaxTMI 
TaxTMI 
2025 (4) TMI 1220
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....in this respect. 3. Brief facts of the case are that the assessee is a Limited Liability partnership engaged in Real Estate business. Search u/s. 132 of the Act conducted on 10.01.2019 in the case of assessee. The assessee e-filed return of income on 30.09.2020 declaring income of Rs. 28,60,630/-. The case selected for scrutiny followed by validly serving of notices u/s. 143(2) and 142(1) of the Act. Various details were called for regarding the documents found during the course of search as well as statement given. Information was also called about the onmoney received on the immovable properties held as stock in trade sold during the year. Based on these observations, ld. AO made addition amounting to Rs. 3,36,95,925/- and after duly taking approval from Addl.CIT u/s. 153D of the Act assessed the income at Rs. 3,65,56,555/- Subsequently, ld. PCIT having jurisdiction u/s. 263 of the Act called for the assessment records of the assessee for A.Y. 2019-20 and after perusal of the assessment records noticed that there are huge unsecured loans standing in the books. However, ld. AO has not called for the necessary details to verify the Identity and Creditworthiness of the unsecured ....
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....s prejudicial to the interest of revenue. 05. Considering the above facts of the case it is seen that the AO has not examined and verified the above issues and therefore income has been under assessed. Therefore, assessment order u/s 143(3) of the Act dated 20.04.2021 passed by the AO for A.Y. 2019- 20 appears to be erroneous in so far as it is prejudicial to the interest of revenue. 06. In view of the facts and circumstances mentioned above, the assessment order passed u/s 143(3) of the Act in the case of M/s Meenamani Ganga Builders LLP for A.Y. 2019-20 prima facie appears to be erroneous in so far as it is prejudicial to the interest of revenue in terms of the provisions of Explanation-(2)(a) to Section 263(1) of the Income Tax Act. I, therefore, intend to set aside/ modify the assessment order within the meaning of section 263 of the I.T. Act, 1961. An opportunity of being heard is therefore, given to you. You are requested to attend in person or through your authorized representative on 20.02.2024 at 01:00 PM in my office." 4. The assessee in its reply submitted that details of unsecured loans were called for by the AO which were duly supplied. Majority of....
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....sessee that it had submitted the documents as required by the AO is found not acceptable. The AO failed to make further inquiries to obtain confirmation along with details supporting their creditworthiness, identity and genuineness. Further, in response to the notice u/s 133(6) of Act dated 07.10.2022, the assessee had only submitted confirmation from 70 parties and did not submit corroborating evidence. Also, no verification/ examination on the aforesaid issue has been done during the assessment proceedings by the AO. The AO should have verified/enquired/examined this issue." 6. Ld.PCIT accordingly held that the assessment dated 20.04.2021 is erroneous and prejudicial so far as prejudicial to the interest of Revenue as the AO has passed the assessment without making necessary examination/ verification/enquiries on the issues related to the genuineness of unsecured loans. 7. Now aggrieved assessee is in appeal before this Tribunal. 8. Ld. Counsel for the assessee at the outset submitted that the assessment order in question has been framed after taking valid approval u/s. 153D of the Act and the revisionary power invoked by the ld. PCIT deserves to be held as invalid as th....
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....ured loans shall be validly acceptable for AY 2019-20 as well. 2.3.6. During the course of hearing before Your Honours on 28/01/2025, a statement demonstrating the break-up of 203 unsecured lenders (copy attached once again at Pg. 40-46 of this Written Note); the genuineness and creditworthiness of which were alleged to be not verified by Ld. AO was provided by the Ld. AR of the Appellant. 2.3.7. The break-up of these 203 unsecured lenders is divided into following: Sr. No. Particulars Number of lenders Pg. number a) Details of loans which existed in FY 2017-18 (i.e. AY 2018-19) and witnessed no increase in the assessment year under consideration 60 40-41 b) Details of loans which existed in FY 2017-18 (i.e. AY 2018-19) and b) increase in the assessment year under consideration was only on account of interest 131 42-44 c) Details of loans which existed in FY 2017-18 (i.e. AY 2018-19) and c) Increase in the assessment year under consideration was only on account of additional loan availed 6 45 d) Details of loans which were availed in FY 2018-19 (i.e. AY 2019-20 and did not existed in the preceding years 6 ....
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....enquiry was raised to the Assessee with regards to the matter concerned, and thereafter submission was made by the Assessee which was perceived as acceptable to the Ld. AO. Moreover, when for all the preceding assessment year the issue of unsecured loan is verified and accepted, it cannot be held that 'no enquiry' was carried out into the matter by the Ld. AO for the year under consideration. 2.3.14. In view of the above facts, it can be seen that an enquiry was explicitly raised by the Ld. AO in respect of the loans during the year under consideration and the documents were verified. The view adopted by the Ld. AO during the assessment proceedings with regard to the said issue cannot be reviewed on mere change of opinion. 2.3.15. It may be noted and appreciated that an order cannot be termed as erroneous unless it is not in accordance with law. Further, it has been established by various Courts that if the Ld. AO makes assessment in accordance with law, the same cannot be declared as erroneous by the CIT/ PCIT merely because the opinion or judgement of the CIT/PCIT differs from that of the Ld. AO. 2.3.16. To substantiate the above, we place relia....
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.... termed as erroneous unless it is not in accordance with law. Further, it has been established by various Courts that if the Ld. AO makes assessment in accordance with law, the same cannot be declared as erroneous by the CIT/ PCIT merely because the opinion or judgement of the CIT/PCIT differs from that of the Ld. AO." 8.1 He further stated that the issue of unsecured loans has been examined in detail by the AO as the specific information was called in the notice u/s. 142(1) of the Act dated 08.03.2021 and in reply on 16.04.2021 the assessee furnished the details along with the ledger account, confirmations, stating that the issue of unsecured loans has been examined by the AO and therefore since there is adequate enquiry, ld. PCIT erred in invoking revisionary powers. Reliance placed on following decisions : Sr. No. Particulars 1 Principal Commissioner of Income-tax Vs. Prakhar Developers (P.) Ltd [2024] 162 taxmann.com 48 (Madhya Pradesh) 2 Shri Ramamoorthy Vasudevan Vs. The Pr. Commissioner of Income Tax (Central) (ITA Nos.967 & 968/PUN/2016) (Pune- Trib) 3 M/s. B.U. Bhandari Schemes Vs. The Pr. Commissioner of Income Tax-Central (ITA 637 to 643/PUN/20....
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....e the same order u/s 263 of the Act. 1.3 However, it should be considered that, the power of the commissioner u/s 263 of the Act is in the nature of supervisory jurisdiction. The same is there to correct an error which is prejudicial to the interest of revenue. The wording of sec 263 of the Act states that, "263, (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioned or/ Commissioner may call for and examine the records of any proceeding under this Act, and if he considers that any order passed therein by the (Assessing) Officer (or the Transfer Pricing Officer, as the case may be, Is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, (including,- i. an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or ii. an order modifying the order under section 92CA; or iii. an order cancelling the order under section 92CA; and directing....
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....er made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on or assigned to, him under the orders or directions issued by the Board or by the Principal Chief commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorized by the Board in this behalf under section 120; 1.7 The term "include" means beside the other orders, the orders mentioned in sub-clause (i) and (ii) can also be revised u/s 263 of the Act. This explanation nowhere mentions that only the orders passed on the basis or directions issued u/s 244A of the Act can be revised u/s 263 of the Act. The said explanation is only in clarificatory nature and to reiterate the existing position that the assessment orders issued on the basis of directions of JCIT can also be revised. 1.8 It is also submitted that there is no statutory provision barring the jurisdiction of Principal Commissioner to invoke sec 263 of the Act to revise the assessment order passed after obtaining the approval u/s 153D of the Act. Reliance in this regards is placed on the followin....
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....ords by the Courts while interpreting a statutory provision. Time and again, Supreme Court and other Courts have held that in a matter of interpretation of statutory provisions, Court cannot add any words or sentence'. Even if there is any ambiguity, at the best Court can read down or struck down such statutory provision. In the present case, reading of Section 263 of Act 1961, it is crystal clear that there is no bar for the Principal Commissioner to invoke Section 263 of Act 1961 to examine the Final Assessment Order passed by the AO pursuant to the DRP decision. Hon'ble Punjab and Haryana HC in case of Osho Forge Ltd v. CIT In the said case, the Hon'ble High Court dealt with the issue of remand order passed by the assessing officer in compliance to the revision order u/s 263 of the Act. The Hon'ble HC while observing the supervisory hierarchy in the department held that while passing assessment order read with revision order u/s 263 of the Act, there is no question of seeking an approval from the Joint Commissioner or the Additional Commissioner Officer lower in rank than Commissioner for complying with the directions given by the Commissioner. ....
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...., the argument of the assessee cannot be applied to those issues which were not considered by the DRP." 1.9 Further reliance is placed in the case of - "1. Hon'ble Supreme Court of India in the case of Param transport pvt. Ltd. PCIT 2019] 102 taxmann.com 328 2. Hon'ble high court of Kerela in case of KV abdul Azeezi Vs. CIT. Central Kochi, [2018] 89 taxmann.com 320 (Kerela) 3. Hon'ble the ITAT Nagpur Bench in case of Shri Gopal Ramesh Kumar sales Pvt. Ltd. Vs. ACIT [2002] 140 taxman 628 [Nagpur-Trib] 4. Hon'ble the ITAT Panji Bench in the case of Dr. William Britto Vs. CIT, Karnataka [2015] 56 Taxman 170 [Panji- Trib]" 1.10 Applying the above decisions to the present case, it can be concluded that the Pr. CIT has power to revise any order u/s 263 of the Act. There is no such restriction that if the order is passed after approval u/s 153D of Additional Commissioner, the same cannot be revised. Hence, the order passed u/s 263 of the Act in the present case revising the assessment order u/s 153A of the Act is within jurisdiction and may be not quashed. The referred judgment(supra) in the case of Kapil Mehta Vs. PCIT....
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.... (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section.] Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer ^82[or the Transfer Pricing Officer, as the case may be,] shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer ^82[or the Transfer Pricing Officer, as the case may be,] conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; ^82[(iii) an order....
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....me Court. Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 13. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Comm....
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....is hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)". [Emphasis Supplied] 15. Hon'ble Apex Court in the case of CIT vs. Max India Limited as reported in 295 ITR 0282 has held that: "2. At this stage we may clarify that under para 10 of the judgment in the case of Malabar Industrial Co. Ltd. (supra) this Court has taken the view that the phrase "prejudicial to the interest of the Revenue" under s. 263 has to be read in conjunction with the expression "erroneous" order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, when the ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the ITO is unsustainable....
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....ctory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: [Provided also] that nothing contained in the first proviso 86[or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 17. In the above provision, it is stated that for any sum found credited in the books maintained for the previous year if the assessee is unable to furnish explanation about the nature and source of the said credit to the satisfaction of the AO then section 68 can be invoked and addition for unexplained cash credit can be made in the hands of assessee. Satisfaction of the AO depends on various enquiries. The assessee in the instant case has furnished the details of unsecured loans which mainly contains balance of unsecured loans brought forward from preceding years as well as loans taken dur....
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....ed loans mentioned (supra) in the finding of ld.PCIT. We are conscious of the fact that most of the unsecured loans are the balance brought forward from preceding years and that part of new loans have been received from the old parties but then all these facts can be very well examined by the AO in the light of settled judicial precedents and so far as unsecured loans from new parties as well as existing parties are concerned, necessary enquiry has to be conducted by the AO before being satisfied that section 68 of the Act need not be invoked in the case of assessee for the cash credits received during the year and appearing in the books of account. 19. During the course of hearing before us, ld. Counsel for the assessee has referred to plethora of decisions and so also the ld. DR as well as the ld.PCIT has referred to. We have taken note of all these decisions and judgements and after duly examined the facts we have reached this conclusion that ld. PCIT has rightly invoked jurisdiction u/s. 263 of the Act and has also rightly held the order of the AO as erroneous and prejudicial to the interest of Revenue so far as the issue of unsecured loans remain to be verified during the y....