TaxTMI 
TaxTMI 
2024 (8) TMI 1610
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....facts and circumstances of the case and in law the Principal CIT has erred in initiating proceedings u/s. 263 of the Income Tax Act, 1961 by wrongly assuming Jurisdiction u/s. 263 hence, the order passed is bad in law and void-ab-initio. 2. Without prejudice to the ground No.1, the learned Principal CIT has erred in passing the revisionary order u/s. 263 of Income Tax Act in spite of the fact that the learned assessing officer had made adequate enquiries during the course of the assessment proceedings and the assessing officer has take a permissible view. The order passed by the assessing officer is neither erroneous nor prejudicial to the interest of the revenue and hence, the order of the principal CIT to be set aside. 3....
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....itiating revision proceedings under section 263. The assessee furnished a detailed reply stating that the details pertaining to the interest expenses along with the break-up between capital and revenue were submitted before the AO and that the AO after going through the details has applied its mind accepting the income returned by the assessee. The assessee also submitted that the Auditor's comments are not qualification but the observation that the assessee has started capitalizing the interest cost based on legal opinion. The assessee therefore, submitted that the order of the AO is not erroneous or prejudicial to the interest of the revenue. 4. The PCIT however did not accept the submissions of the assessee and pass the order unde....
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....er needs to verify entire interest expenditure in view of the remarks made by the auditors in the audit report. The same has not been done by the Assessing Officer before allowing the claim of expenditure made by the assessee. Considering the facts and circumstances of the case, I hold that the assessment order passed u/s 143(3) of the Act dated 15.04.2021 by Assessing Officer is erroneous and prejudicial to the interest of Revenue, within the meaning of section 263 of the IT Act, 1961. I therefore, set aside the assessment order passed u/s 143(3) of the Act dated 15.04.2021 so passed with a direction to complete the assessment order de novo afresh after conducting necessary enquiries on the above mentioned points and after affording proper....
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....by the assessee. The ld. DR further submitted that the PCIT has invoked explanation (2) to section 263 for lack of inquiry and therefore supported the order of the PCIT setting aside the order of the AO. 7. We heard the parties and perused the material on record. Before proceeding further it is apposite now to take note of the relevant extract of section 263 and the Explanation (2) to section 263 of the Act, which read as under :- "Revision of orders prejudicial to revenue. 263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Offic....
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....ection 263 of the Act i.e., firstly, the order of the Assessing Officer is erroneous; and secondly, it is prejudicial to the interests of the revenue on account of error in the order of assessment. There is no dispute that u/s. 263 of the Act, the PCIT does have the power to set aside the assessment order and send the matter for a fresh assessment if he is satisfied that further enquiry is necessary and the assessment order is prejudicial to the interests of the Revenue. However, in doing so, the PCIT must have some material which would enable to form a prima facie opinion that the order passed by the AO is erroneous, insofar as it is prejudicial to the interests of the Revenue. The Commissioner can exercise powers under section 263 of the ....