TaxTMI 
TaxTMI 
2025 (8) TMI 1595
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....the facts and under the circumstances of the case and in law, the Hon'ble PCIT has erred in passing an order under section 143(3) r.w.s. 263 of the Act without properly considering the submissions made by the assessee on being granted an opportunity of being heard and the reasons assigned for doing so are wrong and contrary to the facts and the provision of the law. 2. The brief facts of the case are that the assessee, an individual, filed her return of income on 05.01.2021, declaring a total income of Rs. 1,78,02,520/-, comprising income under the heads 'Salary', 'House Property', 'Capital Gains' and 'Income from Other Sources'. The return was selected for scrutiny and the assessment was completed under Section 143(3) read with Section 144B of the Income-tax Act, 1961 (hereinafter referred to as "the Act") on 08.09.2022, wherein the Assessing Officer accepted the returned income in toto. 2.1 Subsequently, the Principal Commissioner of Income Tax (hereinafter "Ld. PCIT") invoked revisionary jurisdiction under Section 263 of the Act after examining the assessment record. According to the Ld. PCIT, the deduction of Rs. 1,69,18,439/- claimed b....
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.... noticed that this case was selected under scrutiny to examine the large deduction claimed u/s. 57 of the Act. On perusal of the assessment order, it is noted that the AO has not made enquiries and verification which should have been made to examine the deduction claimed u/s. 57 of the Act. In view of the above, the assessment order passed by the AO is deemed to be erroneous in so far as it is prejudicial to the interests of the revenue. 7. As per the provisions of section 57 of the Act, income chargeable under the head income from other sources shall be computed after giving deductions to expenses incurred for earning the income. Thus in individual capacity there is no co- relation between earning income on loans forwarded to another company and receiving loan from the bank/financial institutions for any personal nature (nothing in the records available to specify the nature of loan) and deducting the interest as expenditure for earning the income. In this regard, it is noted that the provisions of Explanation 2 to the Section 263 of the Act are squarely applicable in this case. The said provisions are as under: Explanation 2.-For the purposes of this section, it....
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.... or some other aspect. 4. Delhi Surya Jyoti Software Pvt. Ltd. Vs PCIT (I.T.A. No.2158/DEL/2017) ITAT Hon'ble ITAT Delhi held that the Pr. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in hard copy and in form of CD was made available to him. Hence, assessment order is not only erroneous but also prejudicial to the interest of revenue 5. Surya Financial Services Ltd Vs PCIT (Ι.Τ.Α. No.2158/DEL/2017) ITAT Delhi Hon'ble ITAT Delhi held that when AO fails to carry out adequate enquiry about alleged accommodation entries in the name of the assessee, the Pr. CIT rightly invoked provisions of section 263 of the Act to reopen the assessment 6. Malabar Industrial Co. Ltd. Vs CIT [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1 (SC) Where Hon'ble Supreme Court held that where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any supporting material without making any enquiry, exercise of jurisdiction by Commissioner under section 263(1) ....
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....tailing specific grounds on which revision of assessment order is tentatively being proposed affecting initiation of exercise in absence thereof or to require commissioner to confine himself to terms of notice and foreclosing consideration of any other issue or question of fact; Commissioner is free to exercise his jurisdiction on consideration of all relevant facts, provided an opportunity of hearing is afforded to assessee to contest facts on basis of which he had exercised revisional jurisdiction 12. Shree Manjunathesware Packing Products & Camphor Works Vs CIT [1998] 96 Taxman 1 (SC)/[1998] 231 ITR 53 (SC)/[1997] 143 CTR 406 (SC) Hon'ble Supreme Court held that word 'record' used in section 263(1) would mean records as it stands at time of examination by Commissioner but not as it stands at time of order passed by Assessing Officer. Material which had already come on record though subsequently to making of assessment could be taken into consideration by Commissioner. Commissioner was justified in invoking section 263 on basis of valuation report submitted by DVO subsequent to assessment order. 13. CIT Vs Ashok Logani (11 taxmann.com 208, 2....
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.... with documentary proof. 3.a. Furnish the bifurcation of the expenditure claimed of Rs. 1,69,18,439/- with evidences 3.6. 3.b. Substantiate the allowability of expenditure with reference to the specific subsection of sec 57 with evidences. Further, please note that failure to provide information asked u/s 142(1) would attract penalty u/s 272A(1)(d) of the Income-tax Act, 1961 which is Rs. 10,000/- for each such default or failure. Providing incomplete information or not furnishing information may lead to drawing of adverse inference on the issue. Please Note: For better communication, please make sure to answer all the questions; to do page numbering to your reply letter & annexure thereof and to provide Index for the same." 3.1 Thereafter, the Ld. Counsel referred to Paper Book pages 21 to 24, which contained reply of the assessee in respect of query raised by the Assessing Officer vide notice dated 05.11.2021. In the said reply, the assessee provided the details of the gross income under the head 'income from other sources' and detail of deduction claimed deduction u/s 57 of the Act. The said details of the gross income and deductio....
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....e Limited during the F.Y. 2019- 20. 3.b. You have stated that an amount of Rs. 7,20,32,900/- has been received back from M/s Sanyam Realtors Private Limited during the F.Y. 2019-20. Furnish your bank account statement(s) highlighting the amount of Rs. 7,20,32,900/- received back from M/s Sanyam Realtors Private Limited during the F.Y. 2019-20. 3.c. Furnish Form 16A provided by M/s Sanyam Realtors Private Limited for the TDS deducted of Rs. 16,91,631/- during the F.Y. 2019-20. 3.d. Furnish the copy of loan agreement made with M/s Sanyam Realtors Private Limited. 3.e. Kindly furnish the rate of interest paid by the M/s Sanyam Realtors Private Limited to the assessee. 4. As per your reply uploaded on 22.11.2021 you have furnished details of bank account statements which is reproduced below: Details of Bank Accounts Sr. No. Name of Bank Branch Details Type of Account Account No 1 Central bank of India Juhu, Vile Parle Saving Account 1181932620 2 HDFC Bank Vile Parle West Saving Account 10271870000323 3 HDFC Bank Vile Parle West Overdraft 50200022439652 4 HDFC Bank ....
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....am Realtors Private Limited 1,69,16,310.00 Total 1,69,35,138.0 Assessee claimed the expense of Rs. 1,69,18,439/- u/s 57 of the Income tax Act, 1961 for interest income earned. The breakup of the same is reproduced from assessee reply. Particulars Amount in Rs. Interest paid to Bajaj Finance 1,61,86,047.00 Interest paid to HDFC Overdraft A/cs 7,32,392.00 Total 1,69,35,138.0 On perusal of the submissions, it was seen that assessee acquired loan of Rs. 17.25 Crores from Bajaj Housing Finance and HDFC Overdraft facility and the same was given to M/s Sanyam Realtors (P) Ltd. The details of the loan given to M/s Sanyam Realtors (P) Ltds was furnished by the assessee as under: Copy of Form 16A provided by M/s. Sayman Realtors Private Limited is attached herewith in "Exhibit-D". No specific loan agreement has been executed between the assessee and M/s. Sayman Realtors Private Limited and hence, not provided. The assessee had given the loan to M/s. Sayman Realtors Private Limited at rate of interest of 10% p.a. Assessee paid the interest of Rs. 1,61,86,047/- to the Bajaj Housing Finance through Indusind B....
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....out in the facts and circumstances of the case, invoking Explanation 2 to section 263 of the Act. A perusal of the assessment record reveals that the Assessing Officer had specifically raised queries on the allowability of the claim under Section 57(iii) of the Act. In response, the assessee submitted detailed replies explaining the nexus between the borrowed funds and the income earned. It is evident from the assessment order itself that the Assessing Officer had taken into account the relevant facts, examined the interest payments, verified the bank transactions, and was satisfied that the interest expenditure had been incurred wholly and exclusively for the purpose of earning the interest income offered under the head 'Income from Other Sources'. The principal basis for the invocation of jurisdiction under Section 263 by the Ld. PCIT is the alleged lack of inquiry. However, the factual record demonstrates otherwise. The record clearly reflects that inquiries were made, and replies with supporting documents were furnished and examined. The Assessing Officer, having considered the same, formed a view and accepted the claim of the assessee. Mere difference of opinion with t....