TaxTMI 
TaxTMI 
TaxTMI 
2025 (4) TMI 1753
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....g an order u/s 263 dated 18 03 2024 which is illegal wild unsustainable in law 2. The Ld. PCTT erred in law and tact in invoking the revisionary jurisdiction u/s 263 of the Income Tax Act, 1961. The learned PCIT's order is not justified on the following grounds:- (a) That the ld. PCIT failed to satisfy the mandatory twin conditions u//s 263 of the Act i.e. that the order passed by the AO must be both erroneous and prejudicial to the interest of the Revenue. The assessment order was neither erroneous in law nor caused any prejudice to the interest of revenue. (b) That the invocation of Section 263 is based on a mere change of opinion, which is impermissible under the law. The AO had conducted enquiries, examined the facts and formed a plausible view and the ld. PCIT's disagreement with this view does not justify revision. (c) That the ld PCIT relied on materials that were not part of the ''record'' as defined u/s 263. The term ''record'' is restricted to documents and evidence available during the assessment proceedings and reliance on extraneous materials invalidates the invocation of jurisdiction. (d) That the ld PCIT initiated proc....
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....s the ample evidence provided by the assessee. f. That the assessee complied with all notices issued u/s 142(1) provided complete information and no adverse remarks were made by the AO indicating proper application of judicial mind. g. That the burden of proof to establish the non-genuineness of the loans lies with the Revenue authorities. The PCIT has failed to discharge his burden by presenting any credible evidence to support their claim. 5. That the revision u/s 263 is prejudicial to the interest of the assessee as it unnecessarily subjects them to further scrutiny without any substantive basis. The prolonged assessment process adversely impacts the business operation of assessee, which the appellate authority are urged to consider.'' 2.1 At the outset of hearing of the appeal, the Bench noticed that there is delay of 207 days in filing the appeal by the assessee for which the assessee has filed an application dated 05-03-2025 for condonation of delay giving therein following reasons: ''1. That the present appeal has been filed against the order under Section 263 of the Income Tax Act, 1961, passed by the Learned Principal Commissioner of ....
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....al grounds. 8. It is also a settled principle that the term "sufficient cause" should be construed liberally to ensure that substantive justice prevails over procedural technicalities. In this regard, reliance can be placed on the following judgments: * Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and ORs. (167 ITR 471):-When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay * Supreme Court in the case of Esha Bhattacharjee v. Raghunathpur Nafar Academy (2013) 12 SCC 649:-The Court stressed that there should be a liberal (so as to encapsulate the conception of reasonableness), pragmatic, justice-oriented approach. The expression 'sufficient cause' as it appears in the Act, must be interpreted and understood in the proper spirit as these terms are elastic enough to be applied liberally in the interest of justice. * Basawaraj v. Land Acquisition Officer, (2013) 14 SCC 81:-"9. Sufficient cause is the cause for which the defend....
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....s an admitted position that the words 'sufficient cause' appearing in sub-section (5) of section 253 of the Act should receive a liberal construction so as to advance substantial justice. It must be remembered that in every case of delay, there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him. If explanation does not smack of mala fide or does not put forth a dilatory strategy, the Court must show utmost consideration to such litigant. Further, the length of delay is immaterial, it is the acceptability of the explanation and that is the only criteria for condoning the delay." 9. Your Honor, it is imperative to emphasize that neither the assessee nor its consultant had any deliberate or negligent intent in the delayed filing of this appeal. The assessee derives no benefit whatsoever from such a delay. The confusion was entirely due to the issuance of multiple notices under Section 263 of the Income Tax Act, 1961, which created significant uncertainty regarding which order to appeal against. 10. The issuance of four different orders on the same date with different reference numbers, led to ....
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....enefit - whenever substantial justice and technical considerations are opposed to each other, case of substantial justice has to be preferred and justice oriented approach has to be taken while deciding the matter on condonation of delay - the reasons explained by the assessee are not malafide. * Vijay Vishan Meghani vs. DCIT (Bombay High Court) (2017) 398 ITR 250 None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority found that litigant deliberately and intentionally delayed filing of appeal. * Nimesh Kanubhai Topiwala Vs DCIT (ITAT Surat) ITA No. 242/Srt/2023 Held that the delay in filing appeal before ldCIT(A)/ NFAC is not deliberate or intentional or gross negligence on part of assessee, therefore, considering the principle that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred, therefore, delay in filing appeal before the ld. CIT(A) is condoned. And the order of ld CIT(A) is set aside. * IN THE ITAT BANGALORE BENCH 'C' Sri Suhas Suresh Shet v. Income-tax Officer, International....
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....ss negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay. * SoneraoSadashivrao Patil &Anr. v. Godawaribai [MANU/MH/0022/2000: 1999 (2) Manu 273]: "The primary function of a court to is to adjudicate the disputes between the contesting parties and to advance substantial justice. The rules of limitation are not made to harm the valuable rights of the parties. The discretion is given to the Court to condone delay and admit the appeal in order that judicial power and discretion in that behalf should be exercised to advance substantial justice. The requirement of explanation of every day's delay does not mean that a pedantic approach should be taken. The courts are required to take pragmatic approach while interpreting the concept of sufficient cause. Too much rigour of the law is not justice but the denial of it. It is to be borne in mind the maxim 'Summum Jus, Summa Injuria'. Extreme law is extreme injury. In the matter of condonation of delay, the duration of delay is insignificant. It is respectfully submitted that various courts, including the Hon'ble Supreme Court and High Courts, h....
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....sessee during the year. Thus, the proceedings u/s 263 of the Act were initiated by way of notice issued dated 6-09-2022 and subsequent notices were issued on 26-09-2022 and 2-11-2022. Against on change of incumbency, another notice of hearing was given to the assessee through ITBA Portal on 4-03-2024 fixing the case of hearing on 11-03-2024. In this case, the ld. AR of the assessee Shri Himanshu Goyal and Ms Shweta Daga, AR appeared before the ld. PCIT and submitted more or less the same facts and documentary evidence. The ld. PCIT has mentioned the gist of the submission of the assessee in her order as under:- That a survey under Section 133A of the Income Tax Act was conducted at the premises of Hariram Hospital (Assessee), on 28.08.2018 The assessee filed its return of income declaring an income of Rs. 9,63,910/ under Section 139(1) of the Act on 30.10.2019. Thereafter the said return was selected for compulsory scrutiny. That the assessing officer had made detailed query in regard of the unsecured loans in the notice issued u/s 142(1) of the Income Tax Act 1961 and in prompt compliance with the said notice, the assessee, in its detailed response dated 15.02.20....
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....a Singh Nephew of Dr. Rajendra Singh and proprietor of Golden Medical Store 2. Dr. Rajendra Singh HUF HUF of Dr. Rajendra Singh 3. Fateh Singh Father of Dr.Rajendra Singh 4. Yashasvi Pharmacy Proprietor of Dr. Prashant, S/o Dr. Rajendera Singh 5. Neeraj Bhamla Nephew of Dr. Rajendra Singh 6. Dr.DilmohanSingh Brother-in-law of Dr.Rajendra Singh 7. Sarita Singh Sister-in-lawofDr.Rajendra Singh and wife of Dr. Dilmohan Singh 8. Murti Devi Mother-in-lawof Dr. Rajendra Singh 9. Sarita Devi Mother of Dr. Rajendra Singh That the unsecured loans under scrutiny are unequivocally interest-free and predominantly sourced from family members and close relatives. Hence the assessing officer had never doubted the veracity of the unsecured loans as the AO had verified all the documents The issuance of the notice u/s 263 is against the principles of law set down with respect to issuance of notice under section 263 of the Act. Your attention is drawn to section 263 of the Act which reads as under The A.R of the assessee has in the submission tried to establish that the Assessment order passed by the....
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....s just asked the question in regard to Shri Devendra Singh. Further on the examination of the record, it is seen that the assessee had not submitted confirmation of loan Bank account statement of Devender Singh during the assessment proceedings. The ld. PCIT also mentioned in her order that as per details available on record it is noticed that a specific questionnaire covering the issues from the survey proceedings had been issued by the ld. AO but necessary documents required to reach at conclusion in regard to the unsecured loans had not been sought and not placed on record. In respect of unsecured loans genuineness of the transactions, identity and creditworthiness of the lenders had not been examined. Even in the submission made by the A.R during the 263 proceedings,it was found as under:- S. N. Name Remarks 1. Rajendra Singh HUF The Bank account statement reveals that there is cash deposit just before forwarding of loan to assessee 2. Fateh Singh He is not filing of return of income and the bank account is given on the date when transfer of fund to assessee is reflected. Statement of prior period not submitted. 3. Murti Devi Only confirmatio....
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....acts and circumstances of the case and for the reasons discussed above, the assessment order dated 27/9/2021 for A.Y 2019-20 passed by the AO is held to be erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Act. The said order has been passed by the AO in a routine and casual manner without applying proper mind on the issue involved. The AO has not verified the details which were required to be verified under the scope of scrutiny. The order of the AO is, therefore, liable to revision under the explanation (2) clause (a) of section 263 of the Act. The assessment order is set aside and restored to the file of Assessing officer to examine unsecured loans taken by the assessee afresh in the light of the observation made in this order after allowing reasonable opportunity to the assessee 3.3 During the course of hearing, the ld. AR submitted that he had submitted all the details before the ld. PCIT and the case laws as mentioned in his order. He further submitted that the assessment order is neither erroneous nor prejudicial to the interest of the Revenue and it was passed by the AO after due enquiry and application of mind ....
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....s to the Commissioner to revise any order merely on a subjective belief. This principle has been clearly upheld in Ajay Agarwal v. ACIT [2025] 171 taxmann.com 91 (Jaipur- Trib.), where the Hon'ble ITAT held that: "In view of aforesaid factual and legal discussions, in our considered view, the twin condition as required to revise the assessment order is not met out in the present case. Even the amendment made to explanation 2 of section 263 does not confer blind powers and it is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the explanation 2 in the facts of the present case. Before referring to that Explanation, one has to understand what the true meaning of the Explanation in the context of application of mind by a quasi-judicial authority was. Even that newly inserted Explanation 2 to Section 263 does not authorize or give unfettered powers to Commissioner to revise each and every order, if in his (subjective) opinion, same has been passed without making enquiries or verification which should have been made. While passing that order ld. PCIT failed to demon....
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.... especially surprising considering that: * The assessment was framed under Section 143(3) after due scrutiny. * The AO had issued a specific notice under Section 142(1) dated 29.01.2021 seeking details of the loan from Shri Devendra Singh. * The assessee duly submitted the required confirmations, PAN, address, and other supporting documents vide reply dated 15.02.2021. * No further inquiry or dissatisfaction was expressed by the AO on this issue. Additionally, it is significant that the AO made an addition under Section 69B on an entirely separate issue, which clearly indicates that he was actively applying his mind to the information on record and was not acting mechanically. In such a scenario, it is respectfully submitted that merely because the Ld. PCIT disagrees with the conclusion of the AO, it does not empower him to invoke revisionary jurisdiction. The law is abundantly clear that the PCIT cannot substitute his own opinion merely because he considers a different view to be more appropriate. This legal position has been laid down in a catena of decisions. In Smt. Lata Phulwani v. PCIT-2, Jaipur [2020 (10) TMI 407....
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.... v. Commissioner of Income Tax, [2000] 243 ITR 83 / 109 Taxman 66 (SC), had observed that the phrase 'prejudicial to the interest of Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue." That the ld. PCIT, while invoking section 263 has merely stated that the AO failed to properly examine the issue of unsecured loans but has not demonstrated in what manner th....
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....w with which the ld. PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. We draw strength from the order of the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC). We also refer to the case of CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that ; "The phrase "prejudicial to the interests of the Revenue" in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law. This view has been reite....
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....one by the AO - HELD THAT:- It is not the case of the Ld. PCIT, that the Assessing Officer had not made any enquiry while accepting the unsecured loans as genuine PCIT is, thereby, trying to substitute the plausible view taken by the AO with his own view. This course of action is not permissible under the revisionary provisions under section 263. The grievance of the Assessee is found to be justified and it is accepted as such. Looked at from any angel, the order under appeal is unsustainable in the eye of the law, and we hold so. The impugned order is, hence, reversed, whereas the assessment order is revived. Assessee appeal is allowed." The same approach was followed by the Hon'ble ITAT Jaipur in M/s Hari Om Stones v. Pr. CIT, Alwar [2018 (4) TMI 393], where it was held that when the AO has examined the issue and passed a reasoned assessment order under Section 143(3), the Pr. CIT cannot invoke revision merely on the ground that a more detailed inquiry should have been done. The AO's judgment, unless shown to be illegal or perverse, must be respected. "Thus, these facts suggest that the Assessing Officer has taken into consideration the material before him and a....
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....a Singh, a partner at Hariram Hospital. S.No. Party Involved Relation with the entity 1. Devendra Singh Nephew of Dr. Rajendra Singh and proprietor of Golden Medical Store 2. Dr Rajendra Singh HUF HUF of Dr. Rajendra Singh 3. Fateh Singh Father of Dr. Rajendra Singh 4. Yashasvi Pharmacy Proprietorship of Dr. Prashaant, son of Dr. Rajendra Singh 5. Neeraj Bhamla Nephew of Dr. Rajendra Singh 6. Dr. Dilmohan Singh Brother-in-law of Dr. Rajendra Singh 7. Sarita Singh Sister-in-law of Dr. Rajendra Singh and wife of Dr. Dilmohan Singh 8. Murti Devi Mother-in-law of Dr. Rajendra Singh 9. Santra Devi Mother of Dr. Rajendra Singh The assessee submitted documentary evidence for each lender, including PAN details, bank statements reflecting the transactions, confirmation letters and income tax returns where applicable. These documents collectively established the identity, genuineness and creditworthiness of each lender. It is a settled legal principle that the assessee is not required to establish the source of the source of the funds. In the present case, the learned PCIT incorrectly ....
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....eturn of income on 30.10.2019, declaring a total income of Rs. 9,63,910/-. It is pertinent to note that a survey under Section 133A of the Act was conducted at the business premises of the assessee on 28.08.2018. Consequently, being a survey case the assessee's return was compulsorily selected for scrutiny. It is noted that during the course of assessment proceedings, the AO issued a detailed notice under Section 142(1) dated 29.01.2021, specifically calling for details regarding the unsecured loan obtained from Shri Devendra Singh. The AO required the assessee to furnish the ledger account, confirmation, PAN and postal address of the said lender. The assessee, in complete and timely compliance, furnished all such details in its reply dated 15.02.2021. Notably, after receiving the said response no further query or clarification was sought by the AO regarding any other loan party. It is noted that the assessment was thereafter completed under Section 143(3) of the Act on 27.09.2021. The AO made a addition of Rs. 31,16,355/- under Section 69B of the Act on account of unexplained investment. However, no adverse inference whatsoever was drawn in relation to the unsecured loans received....
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....ary jurisdiction. The law is abundantly clear that ld. PCIT cannot substitute his own opinion merely because he considers a different view to be more appropriate. The bench noted that in the order ld. PCIT write that "It is also noted that a questionnaire had been issued with regards to issues arising out of survey proceeding, but meaningful questions leading to a satisfactory inference were not asked." Thus, we note that ld. PCIT wants the ld. AO should have made the enquiry the way she wants and that is not permitted under the law. This legal position has been laid down in catena of decisions. (i) Smt. Leela Phulwati vs PCIT-2, Jaipur (ITA No.246/JP/2020 dated 6-10- 2020. (ii) Shri Alok Vijiawat vs PCIT,Udaipur [2025 (3) TMI 252 - ITAT, Jaipur] (iii) Ganpati International vs PCIT-III, Ludhiana [2023 (3) TMI 1231 - ITAT Indore wherein it was held the PCIT's desire for "deep-rooted" inquiry cannot be a valid ground if the AO has already made relevant inquiries and formed a plausible opinion based on the material before him. The Tribunal observed that the PCIT was merely substituting his view for that of the AO, which is outside the scope of Section 263. ....