TaxTMI 
TaxTMI 
2025 (12) TMI 1916
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.... Rajkot-1 has erred in passing order u/s 263 of the Act when order passed by Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. 3. It is prayed that order passed by Learned Principal Commissioner may please be quashed. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 2. The facts of the case which can be stated quite shortly are as follows: The assessee had filed its return of income for assessment year (A.Y.) 2021-22, on 07.01.2022, declaring total income of Rs. 44,17,760/-. The assessee`s case was selected for complete scrutiny through "CASS" for the reason "Unsecured loans from persons who have not filed their return of income". The Assessment was finalized u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961 on 29.11.2022 accepting returned income of Rs. 44,17,760/-. 3. Later on, Learned Principal Commissioner of Income-tax (in short "Ld PCIT") has exercised his jurisdiction under section 263 of the Income-tax Act, 1961. On perusal of Form No. 3CD of Audit Report (at Sr. No. 31(a)), it was noticed by learned PCIT that during the previous year 2020-21, re....
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....ll as the lenders and after being satisfied with the identity, creditworthiness and genuineness of the transactions, Assessing Officer passed the order u/s 143(3) of the Act on 29.11.2022. Therefore, such assessment order which has been framed by the assessing officer after conducting sufficient enquiry should not be erroneous and prejudicial to the interest of the revenue. 5. It was also submitted before ld.PCIT that these loans were repaid in the subsequent years, therefore genuineness of these loans should not be doubted. Besides, during the assessment proceedings, the assessing officer issued notice to the persons who have advanced loan to the assessee, and in response to these notices, these persons filed the relevant documents and evidences before the assessing officer, therefore, third-party confirmation was also obtained by the assessing officer, therefore assessment order passed by the assessing officer should not be erroneous and prejudicial to the interest of the revenue. 6. However, the Ld. PCIT rejected the above submissions of the assessee and held that the argument that the assessing officer collected details/information during assessment proceedings does not h....
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....ring the year, kindly provide the following details: (i) Name, address and PAN of all the lenders in order to prove identity of the person/entity. (ii) Please provide their Opening balance, Addition/repayment during the year, closing balance. The said details are attached as per Annexure-2. (iii) Please furnish the purpose for taking unsecured loans and how the same was utilised. In this regard it is to mention that the assessee- firm was formed on 10.05.2018 and in order to meet the funding requirements the assessee-firm has borrowed capital and the said fund was utilized for business purpose only. (iv) Please furnish party wise Rate of interest for the unsecured loan, total interest paid during the year under consideration and TDS deducted on interest. The said details are attached herewith: (v) Please submit copies of Ledger Account of such persons/entities. In this regard Ledger Copies are attached herewith as per Annexure-3." 11. The Ld. Counsel for the assessee also took us through Paper Book Page No.13, and stated that assessee took the loan but after taking the loan, assessee has repaid the loan to the concerned creditor. The ....
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....tements, details of loan providers, copy of balance sheet and income tax return of loan providers. Even, loan providers also furnished confirmation and necessary necessary documents before the assessing officer in response to notice of the assessing officer. Thus, all the documents, details and the explanations required by the Assessing Officer were submitted by the assessee. Just because the Assessing Officer does not bring these documents and details in his assessment order does not mean that assessing officer has not conducted proper enquiry during the assessment stage. In fact, assessing officer has applied his mind. The Learned Counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been wri....
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....dequate enquiry'. It is for the AO to decide the extent of enquiry to be made as it is his satisfaction as what is required under law. Reliance is placed on the decision of CIT v. Sunbeam Auto Ltd. [(2010) 332 ITR 167], wherein Hon'ble Delhi High Court has held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by AO. Further, it was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 of the Act. For bet....
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....) :- "8......However, what is opinion formed as a result of these enquiries is something which is in exclusive domain of the Assessing Officer, and even if Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. The conclusions arrived at as a result of enquiries cannot be tinkered with in the revision proceedings. The conclusions being drawn up as a result of enquiry is a highly subjective exercise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis-a-vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue." 21. So, the Ld. PCIT's finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Based on these facts and circumstances, we quash the order dated 21.03.2025 passed by the ld PCIT under section 263 of the Act. 22. In the result, appeal filed by the assessee is allowed. Order is pronounced in the open court on 31/12/2025 ============= ....