TaxTMI 
TaxTMI 
2026 (10) TMI 332
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....g total income of Rs. 15,920, comprising business loss of Rs. 1,58,366 and interest income of Rs. 1,74,286. The case was selected for scrutiny and, during the course of assessment proceedings, statutory notices were issued and various details were called for. The assessment was ultimately completed on 26.03.2024 at a total income of Rs. 83,15,920 after making an addition of Rs. 83 lakh under section 69A in respect of cash allegedly paid over and above the registered consideration for purchase of transferable development rights. Subsequently, the learned PCIT called for and examined the assessment records and issued a show-cause notice dated 06.03.2026 proposing revision of the assessment, principally on the ground that the Assessing Officer had not carried out adequate enquiry into the unsecured loans, trade payables and the source of expenditure accumulated as work-in-progress. The assessee furnished a detailed reply dated 23.03.2026, supported by various documents. The learned PCIT, however, held that the assessment order had been passed without conducting enquiries and verifications which ought to have been made and, invoking Explanation 2(a) to section 263, set aside the assess....
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....l Infrastructure Pvt. Ltd. and Agarwal Infraprojects Pvt. Ltd., and all the said parties independently responded to the notices and furnished their loan details, ledger accounts, confirmations and acknowledgments of returns. The record, therefore, demonstrated that the Assessing Officer had carried out enquiry and had also obtained independent third-party confirmation. 5. The learned counsel further submitted that the lenders were not strangers but comprised the directors and shareholders of the assessee-company and its sister concerns. Their identities were never in dispute and the transactions were routed through banking channels. In the revisional proceedings, the assessee also furnished bank statements, balance sheets, capital accounts and financial statements of the lenders. Even though some of these documents were furnished before the learned PCIT for the first time, they formed part of the record available to him and were required to be examined before recording an adverse conclusion. However, the learned PCIT neither examined the source of the particular remittances nor identified any cash deposit, unexplained credit, circular movement of funds or other discrepancy in th....
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....e lender-wise balances and the figure appearing in the balance sheet. He also referred to the finding in the assessment order concerning cash payment of Rs. 83 lakh through a person belonging to the promoter group and contended that this circumstance warranted a more searching enquiry into the loans received from the same group. 8. The learned CIT DR further submitted that substantial expenditure had been accumulated as work-in-progress and was funded, inter alia, by the unsecured loans, while customer advances had also been received without recognition of corresponding revenue. According to him, the Assessing Officer ought to have examined whether the method followed by the assessee correctly reflected its income. He relied upon Explanation 2(a) to section 263 and the decisions in Rampyari Devi Saraogi v. CIT (1968) 67 ITR 84 (SC), Smt. Tara Devi Aggarwal v. CIT (1973) 88 ITR 323 (SC), Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC), CIT v. Amitabh Bachchan (2016) 384 ITR 200 (SC), PCIT v. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 (SC) and the other authorities referred to in the written submissions. Alternatively, it was submitted that even if revision was not su....
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....l and financial position were available for examining genuineness and creditworthiness Shri Vijay Mirchandani, Director - Opening balance Rs. 6.72 crore; fresh loan Rs. 4.26 crore; closing balance Rs. 10.98 crore Loan particulars, ledger confirmation and acknowledgment of return of income No separate response under section 133(6) is shown in the record Bank statement reflecting payments to the assessee; balance sheet, capital account and financial statements Identity and transaction were supported before the Assessing Officer; banking trail and financial capacity were placed before the learned PCIT Agarwal Infraprojects Pvt. Ltd. - Opening balance Rs. 7 crore; fresh loan approximately Rs. 9.50 crore; closing balance approximately Rs. 16.50 crore Loan particulars, ledger account, confirmation and acknowledgment of return of income Notice dated 27.12.2023; independent response containing submission, ledger account and return acknowledgment Bank statement reflecting payments to the assessee and audited financial statements Corporate identity and genuineness were independently confirmed; the learned PCIT possessed the financial and banking material necessa....
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.... accumulated as work-in-progress; supporting invoices for RMC purchases from UltraTech Cement Ltd. and Godrej & Boyce Manufacturing Co. Ltd.; and extensive ledger accounts of the principal suppliers Explanation regarding the project-completion method and treatment of project expenditure and customer advances The material contradicted the allegation of complete non-enquiry into the source and composition of work-in-progress Statutory liabilities, retention deposits and other payables Separate details of statutory liabilities, retention deposits and other payables The material was already part of the assessment record available to the learned PCIT The impugned order did not identify any particular inadmissible or unexplained liability Addition to fixed assets of Rs. 6,000 Source of the minor addition was explained and supporting particulars were furnished Details and supporting invoice were available in the record The matter was not part of the specific show-cause notice; in any event, no unexplained source, incorrect capitalisation or inadmissible depreciation was demonstrated 13. Thus, on each of the issues ultimately referred back to th....
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....and the quantum advanced cannot, without examining the composition and source of funds, establish that the transaction was not genuine. The difference of Rs. 11 lakh could have been reconciled or investigated by the learned PCIT, but no conclusion was recorded thereon. The separate addition of Rs. 83 lakh under section 69A also cannot, without a factual linkage between that cash transaction and the banking trail of the loans, displace the documentary evidence furnished by the lenders. The written submissions of the Department may explain or support the impugned order, but they cannot supply an altogether fresh factual foundation which the revisional authority itself neither examined nor recorded. 16. The decisions relied upon by the learned CIT DR do not alter this conclusion. In Rampyari Devi Saraogi, Tara Devi Aggarwal and Amitabh Bachchan, revisional jurisdiction was sustained in circumstances where the material demanded an enquiry which had not been undertaken. Similarly, NRA Iron & Steel Pvt. Ltd. reiterates the assessee's obligation to establish the identity and creditworthiness of the creditor and the genuineness of the transaction. These principles are unexceptionabl....
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.... the ledger, any fictitious purchase or any liability which had ceased to exist. The observation that further cross-verification ought to have been undertaken is therefore unaccompanied by any objective material suggesting an error in the assessment. The power under section 263 cannot be employed merely to direct another round of verification in the hope that it may possibly yield a different result. 19. The direction concerning the source of addition to fixed assets is even less sustainable. This was not a specific subject matter of the show-cause notice on which the assessee was called upon to meet a proposed revision. Apart from this jurisdictional infirmity, the addition to fixed assets was only Rs. 6,000 and its source had already been explained from the available records. The impugned order neither identifies any unexplained source nor points out incorrect capitalisation, inadmissible depreciation or any other prejudice caused to the Revenue. A concluded assessment cannot be set aside on an unspecified issue of such trivial magnitude, particularly when no error prejudicial to the interests of the Revenue has been demonstrated. 20. When the impugned order is considered c....