TaxTMI 
TaxTMI 
2026 (10) TMI 545
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....d by the Revenue under section 260A of the Income Tax Act, 1961 (For short "the Act") against the judgment and order dated 25.07.2024 passed by the Income Tax Appellate Tribunal, "C" Bench, Ahmedabad (For short "the Tribunal") in ITA No. 743/Ahd/2024 for Assessment Year 2014-2015 proposing the following questions of law: "a) Whether in the facts and circumstances of the case and in law, the learned ITAT has erred inholding that the order u/s. 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax (PCIT) is without jurisdiction, given that the order dated 27.03.2022 passed by the Assessing Officer was clearly erroneous and prejudicial to the interest of the revenue?" 3. The assessee company filed its r....
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.... the Faceless Assessing Officer has not made any addition. Thus, there is under-assessment of income to the extent of Rs. 1,36,02,120/- and consequential short levy of taxes. PCIT therefore, found the order of Assessing Officer as erroneous and prejudicial to the interest of the Revenue. 9. Accordingly, a notice under section 263 of the Act dated 15.03.2024 was issued to the assessee requiring the assessee to show cause as to why the order under section 147 read with section 144B of the Act dated 27.03.2022 should not be revised. 10. The assessee replied to the notice of the PCIT contending that the order of the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue and therefore, the exercise of jurisdi....
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....g reassessment proceedings, the AO issued multiple notices under Section 142(1) of the Act to the assessee, who duly responded to each. Additionally, the National Faceless Assessment Centre (NFAC) requested the jurisdictional the AO to provide all relevant documents seized during the search in the case of Sanjay Govindram Agrawal, which implicated the assessee. The NFAC completed the reassessment under Section 147 read with Section 144B of the Act. Despite having information regarding accommodation entries amounting to Rs. 1,36,02,120/- from Sanjay Govindram Agrawal, no additions were made by the AO. 6.2. We have noted that the assessee provided detailed explanations and evidence to show that the transactions in question were condu....
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....3. CIT v. Jawahar Bhattacharjee (341 ITR 434) (Gauhati) (HC): Where the Hon'ble High Court decided that the term "erroneous" involves nonapplication of mind, incorrect assumption of facts, or incorrect application of law and the term "prejudicial" refers to prejudice to the income-tax administration as a whole. 6.5. As per the provisions of section 263 of the Act, after getting the explanation from the assessee, the Ld. PCIT was supposed to examine the contention of the assessee. Before passing an order of modifying, enhancing or cancelling the assessment, he was supposed either to himself make or cause to make such an enquiry as he deems necessary. We note that the Ld. PCIT did not raise any query as to what enquiries were mad....
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....inion, the AO conducted sufficient inquiries during the reassessment proceedings, as evidenced by the notices issued and responses received. There is sufficient ground to conclude that the AO formed an opinion based on the documents and explanations provided by the assessee, which included detailed evidence of transactions involving M/s. Dee Are Products. 6.8. The conditions necessary for invoking Section 263 of the Act, i.e., the order being erroneous and prejudicial to the interest of the revenue, are not satisfied in this case. The assessee provided substantial evidence to the AO and Ld. PCIT to demonstrate that the transactions in question were not conducted by the assessee but by M/s. Dee Are Products. The Ld. PCIT did not ref....
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....g the further record or information available with the PCIT, the order under section 263 of the Act was passed. In our opinion, Tribunal was therefore, justified in setting aside the order passed under section 263 of the Act relying upon the settled legal position observed in para no. 6.4 of the order passed by the Tribunal as the Assessing Officer has conducted sufficient inquiry during reassessment proceedings and the assessee provided substantial evidence both before the Assessing Officer and PCIT to demonstrate that transactions in question were not conducted by the assessee but by M/s. Dee Are Products which was belonging to one Divyaraj Madanlal Gupta and not by the assessee. The assessee has also produced relevant documents including....