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2014 (11) TMI 228 - HC - Income TaxPower to invoke section 263 - Inadequacy of enquiry can be a ground for invoking power u/s 263 or not – Held that:- The Commissioner observed that the loans were unquestioningly accepted by the AO despite the fact that the identity and capacity of the persons to whom the loans had been given had not been established - the identity and capacity of as many as 12 lenders were not established and the Assessing Officer was directed to modify his order by adding the amount obtained from the loans - It could not be deduced merely on the basis of the order sheets of the AO that there was a due and proper application of mind to the fundamental issue which has been raised while exercising jurisdiction u/s 263 - the requirement of Section 263 has been established and the Commissioner was justified in coming to the conclusion that the order passed by the AO without application of mind was both erroneous and prejudicial to the interests of the revenue - The Tribunal has manifestly acted in excess of its jurisdiction in interfering with the order of the Commissioner - The Commissioner has, while exercising jurisdiction u/s 263, directed the AO to modify his order by adding a sum obtained through the loans – thus, the matter is required to be remitted back to the AO to enable him to scrutinize the nature and source of the loans so as to furnish the assessee a proper opportunity in consonance with the principles of natural justice for establishing the identity of the lenders and their capacity – Decided in favour of Revenue.
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