2012 (9) TMI 1179 - AT - Income Tax

Summary

Issues involved: The issues involved in this case are u/s 263 jurisdiction invoked by CIT(A)-II, Ludhiana, and the claim of setting off net business loss against other incomes u/s 43(5) of the Income Tax Act, 1961.

u/s 263 Jurisdiction Invoked:
The appeal was filed against the order of CIT(A)-II, Ludhiana, related to the assessment year 2008-09. The CIT(A) set aside the assessment order u/s 143(3) and directed the Assessing Officer to reassess the income based on the directions given. The assessee had taken unsecured loans from various parties, and the Assessing Officer had made inquiries and recorded statements of the creditors. The CIT(A) found the assessment order erroneous as no documentary evidence was obtained regarding the sources of the loans. The Commissioner held that the assessment order was prejudicial to the interest of Revenue and directed a reassessment. The assessee argued that the inquiries made by the Assessing Officer were reasonable, even if not to the satisfaction of the Commissioner. The Tribunal noted that the inquiries, though inadequate, did not render the assessment order erroneous. Citing relevant case law, the Tribunal concluded that the assessment order was not erroneous and allowed the appeal.

Claim of Setting Off Business Loss:
The assessee claimed to set off a net business loss suffered in trading of shares/derivatives against other incomes u/s 43(5) of the Income Tax Act, 1961. The CIT(A) did not allow this claim, leading to one of the grounds of appeal. The Tribunal, after considering submissions from both parties, found that the Assessing Officer had made inquiries and recorded statements of the creditors. The Tribunal held that the assessment order was not erroneous and allowed the appeal, thereby quashing the order u/s 263 of the Act.