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2022 (12) TMI 432 - AT - Income TaxRevision u/s 263 - PCIT held assessment framed u/s 143(3) as erroneous in so far prejudicial to the interest of Revenue - assessee has claimed foreign fluctuation loss with respect to foreign currency loan which was converted into the shares of the company - assessee in the revised return of income has claimed such loss as revenue in nature by virtue of the provision of section 43AA which was brought by Finance Act, 2018 with retrospective effect from the Assessment Year 2017-18 i.e. the year under consideration - HELD THAT:- We note that all the necessary details with respect to the deduction claimed by the assessee under the provisions of section 43AA of the Act were available before the AO during the assessment proceedings. The revised return wherein the deduction was claimed was filed before the AO which was duly accepted by the AO in the assessment proceedings after raising the questions to the assessee. This fact can be verified from the question raised in the notice issued u/s 142(1). There was no question raised by the AO to the assessee for the deduction claimed by the assessee in the revised return of income. Thus, in the absence of any inquiry by the AO, we are of the view that it is a case of nonapplication of mind. At the time of hearing, a query was also raised to the AR to justify whether any inquiry has been made by the AO with respect to the claim made by the assessee. AR failed to make any satisfactory reply. Thus it can be safely concluded that there was no enquiry made by the AO during the assessment proceedings despite the fact that all the necessary details were available before the AO. PCIT has made reference to the explanation 2 of section 263 of the Act in holding the assessment order as erroneous in so far prejudicial to the interest of revenue. In this regard we find that the PCIT has not made any reference to the explanation 2 of section 263 of the Act in the notice issued u/s 263 of the Act, thus we are of the view that no reference to the explanation 2 of section 263 of the Act cannot be made while holding the order of the assessment as erroneous in so far prejudicial to the interest of the Revenue. See M/S. SHREEJI PRINTS PVT. LTD. [2021 (9) TMI 108 - SUPREME COURT] Hon’ble Court in the series of cases held that the order is erroneous in so far prejudicial to the interest of revenue if the inquiry has not been conducted during the assessment proceeding - Thus AO has not conducted inquiry with respect to loss claimed by the assessee in the revised return of income by virtue of amended provision of section 43AA of the Act which was made applicable retrospectively. Thus, the ground of appeal of the assessee is not allowed.
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