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2023 (10) TMI 773 - AT - Income TaxRevision u/s 263 - As per CIT AO has failed to carry out necessary verification towards unsecured loans aggregating to Rs. 8 crore received from certain parties - HELD THAT:- The expression ‘lack of enquiry’ is quite distinct from the expression ‘insufficient enquiry’. It may be possible for the CIT in some cases to show and establish that facts on record or inferences drawn from facts on record per se justified or mandated further inquiry or investigation which the AO has erroneously not undertaken. Such finding must be clear, unambiguous and not debatable. CIT must demonstrate that the order is both erroneous as well as prejudicial to the interest of the Revenue by such lapse on the part of the AO. This is the position of law enunciated by several cases including CIT .v. Goetze (India) Ltd. [2013 (12) TMI 607 - DELHI HIGH COURT], DG Housing Projects Ltd [2012 (3) TMI 227 - DELHI HIGH COURT], CIT vs. Sunbeam Auto Ltd [2009 (9) TMI 633 - DELHI HIGH COURT] - As a question would arise whether, firstly, the action of the AO is unsustainable in law or not, owing to such assertions on mere inadequacy and secondly, whether the mandate u/s 68 of the Act for extent of inquiry by way of cross verification is absolute or left to the discretion to be reasonably exercised by the AO. As observed in the preceding paras, even if inquiry with regard to source of source of loan in a particular manner as suggested by Pr. CIT is omitted to be carried out, the provisions of Section 68 of the Act cannot be automatically fastened on the assessee. To reiterate, no objective material is discernible from the SCN or from the revisioanal order to implicate the assessee per se. Having regard to the prerogative vested with the AO towards the extent and manner of inquiry for drawing satisfaction, it is difficult to hold that the action of the AO is unintelligible. AO has not committed any error in not chasing ‘will of the wisp’ in the absence of any brazen circumstances available. In the light of aforesaid discussion, the basis of issuance of show cause notice u/s 263 of the Act does not appear to be tenable in law in the peculiar set of facts. Consequently, the assumption of jurisdiction u/s 263 of the Act on this ground too, will have to be regarded as without authority of law. Assessee appeal allowed.
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