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2017 (4) TMI 816 - AT - Income TaxRevision u/s 263 - inadequate enquiry versus lack of enquiry - assessee borrowed interest bearing loans and extended interest free loans - erroneous and prejudicial to the interest of the Revenue - Held that:- When the entire capital account of the assessee has been examined by the AO and nothing has been brought on record by ld. CIT that there is any escapement of income by making withdrawal from the capital account as its closing balance was ₹ 14.86 crores during the year under assessment. Also When the assessee submitted the complete details of unsecured loans along with confirmation of each of the transaction, bank account of each of the person and income-tax acknowledgement return of each lenders from whom unsecured loans were availed to the AO who has duly examined the same during the course of assessment, it cannot be a case of lack of enquiry. On proof of ownership of the premises / factory located there is not an iota of doubt on the file to dispute the fact that the factory premises and goddown is ancestral property of assessee’s family. Moreover, when no rent has been claimed in the balance sheet qua the property in question it would not affect the tax liability of the assessee in any manner. The assessee argued that the assessee could not furnish PAN of only those parties in whose case there was no further transactions at the time of assessment proceedings and that the account of the 13 parties out of 17 parties stood squared off in subsequent years and details thereof was filed before ld. CIT. This fact goes to prove that a discreet enquiry has been conducted by the AO qua all the sundry creditors and the findings of the ld. CIT that the AO did not make any enquiry even on sample basis to find out the genuineness of the sundry creditors is based upon surmises. At the most, it can be a case of inadequate enquiry, in which ld. CIT has no power to intervene u/s 263 of the Act. Bare perusal of the written submissions filed by the Revenue, it goes to prove that the Revenue has merely relied upon the case law to clarify the legal position so as to invoke the provisions contained u/s 263 of the Act but has failed to bring on record that the order passed by the AO was erroneous and prejudicial to the interest of the Revenue by bringing on record the evidence as we have discussed in detail in the preceding paras. This is a case of inadequate enquiry on the part of the AO and not a case of lack of enquiry by any stretch of imagination thus the order passed by CIT u/s 263 is hereby quashed. Resultantly, the appeal filed by the assessee is allowed.
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