2022 (8) TMI 1168 - ITAT JAIPUR

Revision u/s 263 - disallowance u/s 14A - how is order of AO is erroneous and prejudicial to the interest of the revenue? - HELD THAT:- One of the pre-requisite before invoking S. 263 and the allegation of the Ld. Pr. CIT is that there has been incorrect assumption of fact and law by the Assessing Officer. However, despite our deep and careful consideration of the material on record including the finding recorded in the subjected Assessment order dated 27.12.2019 and in the findings recorded in the order under challenge, we do not find any incorrectness and incompleteness in the appreciation of facts made by the AO.In the light of these observations, we do not agree on this aspect to this extent with Ld. Pr. CIT

Whether the AO has also incorrectly appreciated and assumed the law while making the subjected assessment to be termed, as erroneous and prejudicial to the interest of the revenue? - The facts are not disputed that the assessee has submitted the proof of identity of shareholders, capacity by showing the gift received and genuineness of the transactions as the shareholder and company both have supplied the information related to these transactions. Even the issue was similar in assessment year 2016-17 wherein the investor shareholders being same and the investment made by the shareholder were accepted and even the proceedings u/s. 143(3) r.w.s. 263 read with section 144B of the Act for the assessment year 2016-17 has after giving the detailed show cause and considered the submission of the assessee and accepted the fact that the investment made by the shareholder is genuine and no addition was made in the case of the company what else the ld. AO can do in this case so as to prove the investment made by the shareholder in the assessee company. Even the factual input made by the ld. AR that the case of shareholders are re-opened to check the genuineness of the investment made by them in that circumstances we believe the plausible view was taken by the AO on this issue. As regards, the disallowance under section 14A r.w.r. 8D the ld. AR of the assessee has submitted that there is no exempt income for the year under consideration and there is no expenditure incurred to earn the exempt income. This view and argument were accepted by the AO.

Pr. CIT acted beyond jurisdiction in holding that the assessment order for A. Y. 201718 passed by the AO is held erroneous in so far as it is prejudicial to the interests of the revenue for the purpose of section 263 of the Income Tax Act. As the assessment was completed after making required amount of enquiry and there was no lake of enquiry or investigation by the AO on the issues which was raised by the ld. Pr. CIT under the provision of section 263 proceedings. Therefore, the findings of Ld Pr. CIT that order passed by AO was passed without conducting necessary enquires and without verifying necessary details was without any basis or without any evidence on record and mere guess work that that the ld AO has not conducted the enquiry. Appeal of assessee allowed.