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2022 (12) TMI 754 - AT - Income TaxRevision u/s 263 - Unexplained source of cash investment made by the assessee in company where the assessee is also a partner - unexplained cash credits u/s 68 - HELD THAT:- Regarding the first issue, in the 263 proceedings itself, the principal CIT accepted the assessee’s contention and held that so far as the issue related to increase in investment in the partnership firm by the assessee is concerned, the explanation of the assessee that a similar amount on the same date was withdrawn from another partnership firm was invested in M/s D Jewel was accepted by Principal CIT. Disallowance of interest in relation to exempt income - As from the records we know observe that so far as the issue relating to disallowance of interest in relation to exempt income is concerned, we observe that in the notice dated 13-12-2017 issued by the AO the issue of disallowance of interest for earning exempt income was specifically raised at page 2 of the said notice. In response to the same the assessee had filed reply dated 20-12-2017 in which assessee filed an explanation in response to the same - balance sheet of the assessee as on 31st March, 2015 shows that the assessee has own capital of ₹ 5.26 crores at its disposal i.e. the assessee has substantial interest-free funds available with it. Further, we also observe that in the assessment order the AO has discussed the aspect of addition under section 14A and has also made disallowance in respect of the same. We observe that this is not a case where there was an omission on part of the AO to examine this aspect of disallowance of 14A/ 36(1)(iii) of the Act at all. The AO had put a specific question before the assessee during the course of assessment and taken his reply on record. Further the assessing Officer had also discussed this aspect as part of assessment order. This is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. It is also not the case of the Pr. CIT that the AO failed to apply his mind to the issues on hand or he had omitted to make enquiries altogether or had taken a view which was not legally plausible in the instant facts. As held by various Courts, Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has different opinion in the matter. In our view, s 263 of the Act does not visualise a case of substitution of the judgment of the Principal CIT for that of the AO who passed the order unless the decision is held to be wholly erroneous. Now on the issue that the AO passed a cryptic order and did not discuss in detail regarding assessee’s submissions on various queries raised vide the various notices, in our view it is a well settled position of law that if from the assessment records, it is evident that the AO has made due enquiries in response to which assessee has filed its submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication [2016 (4) TMI 173 - BOMBAY HIGH COURT], Smt. Anupama Bharat Gupta [2021 (4) TMI 1000 - ITAT AHMEDABAD], Goyal Private Family Specific Trust [1987 (10) TMI 43 - ALLAHABAD HIGH COURT], CIT v. Mahendra Kumar Bansal [2007 (7) TMI 149 - HIGH COURT, ALLAHABAD] - We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. The Grounds of appeal raised by the assessee are thus allowed.
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