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2023 (2) TMI 1070 - AT - Income TaxRevision u/s 263 - repayment of unsecured loans to the alleged shell companies considering the provisions of Section 69C r.w.s. 115BBE - HELD THAT:- The issue under consideration was duly examined by the AO in the assessment proceedings and conscious decision was taken after due application of mind. Accordingly, it is not a case of lack of inquiry by the Assessing Officer. Secondly, as regards applicability of section 69C of the Act, we observe that section 69C applies in case of unexplained expenditure, source of which remains unexplained. In the assessee’s case, repayment of loan does not constitute any expenditure and further, the source of such repayment was also explained by the assessee both before the Assessing Officer as well as PCIT. Accordingly, in our view section 69C of the Act cannot be invoked in the instant facts. In the instant facts even if one were to invoke section 68 of the Act since repayment of loan is not “credit” in the books of accounts, the same is outside purview of section 68 of the Act. On the issue that the ld. Assessing Officer should have enquired into the transaction on the ground that the assessee had made repayment to bogus/shell companies, the assessee before us submitted that at the time when the aforesaid unsecured loans were received by the assessee from the above three parties, the receipts have already been taxed in the hands of the assessee u/s. 68 of the Act in the assessment for A.Y. 2013-14. The assessee had filed appeal against the aforesaid order and the appeal was finally closed under the Vivad Se Vishwas Scheme. Accordingly, once the unsecured loans have been taxed in the hands of the assessee at the time when they were received by the assessee in A.Y. 2013-14, the same cannot be again taxed in the hands of the assessee at the time when such loans are repaid back by the assessee to such alleged bogus companies, since the same would amount to double taxation. Further, on perusal of the order passed by ld. PCIT, it is seen that the ld. PCIT has not established as to how the repayment of loans falls u/s. 69C of the Act when the assessee has not claimed the same as expenditure and also when the source of such repayment has not been disputed by the PCIT. Scope of proceedings u/s 263 - An inquiry made by the Assessing Officer is considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous.The order can be erroneous if the Assessing Officer fails to apply the law correctly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the AO. Assessing Officer’s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers u/s 63 cannot impose his own understanding of the extent of inquiry. Decided in favour of assessee.
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