TMI Blog2022 (6) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of time-to-time written submissions filed by the assessee and documents / evidence placed on record, the Ld. AO accepted the return of income filed by the assessee. The Gujarat High Court in the case of CIT v. Nirma Chemical Works [ 2008 (2) TMI 373 - GUJARAT HIGH COURT ] held that when the assessing officer after making due enquiries had adopted one view and granted partial relief, merely because the Commissioner took a different view of the matter, it would not be sufficient to permit Commissioner to exercise powers under section 263 of the Act. The Gujarat High Court in the case of CIT v. Kamal Galani [ 2018 (6) TMI 1052 - GUJARAT HIGH COURT ] has held that once assessing officer carried out detailed enquiries, it was not open for the Commissioner to reopen issues on mere apprehensions and surmises. In the instant case, detailed enquiries were made during the course of assessment proceedings by the Ld. Assessing Officer to enquire about the claim of expenses u/s 57 of the Act, to which the assessee filed time to time replies. Hence, in the instant facts, we are of the considered view that the assessment order was not erroneous or prejudicial to the interest of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in view of the above, the assessment order has been passed by the assessing officer without any proper enquiry or cross-verification of correct facts and thus, the assessment order is erroneous and prejudicial to the interests of the revenue. In response to the show cause notice, the assessee appeared before Ld. Pr. CIT and filed reply dated 10-02- 2020 in reply to the above show cause notice. However, the Ld. Pr. CIT rejected the assessee s contentions and set aside the assessment order holding the same to be erroneous and prejudicial to the interests of the revenue. While passing the order Ld. Pr. CIT made the following observations/directions: 3.4 The overall discussion as made above clearly reflects that the Assessing Officer did not verify the nexus between the interest bearing borrowed funds obtained in earlier years and during the year under consideration and the interest bearing loans advances were given including the advances on which no interest has been charged. This omission on the part of the Assessing Officer has resulted into passing an erroneous assessment order passed u/s 143(3) of the Act. Further, the A.O. has also ignored the provisions of section 14 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is in appeal before us against the aforesaid order of the Ld. Pr. CIT. At the outset, we note that the appeal is time-barred by 39 days. The Ld. Counsel for the assessee submitted that the appeal was filed on 05- 06-2020 i.e. during the corona outbreak and hence there was a small delay of 39 days in filing of appeal due to circumstances beyond the control of the assessee. The Ld. Departmental Representative has also not contested assessee s request for condonation of delay in filing the appeal. Considering the above circumstances, and in the interests of justice, we are hereby condoning assessee s delay in filing the appeal. 5. On merits, the counsel for the assessee drew our attention to the contents of the show cause notice issued by the Ld. Pr. CIT u/s 263 of the Act, which mentions that the reason for initiating 263 proceedings was that the Ld. Assessing Officer did not carry out a proper enquiry or cross verification of correct facts to ascertain whether the interest expenses amounting to Rs. 1,25,62,917/-were incurred for earning interest income of Rs. 1,44,83,261/-. However, the ld. counsel for the assessee submitted that a perusal of the assessment record woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant facts the AO had conducted detailed enquiries which were duly replied by the assessee during the course of assessment proceedings and hence the assessment order is not erroneous and prejudicial to the interest of the revenue. Accordingly, the order passed under section 263 of the Act is liable to be set aside. The Ld. Departmental Representative in response has placed reliance on the observations of the Ld. Pr. CIT made in the 263 order. 6. We have heard the rival contentions and perused the material on record. We note that the assessment proceedings were reopened on limited scrutiny basis to analyse (a) Interest income mismatch and (b) deduction from income from other sources. During the course of assessment, the AO made detailed enquiries with respect to the above issues under consideration as can be seen from various notices issued from time to time during the course of assessment proceedings. The assessee also filed time to time replies in response to the notices issued by the AO giving details of interest paid/received and also gave justification/nexus for claim of deduction of interest expenditure against interest income. Accordingly, in our considered view, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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