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TMI Blog2023 (2) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order passed by the Id. A.O. u/s. 143(3) of the Act and directing de-novo assessment regarding verification of repayment of unsecured loans of Rs.21,83,802/- to the alleged shell companies considering the provisions of Section 69C r.w.s. 115BBE of the Act. 4. The learned Pr. CIT has erred in law as well as on facts in not appreciating that the acceptance of the unsecured loans from the alleged shell companies has already been taxed u/s. 68 of the Act and therefore, the action of taxing the repayment of the said loans would result into double taxation which is not permissible under the law. The appellant craves leave to add, alter, amend, delete or withdraw one or more grounds of appeal." 3. The brief facts of the case are that the assessee filed return of income for assessment year 2017-18 declaring total income at Rs. Nil and the assessment under section 143(3) of the Act dated 31-12-2019 was finalised at an income of Rs. 41,27,020/-. The PCIT observed that the assessee had made repayment of unsecured loan of Rs. 21,83,802/- to bogus shell companies. The PCIT observed that the assessee failed to produce any verifiable evidence against repayment of unsecured loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income of A Y 2013-14 and the same have also been settled under VsVs therefore no addition to the income could be made in the year under consideration with regards to the repayment to the shell companies. 6. The above facts will indicate that AO has not conducted any inquiries/verification in respect of the addition made by the AO in the A Y 2013-14 of unsecured loans taken from 4 parties to whom part repayment of loans of Rs. 21,83,802/- to bogus shell companies by the assessee during the course of assessment proceedings. Thus, there was lack of proper inquiries in the case of the assessee. It may be mentioned that two essentials condition for invoking the provisions of section 263 of I.T. Act are that the order passed by the AO is erroneous and prejudicial to the interest of revenue. 4. The assessee is in appeal before us against the order passed by PCIT u/s. 263 of the Act. Before us, the counsel for the assessee primarily reiterated the submissions made before ld. PCIT during the 263 proceedings. In response, the Departmental Representative submitted that in the instant case, the assessee had made payments to shell companies and therefore the Assessing Officer was bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment 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. 5.1 Regarding the scope of proceedings u/s 263 of the Act, 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. In our view, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 15. Thus, even the Commissioner conceded the position that the Assessing Officer made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 5.5 The Supreme Court of India in the case of Principal Commissioner of Income-tax, Surat-2 v. Shreeji Prints (P.) Ltd.[2021] 130 taxmann.com 294 (SC) dismissed SLP filed by the assessee against order passed by High Court holding that where assessee-company had received unsecured loans from two different companies and Assessing Officer had made inquires in detail and accepted genuineness of same, such view of Assessing Officer being a plausible view could not be considered erroneous or prejudicial to interest of revenue. The facts of this case were that respondent assessee has filed its return of income showing total income of Rs. 62,55,900/- which was assessed under section 143(3) of the Act, 1961 by an assessment order dated 14th March 2016. The respondent c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out detailed inquiries which included assessee's onmoney transactions and Tribunal thus set aside revisional order passed by Commissioner. The High Court upheld Tribunal's order. The Supreme Court while dismissing the SLP filed by the Department held as under: "We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed" 5.7 The Supreme Court in the recent case of Principal Commissioner of Income-tax-2, Meerut v. Canara Bank Securities Ltd[2020] 114 taxmann.com 545 (SC), dismissed the Revenue's SLP holding that 263 proceedings are invalid when AO had made enquiries and taken a plausible view in law, with the following observations: "Having heard learned counsel for the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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