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TMI Blog2024 (1) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of the Income Tax has erred in violating the principles of natural justice by not the mentioning the grounds for initiating action u/s.263 of Income Tax Act, 1961 in the show cause notice issued. As such the order passed u/s.263 is void ab-initio. The action of the Ld. CIT was wholly unreasonable, uncalled for the bad in law. 4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s.263 is merely 'change in opinion' The order u/s. 143(3) rws.143(3A) and 143(3B) of the Income Tax Act passed by the Ld AO does not in any way represent erroneous order. The action of the Ld. Pr. CIT was wholly unreasonable, uncalled for and bad in law. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income Tax has grievously erred in assuming that the assessing Officer had not verified the expenditure to the tune of Rs.26,32,250/- and not made proper inquiry on finalized the order of assessment u/s. 143(3) rws.143(3A) and 143(3B) of the I.T. Act is contrary to the fact of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/- from other sources. In such scenario, the assessee has failed to substantiate that this payment was in relation to any business activity. Hence, the source of payment of the credit card payment of Rs.26,32,250/- remains unexplained and was required to be added into the total income of the assessee, as unexplained expenditure u/s 69C of the Act. In view of the above, ld. PCIT noted that the assessee has incurred expenditure to the tune of Rs.26,32,250/- and has failed to offer explanation about the source of such expenditure or part thereof. The assessee has not offered any income from business or profession, and not disclosed any turnover. The AO has not made any inquiry/verification on the source of transaction and in failure of explanation of the source of the transaction, the AO was required to treat credit card payment made of Rs.26,32,250/- as unexplained expenditure u/s 69C of the Act and to make addition to the total Income of the assessee, which he failed to do so. Therefore, ld PCIT issued a show -cause notice, to the assessee to explain the transaction, vide show cause notice, bearing DIN No. ITBA/COM/F/17/2022-23/1020329929(1), dated 02.03.2023 and was duly served up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without inquiry/verification, which should have been done. This shows lack of inquiry/verification and application of mind by the AO. Thus, the assessment order passed u/s 143(3) r.w.s. 143(3A) and 143(3B) of the Act, dated 25.02.2021 is found to be erroneous in so far as it is prejudicial to the interest of Revenue within the meaning of section 263 of the Act. Accordingly, the assessment order passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act, dated 15.02.2021, in the instant case was set aside by ld. PCIT with a direction to the Assessing Officer to pass fresh assessment order after taking into consideration the issues as may have been already considered together with the issue discussed herein above also. 7. Aggrieved by the order of ld. PCIT, the assessee is in appeal before us. 8. Shri P. M. Jagasheth, Learned Counsel for the assessee submitted that during the assessment stage, the Assessing Officer has conducted sufficient enquiry about the issue raised by the ld. PCIT. The Ld. Counsel submitted that assessee's case was selected for scrutiny for verification of transactions. The notice issued under section 143(2) clearly states that scrutiny assessment was to be conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to AO dated 19.12.2020 to Notice u/s 142(1) of the Income Tax Act, (vide Pb.15), (7) Notice u/s 142(1) of the Income Tax Act, 1961 issued by AO dated 24.01.2021 along with Annexure (vide Pb.19 - 20), (8) Reply of assessee to AO with attachment dated 08.02.2021 to notice u/s. 142(1) of the Income Tax Act, 1961 (vide Pb.21 - 31). From the above factual position, it is abundantly clear that during the assessment stage, the assessing officer issued various notices to call the details from the assessee and in response to these notices the assessee has submitted details, documents and explanation before the assessing officer, in respect of the issue raised by the ld PCIT under section 263 of the Act. 11. The Ld. Counsel submitted before us that assessee has used the credit card, for making the payment of articles / items on behalf of his clients for the purpose of things which were sold to his clients and the net profit earned by the assessee has been shown in the return of income, filed by him for assessment year (AY) 2018-19, which is placed at paper book page nos. 7 and 8 of the assessee`s paper book. The Ld. Counsel argued that during the assessment proceedings, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is placed at paper book page no.15. The Assessing Officer again issued notice under section 142(1) of the Act, wherein the following details were asked by the Assessing Officer about credit card payments of Rs.26,32,250/- which is reproduced below: 14. In response to the said notice, the assessee submitted its reply, before the assessing officer, which is placed at paper book page no.18 to 21 of the assessee`s paper book. 15. Apart from this, the assessee submitted the bank statements of HDFC Bank, wherein all the transactions and credit cards are getting reflected (vide paper book page nos. 22 to 31). Therefore, we note that the Assessing Officer has made a detail enquiry during the assessment stage, about the issue raised by the ld. PCIT. Hence, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of the Revenue. 16. Therefore, we note that during the assessment stage, the Assessing Officer asked the assessee to furnish the details and documents which are placed in paper book. In response, the assessee submitted its reply which is placed at paper book, as stated above. Thus, all the documents, details and the explanations required b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue "unless the view taken by the Assessing Officer is unsustainable in law". Therefore, we are of the considered opinion that AO's order cannot be termed as erroneous as well as prejudicial to the interest of the revenue and therefore, jurisdictional condition precedent as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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