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TMI Blog2024 (7) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. That on the facts and circumstances of the case, the revision order passed by the Ld. Pr. CIT u/s 263 of the Income Tax Act, 1961 is bad in law and therefore deserves to be set aside. 2. That on the facts and circumstances of the case, the Ld. Pr. CIT erred in holding that the assessment order passed u/s 143(3) of the Income Tax Act, 1961 dated 19.12.2019 is erroneous and prejudicial to the interest of the revenue when all the necessary enquiries were duly made by the assessing officer and duly explained by the assessee. 3. That on facts and circumstances of the case, the Order u/s 263 of the Act dated 11.03.2022 setting aside the original Assessment Order dated 19.12.2019 and directing fresh assessment to examine issue on which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest @ 12% amounting to Rs. 34,26,074, to its income as per the return of income pertaining to 7 persons. The assessee submitted details of 7 persons before the Assessing Officer. Insofar and remaining 4 persons are concerned, the assessee was asked to explain as to why proportionate interest on other interest free advances should not be disallowed. In response, the assessee vide reply dated 11/12/2019, submitted that it has no objection for the proposed disallowance of Rs. 13,45,752. 4. Subsequently, the learned PCIT, by exercising power under section 263 of the Act issued show cause notice and called for explanation from the assessee why the order passed by the Assessing Officer dated 19/12/2019, should not be set aside. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the assessee himself has disallowed @ 12%, and for the remaining parties, the Assessing Officer has added. The assessee himself has claimed huge interest and also filed loss return of income. It was the duty of the Assessing Officer to call for the details such as what is the reason for borrowing such huge amount; what is the amount of money utilised for the purpose of business; why he has given loans to various parties; what is the receipt of interest; the quantum of shares have been sold by the assessee and what is the ratio of profit he received whether long term capital gain / short term capital gain. All such details have were required to be examined by the Assessing Officer and he has examined nothing. For the reasons stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO which ought to have been done. Even the break-up of the advances were never verified by the AO during assessment proceeding. For example, the assessee has claimed advances as advance towards property, sticky advances, etc. to justify not charging of interest. However, whether these advances are what is claimed and further whether such advances justify not charging of interest were never verified by the AO making the order amenable to Section 263 of the Act. Similarly, the AO has failed to verify the taxability of multiple transaction relating to authenticity and investment & sale of share which further makes the order of the AO amenable to Section 263. 8. In this case, the assessment order has been passed without making inquirie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer will result in prejudice to interests of the revenue and initiation of action under section 263 by the Commissioner under such circumstances will be perfectly valid and justified. 8.3 Rajmandir Estates Private Limited V. Principal Commissioner of Income Tax'-2016 (5) TMI 801 - CALCUTTA HIGH COURT- The High Court held that lack of enquiry, where enquiry is necessary, can be treated as prejudicial to the interest of the Revenue so as to justify revisional jurisdiction. It was for non inquiry, the validity of action under Section 263 was held justified in a case of non verification of share capital contribution when there was evidence to suggest that the transaction could not be genuine. 8.4 The Hon'bleITAT Ahmedabad Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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