CIT can not substitute his view over the view taken by AO in the revisionary jurisdiction u/s 263 – ITAT

CIT can not substitute his view over the view taken by AO in the revisionary jurisdiction u/s 263 as AO took one of the possible view

ABCAUS Case Law Citation:
ABCAUS 2454 (2018) 08 ITAT

The instant appeal was filed by the assessee against CIT in invoking the revisionary jurisdiction u/s 263 of the Income Tax Act, 1961 (the Act).

The assessee individual was a civil contractor. The assessment was completed u/s 143(3) of the Act accepting the income returned. The AO noted in the assessment order that the assessee produced the books of accounts, supporting evidences and explained the return together with the audited accounts.

This assessment was sought to be revised by the CIT u/s 263 of the Act on the ground that the assessee was in receipt of loan but the AO had not made proper enquiries with regard to it which made the assessment order erroneous inasmuch as prejudicial to the interest of the revenue. Accordingly, the CIT passed an order u/s 263 of the Act setting aside the assessment order for verification of this specific issue with the additional direction that the AO should also examine the assessee’s contention whether the loan was brought forward from earlier year.

The Tribunal observed that the loan was not received during the year under appeal. The assessee had specifically brought this point to the notice of the CIT together with the dates of receipt of loans; sources from which the loan creditor had given this loan to the assessee and circumstances under which the assessee was forced to avail loan.

It was also observed that the assessee had placed the copy of PAN card, the relevant page of the bank statement of the loan creditor before the AO together with the copy of sale deed executed explaining the source for the loan creditor to advance loans to the assessee during the earlier assessment year.

Moreover, the AO had examined the loan creditor on oath and recorded sworn statement u/s 131(1) of the Act wherein he had categorically stated that she had advanced loan to the assessee during the previous financial year and that the said loan was outstanding. In the said sworn statement, she had also stated the source for advancing loan to the assessee. The AO after examining all these facts brought on record had taken a conscious decision and the correct view in the matter that no addition was warranted towards the loan amount in the case of the assessee.

The Tribunal opined that the possible view taken by the AO cannot be sought to be disturbed merely because the CIT was of a different view.  This was nothing but the CIT trying to substitute his view over the view taken by the AO in the revisionary jurisdiction u/s 263 of the Act, which was not permissible as per law.

The Tribunal opined that in any case the loan was received by the assessee only in the earlier assessment year and not in relevant assessment year. Hence, in any case, there cannot be any addition that could be made in the hands of the assessee for the relevant assessment year i.e. the year under appeal in respect of the said loan. Hence the order of the AO cannot be treated as erroneous and prejudicial to the interest of the revenue.

The Tribunal quashed the revision order passed by the CIT u/s 263 of the Act.

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