Revision order u/s 263 by PCIT without specifying what information AO had not called – SC declines to interfere with quashing.
In a recent case, the Hon’ble Supreme Court declined to interfere with quashing of revision order under section 263 as PCIT did not give any specific finding as to what was the information that the Assessing Officer had not called for from the assessee.
ABCAUS Case Law Citation:
4656 (2025) (07) abcaus.in SC
The respondent assessee was a limited company engaged in manufacturing. A search and seizure operation u/s 132 of the Act as well as survey operation u/s 133A of the Act was carried out on a business group and various incriminating material were found and seized.
The assessee company was served notice u/s 153A of the Act. In compliance thereto the assessee filed the return. Case selected for scrutiny followed by serving of notices u/s 143(2) of the Act. After considering the submissions made by the assessee with regard to questionnaire issued u/s 142(1) of the Act, returned income was accepted.
Subsequently, Pr. CIT called for the assessment records and issued show cause notice u/s 263 of the Act stating that the Assessing Officer (AO) had not examined in details about the transaction in respect of the unsecured loan taken by the assessee company. The creditworthiness, identity of the loan provider and genuineness of the transaction was not examined. Thus, the order passed by the assessing officer was erroneous in so far as prejudicial to the interest of revenue. Finally, not satisfied with the objections, assessment order was set aside to be framed afresh by making proper and adequate verification.
The Tribunal observed that AO had called for all the details of the unsecured loans taken by the assessee during the year and had also referred to the seized material in the notice issued u/s 142(1) of the Act and all necessary replies along with the evidences have been filed during the assessment proceedings. It was not the case of no enquiry rather it is a case where AO had raised necessary queries with regard to the issue under consideration and on being satisfied with such details and accepting the identity, creditworthiness and genuineness of the cash creditors took a plausible view as provided under the Act and completed the assessment proceedings u/s 153A r.w.s. 143(3) of the Act.
The Tribunal further observed that the Pr. CIT in the impugned order had only give general observation that AO had not conducted the necessary enquiry but in the impugned proceedings had not given any specific finding as to what was the information which AO had not called for and also had not given any comment on such information which Pr. Cit was required to call for during the course of revisionary proceedings before holding the assessment order in question as erroneous and prejudicial to the interests of the Revenue.
The Tribunal quashed the revisionary order holding that sufficient enquiry had been documented regarding the unsecured loans taken by the assessee during the year, the assessment order was neither erroneous nor prejudicial to the interests of the Revenue.
Not satisfied, the Revenue challenged the order of the ITAT before the Hon’ble High Court.
The Hon’ble High Court observed that from the factual finding of ITAT, it can be seen that the Tribunal was satisfied that it was not a case where the assessing officer had not conducted any enquiry. The Tribunal on facts found that the assessing officer had raised necessary queries with regard to the issue under consideration and was fully satisfied with the details furnished by the assessee and also accepted the identity, creditworthiness and genuineness of the cash creditors and took a plausible view as provided under the Act and completed the assessment.
The Hon’ble High Court further observed that the Tribunal also faulted the PCIT for making a general observation stating that the assessing officer had not conducted necessary enquiry and failed to give any specific finding as to what was the information that the assessing officer had not called for and has also not given any comment on such information which the PCIT was required to call for during the course of revision proceedings before holding the assessment order in question as being erroneous and prejudicial to the interest of the revenue.
Accordingly, the High Court dismissed the appeal of the Revenue,
Still aggrieved, the Revenue approached the Hon’ble Supreme Court by filing a Special Leave Petition (SLP) challenging the dismissal of appeal by the High Court.
However, the Hon’ble Supreme Court declined to interfere with the order and dismissed the SLP with following observation,
“In the facts and circumstances of the case, we are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.”
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