AI Insights
The case revolves around an appeal by Dattatray Hanmantrao Desai against the order of the PCIT, Pune-3, which was issued under section 263 of the Income Tax Act, 1961. The PCIT's order was based on the finding that the original assessment made by the Assessing Officer under section 143(3) was inadequate as it failed to properly investigate the substantial unsecured loans amounting to Rs.19,60,06,676 introduced in the assessee's books during the assessment year 2018-19. These loans were purportedly from various friends and relatives of the assessee, whose income levels were disproportionately low compared to the amounts loaned. The Tribunal's decision emphasized the need for a detailed examination of the creditworthiness and the genuineness of these transactions under section 68 of the Act.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 397053 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-05-2025
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2018-2019
Judgement Text
"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1240/PUN/2024 Assessment Year : 2018-19 Dattatray Hanmantrao Desai G8, Pandurang Bhavan, Near Dominose Pizza, Malkapur, Karad – 415110, Maharashtra Vs. PCIT, Pune-3 PAN : AHLPD3766G (Appellant) (Respondent) Assessee by : Shri Ashok B Nawal Department by : Shri Amol Khairnar, CIT-DR Date of hearing : 07-05-2025 Date of pronouncement : 28-05-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 28.03.2024 passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Ld. PCIT, Pune-3, relating to assessment year 2018-19. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. PCIT in setting aside the order u/s 263 of the Act passed by the Assessing Officer u/s 143(3) with a direction to frame a fresh assessment order after necessary examination / verification / enquiries. 2 ITA No.1240/PUN/2024 3. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of construction of buildings and whole sale and retail trade. He filed his return of income on 29.10.2018 declaring total income of Rs.1,29,08,670/- The case was selected for limited scrutiny assessment under the E-assessment Scheme, 2019 on the following issues: “S. No. Issues i. Share Capital / Other Capital‖ 4. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 19.04.2021 accepting the returned income. 5. Subsequently the Ld. PCIT examined the record and noted certain discrepancies with regard to the issues on which the case was selected for scrutiny. He noted that the assessee during the impugned assessment year has introduced fresh capital to the tune of Rs.19,60,06,676/- which was claimed to have been borrowed from the following persons who are said to be the friends and relatives of the assessee: Sr. No. Name of loan creditor Amount of loan (Rs.) 1 Krishant Eknath Chavan 97,61,000/- 2 Amrut Kakaso Kumbhar 98,39,955/- 3 Vijay Raghunath Patil 3,00,00,000/- 4 Dadaraje Anandrao Desai 5,21,96,958/- 5 Sambhaji Shamrao Patil 3,00,00,000/- 6 Hanmant Bajirao Desai 5,16,30,000/- 7 Pratap Ramdas Janugade 1,25,78,763/- Total 19,60,06,676/- 6. He noted that the assessee had filed the confirmation, copy of acknowledgement of ITR for assessment year 2018-19 filed by the respective 3 ITA No.1240/PUN/2024 creditors and copies of bank statements for financial year 2017-18 of the lenders reflecting the transactions. However, mere filing of the documents according to the Ld. PCIT is not sufficient to establish the loans raised / capital introduced. According to him, the Assessing Officer has to analyze the veracity of those documentary evidences and establish their genuineness and creditworthiness of the parties involved by conducting proper enquiries and verification and satisfy himself about the correctness of the claim. Such satisfaction must not be illusory or imaginary but must have been derived from the relevant facts and evidences and on the basis of proper enquiry of all material before him. However, no such enquiry was made by the Assessing Officer in order to satisfy the basic ingredients of section 68 of the Act. He noted various discrepancies vis-à-vis documentary evidences furnished by the assessee in support of borrowings / credits availed, the details of which are as under: Sr. No Name of the creditors Amount of Loan Documents available on record Remarks 1 Krishnat Eknath Chav 97,61,000/- Unsigned copy of ITR-V for AY 2018-19 showing returned income at Rs.3,09,700/-, Conformation, extract of bank statement of account no. 31090200000192 No document in support of identity proof is available, ITR-V and declaration are deficient, name of bank & branch not mentioned in the bank statement, further, the debit on 19.03.2018, corresponding to the loan given to the assessee, is preceded by immediate credits in 10 tranches between 17.03.2016 to 19.03.2018 totaling to loan amount. He has filed return on income for A.Y. 2018-19 on 31.08 2018 disclosing a meagre income of Rs. 3,89,700/- which does not commensurate with the quantum of loan advanced 4 ITA No.1240/PUN/2024 to the assessee No balance sheet has been filed reflecting the transactions. The sources of income have also not been explained. The documents available on records and the short comings/deficiencies pointed out do not establish the identity of the creditor, the genuineness of the transaction and the creditworthiness in terms of section 68 2 Amrut Kakaso Kumbhar 98,39,955/- ITR-V for AY 2018-19 showing returned income 2,77,070/- Confirmation, extract of statement of account no. 31090200000216 No document in support of identity proof is available, declaration is deficient, name of the bank & branch not income mentioned in the bank statement, further the debit on 15.03.2018, 19.03.2018 and 20.03.2018 corresponding to the loan given to the assessee, are bank preceded by immediate credits in 13 tranches of between 14.03.2018 to 20.03.2018 totalling to loan no. amount. He has filed return on income for AY 2018-19 on23.07.2018 disclosing a meagre income of Rs. 2,77,070/- does not commensurate with the quantum of loan advanced to the assessee. No balance sheet has been filed reflecting the transactions. The sources of income have also not been explained. Further on perusal of the bank statement, it is noted that there is a debit entry of Rs. 25,00,000/- on 15.03.2018 indicating that the lender has paid this amount to the assessee, for which there is no 5 ITA No.1240/PUN/2024 explanation/ supporting document on records. The documents available on records and the short comings / deficiencies pointed out do not substantiate the identity of the creditor, the genuineness of the transaction and the creditworthiness in terms of section 68 3 Vijay Raghunath Patil 3,00,00,000/- Unsigned copy of ITR-V for AY 2018-19 showing returned income at Rs.2,37,770/-, Confirmation, extract of bank statement of account no. 31090200000437 No document in support of identity proof is available, ITR-V and declaration are deficient, name of the bank & branch not mentioned in the bank statement, the date of opening of the bank account is 12.03.2018, further the debits on 23.03.2018, 26.03.2018 & 27.03.2018 corresponding to the loan given to the assessee, are preceded by immediate credits in 04 tranches between 23.03.2018 to 27.03.2018 totaling to loan amount.. He has filed return of income for A.Y. 2018-19 on 25.08.2018 disclosing a meagre income of Rs. 2,37,770/- does not commensurate with the quantum of loan advanced to the assessee. No balance sheet has been filed reflecting the transactions. The sources of income have also not been explained. The documents available on records and the short comings/deficiencies pointed out do not genuineness of the transaction creditworthiness in terms of section 68. 4 Dadaraje 5,21,96,958/- Unsigned copy No document in support of 6 ITA No.1240/PUN/2024 Anandrao Desai ITR-V for AY 2018- 19 showing returned income at Rs. 2,74,410, Confirmation, extract of bank statement of account no. 31090200000164 identity proof is available, ITR-V and declaration are deficient, name of the bank & branch not mentioned in the bank statement, further, the debit on 19.03.2018. 20.03.2018 21.03.2018. 26.03.2018 & 27.03.2018 corresponding to the loan given to the assessee, are preceded by immediate bank credits in several tranches between 17.03.2018 to of 27.03.2018 totalling to loan amount. He has filed return on income for A.Y, 2018-19 on 28.08.2018 disclosing a meagre income of Rs.2,74,410/- does not commensurate with the quantum of loan advanced to the assessee. No balance sheet has been filed reflecting the transactions. The sources of income have also not been explained. Further, on perusal of the bank statement, it is noted that there is a credit entry of Rs. 10,00,000/- on 19.03.2018 indicating that the assessee has paid this amount to the lender, for which there is no explanation / supporting document on records. The documents available on records and the short comings / deficiencies pointed out do not substantiate the identity of the creditor, the genuineness of the transaction and the creditworthiness in terms of section 68. 5 Sambhaji Shamrao Patil 3,00,00,000/- Unsigned copy of ITR-V for AY 2018-19 showing returned income at Rs 2,08,110 No document in support of identity proof is available. ITR-V and declaration are deficient, name of the bank & branch not mentioned in 7 ITA No.1240/PUN/2024 Confirmation, extract of statement of account no. 31090200000436 the bank statement, the date of opening of the bank account is 12.03.2018, further the debits on 2.03.2018, 22.03.2018, 23.03.2018 & 27.03.2018 corresponding to the loan bank given to the assessee are preceded by immediate of credits in 04 tranches between 21.03.2018 to no. 27.03.2018 totalling to loan amount. He has filed return on income for A.Y. 2018-19 on 25.08.2018 disclosing a meagre income of Rs. 2,08,110/- does not commensurate with the quantum of loan advanced to the assessee. No balance sheet has been filed reflecting the transactions. The sources of income have also not been explained. The documents available on records and the short comings deficiencies pointed out do not substantiate the identity of the creditor, the genuineness of the transaction and the creditworthiness in terms of section 68 6 Hanmant Bajirao Desai 5,16,30,000/- Unsigned copy ITR-V for AY 2018-19 showing returned income at Rs.2,15,670 Confirmation, extract of statement of account no. 31090200000165 No document in support of identity proof is available. ITR-V and declaration are deficient, name of the bank & branch not mentioned in the bank statement, further at the debit on 17.03.2018. 20.03.2018, 21.03.2018, 22.03.2018, & 26.03.2018 corresponding to the loan given to the assessee, are preceded by immediate bank credits in several tranches between 16.03.2018 to of 26.03.2018 totalling to loan amount, He has filed return on income for A.Y. 8 ITA No.1240/PUN/2024 2018-19 on 24.08.2018 disclosing a meagre income of Rs.2,15,670/- does not commensurate with the quantum of loan advanced to the assessee No balance sheet has been filed reflecting the transactions. The sources of income have also not been explained. Further on perusal of the bank statement, it is noted that there are 2 credit entries of Rs.1,00,00,000/-, Rs10,00,000/- on 21.03.2018 & 22.03.2018 indicating that the assessee 7 Pratap Ramdas Janugade 1,25,78,763/- ITR-V for AY 2018-19 showing returned income at Rs. 4,59,040/-, in revised Confirmation, ITR, extract of bank statement account no. 31090200000183 No document in support of identity proof is available, declaration is deficient, name of the bank & branch no mentioned in the bank statement, further the debit on 26.03.2018 & 27.03.2018 corresponding to the loan ITR, given to the assessee, are preceded by immediate credits in several tranches between 15.03.2018 to 27.03.2018 totalling to loan amount. He has filed revised return on income for A.Y.2018-19 on 05.01.2019 disclosing a meagre income of Rs.4,59,040/- does not commensurate with the quantum of loan advanced to the assessee. No balance sheet has been filed reflecting the transactions. Further on perusal of the bank statement, it is noted that there is a credit entry of Rs. 29,40,000/- on 15.03.2018 indicating that the assessee has paid these amounts to the lender, for which there is no explanation / supporting document on records. 9 ITA No.1240/PUN/2024 The documents available on records and the short comings/ deficiencies pointed out do not substantiate the identity of the creditor, the genuineness of the transaction and the creditworthiness in terms of section 68. 4.3 Thus, it was found that the FAO has failed to examine the huge loans shown to have been advanced by the lenders, namely, Sh. Krishant Eknath Chavan of Rs.97,61,000/-, Sh Amrut Kakaso Kumbhar of Rs.98,39,955/, Sh. Vijay Raghunath Patil of Rs.3,00,00,000/-, Sh. Dadaraje Anandrao Desal of Rs.5,21,96,958/-, Sh. Sambhaji Shamrao Patil of Rs.3,00,00,000/-, Sh. Hanmant Bajirao Desai of Rs.5,16,30,000/- & Sh. Pratap Ramdas Junagade of Rs.1,25,78,763/-. While the aggregate amount of Loan received by the assessee comes to Rs 19,60,06,676/-, not a single lenders is found to have disclosed income of more than Rs.5 Lakhs in their respective ITR for the AY 2018-19. This put the creditworthiness of those lenders and their capability to advance such a huge sum to the assessee in question. The FAO was thus, found to have accepted aassessee's claim without examining the above aspects and testing the claims to the rigors of Sec.68 of the Income Tax Act. 4.4. Apart from the above, it was further seen that the FAO also had failed to examine that similar transactions of receipt and payment of credits carried out by the assessee with various persons, namely, with Sh. Amrut Kakaso Kumbhar at Rs.25,00,000/- (received by the assessee), loan transaction made with Dadaraje Anandrao Desai at Rs.10,00,000/- (paid by the assessee), loan transactions of Rs.1,00,00,000/- & Rs.10,00,000- with Hanamant Bajirav Desai (paid by assessee) and loan transaction made with Pratap Ramdas Janugade at Rs.29,40,000/- (paid by the assessee).‖ 7. In view of the above discrepancies, the Ld. PCIT was of the opinion that the assessment order dated 19.04.2021 passed by the Assessing Officer u/s 143(3) of the Act for assessment year 2018-19 prima facie appears to be erroneous and prejudicial to the interest of Revenue. He therefore, issued a show cause notice u/s 263(1) of the Act to the assessee giving an opportunity of being heard to in the matter. The assessee in response to the same submitted that during the course of assessment proceedings whatever details were asked for by the Assessing Officer 10 ITA No.1240/PUN/2024 were submitted including the names of the persons from whom such unsecured loans were obtained by filing their income tax returns, bank statements, etc. Further, the books of account produced by the assessee were never rejected. Relying on various decisions it was argued that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue and therefore, the proceedings initiated u/s 263 of the Act should be dropped. 8. However, the Ld. PCIT was not satisfied with the arguments advanced by the assessee. He noted that the case of the assessee was selected for limited scrutiny on the issue of share capital / other capital. The assessee has introduced substantial amount of capital to the tune of Rs.19,60,06,676/- during the year which was claimed to have been borrowed from various persons. He noted that the comparative analysis of the income tax returns filed by the respective creditors vis- à-vis the quantum of loans given reveals the following position: Sr. No. Name of the creditors Amount of Loan given Income returned for the A.Y. 2018- 19 Proportion to annual income 1 Krishnat Eknath Chavan 97,61,000/- Rs.3,89,700/- 2570% 2 Amrut Kakaso Kumbhar 98,39,955/- Rs.2,77,070/- 3552% 3 Vijay Raghunath Patil 3,00,00,000/- Rs.2,37,770/- 12620% 4 Dadaraje Anandrao Desai 5,21,96,958/- Rs.2,74,410/- 19022% 5 Sambhaji Shamrao Patil 3,00,00,000/- Rs.2,08,110/- 14416% 6 Hanmant Bajirao Desai 5,16,30,000/- Rs.2,15,670/- 23947% 7 Pratap Ramdas Janugade 1,25,78,763/- Rs.4,59,040/- 2740% 9. He accordingly noted that the unsecured loans given by the loan creditors are grossly disproportionate to the annual income disclosed by them. Further, a perusal of the bank accounts of the respective creditors reveals that there were 11 ITA No.1240/PUN/2024 unusual activities involving huge credits in the said bank accounts before the impugned loan transactions. He noted that there are no adequate documents to establish the correct identity, genuineness of the transactions and creditworthiness of the creditors. In view of the above and relying on various decisions, the Ld. PCIT held that the assessment order dated 19.04.2021 passed by the Assessing Officer u/s 143(3) r.w.s. 144B of the Act is erroneous in so far as it is prejudicial to the interest of Revenue. He, therefore, partly set aside the order of the Assessing Officer for the limited purpose of examining the transaction involving unsecured loans and other financial transactions. He further directed the Assessing Officer to specifically examine the following aspects: i) The AO shall conduct detailed inquiries with regard to the unsecured loans and other financial transactions as detailed in paras 4.2 to 4.4 by calling for the relevant evidences relating to the said transactions and properly verify the same and if necessary, examine the persons concerned. ii) The AO may examine the credits/unsecured loans keeping mind the proviso to Sec 68 of the Act. iii) The AO, upon verification of the relevant details/documents, shall record his clear findings as to the identity of the creditor, genuineness of the transactions and creditworthiness of the respective creditors, in respect of the transactions under consideration. 10. Aggrieved with such order of the PCIT, the assessee is in appeal before the Tribunal. 11. The Ld. Counsel for the assessee at the outset submitted that during the course of assessment proceedings the Assessing Officer had asked for various details which the assessee has provided. Merely because the Assessing Officer has not passed a speaking order giving reasons in the manner in which the Ld. PCIT wants, the assessee cannot be held responsible. 12 ITA No.1240/PUN/2024 12. Referring to the decision of Hon’ble Karnataka High Court in the case of CIT v. Gokuldas Exports [2012] 20 taxmann.com 491 (Karnataka), he submitted that the Hon’ble High Court in the said decision has held that if in given facts and circumstances of a case, two views are possible and one view has been adopted by Assessing Officer, then that view alone would not be sufficient to exercise powers under section 263 by Commissioner. 13. Referring to the decision of Hon’ble Punjab & Haryana High Court in the case of Pr. Commissioner of Income-tax (Central) v. Kanin (India) [2022] 141 taxmann.com 83 (Punjab & Haryana), he submitted that the Hon’ble High Court in the said decision has held that before reaching the conclusion that order of Assessing Officer is erroneous and prejudicial to interests of revenue, revisionary authority itself has to undertake some enquiries to establish that assessment order is erroneous and prejudicial to interests of revenue. It has been held that where order was passed by Principal Commissioner holding that assessment made by Assessing Officer was erroneous and prejudicial to interest of revenue as assessment order had been passed without making Inquiries or verification, however, Principal Commissioner was not in a position to point out as to what inquiries or verification should have been made but had not been made by Assessing Officer so as to make present case fall within Explanation 2(a) to section 263, Tribunal rightly set aside order passed by Principal Commissioner. 14. Referring to the decision of Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax v. Pramod Kumar Tekriwal [2023] 154 taxmann.com 13 ITA No.1240/PUN/2024 142 (SC), he submitted that the Hon’ble Supreme Court in the said decision has dismissed the SLP filed against the order of High Court in holding that where Assessing Officer made addition of 3 per cent in respect of bogus purchases over and above rate of gross profit of 4.63 per cent declared by assessee and passed assessment order, since assessee had produced all necessary details of purchase, sales, audited books of account, quantity details and there was no discrepancy between purchase and sales declined, Assessing Officer had taken one possible view out of two assumption and thus to assumption of jurisdiction by Principal Commissioner under section 263 was erroneous. 15. Referring to the decision of Hon’ble Allahabad High Court in the case of M.L. Chains v. Principal Commissioner of Income-tax [2023] 154 taxmann.com 508 (Allahabad), he submitted that the Hon’ble High Court in the said decision has held that Where Commissioner issued a notice under section 263 to assessee, however no opportunity was given to assessee for defending or presenting its case, and moreover, revenue recorded a contrary finding in respect of reply submitted by assessee, impugned order passed under section 263 could not be so stained. 16. He also relied on the following decisions: (i) Global Vectra Helicorp Ltd. vs. Assessment Unit, NFAC (2024) 162 taxmann.com 274 (Del) (ii) Sutherland Global Services (P.) Ltd. vs. DCIT (2024) 162 taxmann.com 393 (Mad) (iii) Dinamalar vs. ACIT (2024) 161 taxmann.com 804 (Mad.) (iv) GHH India Mining and Tunnelling Equipment (P.) Ltd. vs. PCIT (2024) 162 taxmann.com 763 (All) 14 ITA No.1240/PUN/2024 (v) Mod Creations (P.) Ltd. vs. ITO (2011) 13 taxmann.com 114 (Del) (vi) Gaurav Triyugi Singh vs. ITO (2020) 121 taxmann.com 6 (Bom) (vii) K.P. Manish Global Ingredients (P.) Ltd. vs. ACIT (2021) 131 taxmann.com 158 (Chennai – Trib.) (viii) PCIT vs. Dharmesh Padamshibhai Patel (2023) 156 taxmann.com 491 (Guj) 17. He accordingly submitted that the order passed by the Ld. PCIT be set aside. 18. The Ld. DR on the other hand heavily relied on the order of the Ld. PCIT invoking the jurisdiction u/s 263 of the Act. He submitted that the case was selected for limited scrutiny on the issue of Share capital / other capital. During the year the assessee has received unsecured loans to the extent of Rs.19.60 crores from the 7 parties who are said to be the friends and relatives of the assessee. A perusal of their returned income shows that they have declared very meager income as compared to the huge loans and advances given by them. The Assessing Officer has passed a cryptic order and without verifying the identity and creditworthiness of the loan creditors, has accepted the same. Under these circumstances, the Ld. PCIT has rightly invoked the jurisdiction u/s 263 of the Act. He accordingly submitted that the grounds raised by the assessee should be dismissed. 19. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the case of the assessee was selected for limited scrutiny on 15 ITA No.1240/PUN/2024 the issue of Share capital / other capital. It is also an admitted fact that the assessee during the year has received an amount of Rs.19,60,06,676/- from the 7 parties who are said to be the friends and relatives of the assessee. A perusal of the assessment order shows that the Assessing Officer has passed the order as under: 16 ITA No.1240/PUN/2024 20. A perusal of the record shows that the parties who have extended the loan to the assessee have declared very meager income as compared to the huge loans and advances given to the assessee the details of which are as below: Sr. No. Name of the creditors Amount of Loan given Income returned for the A.Y. 2018- 19 Proportion to annual income 1 Krishnat Eknath Chavan 97,61,000/- Rs.3,89,700/- 2570% 2 Amrut Kakaso Kumbhar 98,39,955/- Rs.2,77,070/- 3552% 3 Vijay Raghunath Patil 3,00,00,000/- Rs.2,37,770/- 12620% 4 Dadaraje Anandrao Desai 5,21,96,958/- Rs.2,74,410/- 19022% 5 Sambhaji Shamrao Patil 3,00,00,000/- Rs.2,08,110/- 14416% 6 Hanmant Bajirao Desai 5,16,30,000/- Rs.2,15,670/- 23947% 7 Pratap Ramdas Janugade 1,25,78,763/- Rs.4,59,040/- 2740% 17 ITA No.1240/PUN/2024 21. Although the case was selected for scrutiny on the issue of Share capital / other capital, however, the Assessing Officer without verifying the identity and creditworthiness of the loan creditors in terms of provisions of section 68 has accepted the same in a mechanical manner. 22. We find the provisions of section 263 of the Act read as under: ―263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, [including,— (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section]. Explanation 1.—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1st day of June, 1988] by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall include— (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer [or the Transfer Pricing Officer, as the case may be,] conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; [(iii) an order under section 92CA by the Transfer Pricing Officer;] (b) \"record\" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] had been the subject 18 ITA No.1240/PUN/2024 matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. [Explanation 3.—For the purposes of this section, \"Transfer Pricing Officer\" shall have the same meaning as assigned to it in the Explanation to section 92CA.] (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.—In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.‖ 23. A perusal of the assessment order shows that the order has been passed by Assessing Officer without making any enquiry or verification which should have been made in the instant case. When the lenders are declaring very meager income, how can they extend the loans to the extent of crores of rupees should have opened the eyes of the Assessing Officer. However, the Assessing Officer for the reasons best known to him, has closed his eyes and accepted the documents filed by the assessee and completed the assessment without application of mind. Under these circumstances, if the provisions of section 263 of the Act are not 19 ITA No.1240/PUN/2024 invoked, then we are afraid that such provisions will become redundant and the Assessing Officers can do anything in the name of enquiry. The various decisions relied on by the Ld. Counsel for the assessee are of no help to him especially when the assessment order has been passed by the Assessing Officer by closing his eyes and accepting the huge loans and advances despite meager income declared by those lenders. Under these circumstances and in view of the detailed reasoning given by the Ld. PCIT on this issue, we do not find any infirmity in his order invoking the jurisdiction u/s 263 of the Act. We accordingly uphold the same and the grounds raised by the assessee are dismissed. 24. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open Court on 28th May, 2025. Sd/- Sd/- (ASHTA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 28th May, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. DR, ITAT, ‘A’ Bench, Pune गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 20 ITA No.1240/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 21.05.2025 Sr. PS/PS 2 Draft placed before author 22.05.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "
Other Referred Cases
CIT v. Gokuldas Exports [2012] 20 taxmann.com 491 (Karnataka), Pr. Commissioner of Income-tax (Central) v. Kanin (India) [2022] 141 taxmann.com 83 (Punjab & Haryana), Principal Commissioner of Income-tax v. Pramod Kumar Tekriwal [2023] 154 taxmann.com 142 (SC), M.L. Chains v. Principal Commissioner of Income-tax [2023] 154 taxmann.com 508 (Allahabad), Global Vectra Helicorp Ltd. vs. Assessment Unit, NFAC (2024) 162 taxmann.com 274 (Del), Sutherland Global Services (P.) Ltd. vs. DCIT (2024) 162 taxmann.com 393 (Mad), Dinamalar vs. ACIT (2024) 161 taxmann.com 804 (Mad), GHH India Mining and Tunnelling Equipment (P.) Ltd. vs. PCIT (2024) 162 taxmann.com 763 (All), Mod Creations (P.) Ltd. vs. ITO (2011) 13 taxmann.com 114 (Del), Gaurav Triyugi Singh vs. ITO (2020) 121 taxmann.com 6 (Bom), K.P. Manish Global Ingredients (P.) Ltd. vs. ACIT (2021) 131 taxmann.com 158 (Chennai - Trib), PCIT vs. Dharmesh Padamshibhai Patel (2023) 156 taxmann.com 491 (Guj)
Laws Referred To
Income Tax Act, 1961
1:1 Consultation on Startup Fundraising
₹5000
Tax Holiday Secrets for Startups
₹0
Guide to Charitable Trusts: Formation, Benefits, and Compliance
₹0
Shipping and Logistics Agreement
₹0
Affidavit - Application for condonation of delay in filing the appeal before ITAT - Type 2
Mehul₹0
Transfer Pricing and International Tax Reforms under Finance Bill, 2026: A Practical Overview
Team Counselvise - February 07, 2026
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026
Why Meesho got ₹1,500 Crore Tax Demand ?
Team Counselvise - March 09, 2026