Aryadeep Complex Pvt. Ltd., Bilaspur V. Pr. Commissioner of Income tasx, Bilaspur

ITA 85/RPR/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0140 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 30-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIMAL
• Keywords: Revision of order; Assessment record; Set aside
• Section: 263; 143(3); 142(1); 143(2)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No. 85/RPR/2020 Ǔनधा[रणवष[ / Assessment Year : 2015-16 Aryadeep Complex Pvt. Ltd. 2 nd Floor, CA Chamber, Behind Surya Chamber, VyaparVihar, Bilaspur-495 001 PAN : AAKCA1378E .......अपीलाथȸ / Appellant बनाम / V/s. The Pr. Commissioner of income Tax, Bilaspur(C.G.) ......Ĥ×यथȸ / Respondent Assessee by : S/Shri Sunil Kumar Agrawal, Vimal Agrawal, CA & Smt. Laxmi Sharma, CA Revenue by : Shri P.K. Mishra, CIT-DR स ु नवाई कȧ तारȣख / Date of Hearing : 26.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 05.08.2022 2 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 आदेश/ ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax, Bilaspur(for short ‘Pr. CIT’) dated 31.03.2020, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’), dated 21.04.2016 for assessment year 2015-16. Before us the assessee has assailed the impugned order on the following solitary ground of appeal: “1. On the facts and circumstances of the case and in law, the Ld. Pr. CIT has erred in giving direction u/s.263 to the Ld. AO for making fresh assessment by setting aside the assessment completed u/s. 143(3) dated 21-04.-2017, while it is not so erroneous & prejudicial to the interest of the revenue which is a sine qua & precondition, pre requisite for making direction u/s.263 and in absence of this, the impugned order passed u/s.263 is invalid, void-ab-initio and thus, liable to be quashed.” 2. Succinctly stated, the case of the assessee company was selected for limited scrutiny under CASS u/s.143(2) of the Act. Original assessment was framed by the AO vide his order passed u/s.143(3) of the Act, dated 21.04.2016, wherein the income of the assesee was determined at Rs.2,92,770/-. 3 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 3. After culmination of the assessment proceedings the Pr. CIT called for the assessment records of the assessee. On a perusal of the records, it was observed by the Pr. CIT that the Assessing Officer had framed the assessment without making necessary verifications and examination of certain aspects, viz. (i) that though the share capital and the securities premium of the assessee company as on 31.03.2015 was Rs.33,98,000/- and Rs. 14,91,01,200/-, respectively, however, the Assessing Officer had failed to make any inquiry/examination of the said issue; (ii) that though the assessee company had made an investment of Rs.15.25 crores in unquoted equity shares/unsecured loans/advances, however, the Assessing Officer had not property verified and examined the said aspect; and (iii) that though the assessee company had claimed a loss of Rs.26,90,317/- from derivatives, however, the Assessing Officer had not verified and examined the said aspect of the case. On the basis of his aforesaid observations the Pr. CIT called upon the assessee to explain as to why the assessment order passed 4 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 u/s.143(3) of the Act, dated 21.04.2016 may not be revised u/s.263 of the Act. After considering the reply filed by the assessee, the Pr. CIT though accepted its claim that no revision was called for on the issue of share capital and securities premium of the assessee company which as on 31.03.2015 was Rs.33,98,000/- and Rs. 14,91,01,200/-, respectively, but held the order passed by the AO u/s.143(3) of the Act, dated 21.02.2016 as regards the remaining two issues as erroneous in so far it was prejudicial to the interest of the revenue under Sec. 263 of the Act. Accordingly, the Pr. CIT set-aside the assessment order with a direction to the Assessing Officer to examine the aforesaid two issues afresh and pass a fresh assessment order after affording a reasonable opportunity of being heard to the assessee. 4. Aggrieved, the assessee has assailed the order passed by the Pr. CIT u/s.263 of the Act, dated 31.03.2020 before us. 5. Before us the Ld. Authorized Representative (for short ‘AR’) for the assessee has assailed the impugned order passed by the 5 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 Pr. CIT u/s.263 of the Act primarily on two counts, viz. (i) that the Pr. CIT had wrongly assumed jurisdiction and holding the order passed by the AO u/s.143(3) of the Act, dated 21.02.2016 as erroneous in so far it was prejudicial to the interest of the revenue set-aside the same u/s. 263 of the Act; and (ii) that as the Assessing Officer had framed the assessment after due application of mind, therefore, the Pr. CIT even otherwise was divested of his jurisdiction to revise the order passed by him u/s.143(3) of the Act. 6. As the Ld. AR has assailed the validity of the jurisdiction assumed by the Pr. CIT u/s. 263 of the Act, therefore, we shall first deal with the same. It is the claim of the Ld. AR that as the case of the assessee was taken up for limited scrutiny under CASS, therefore, the Pr. CIT in garb of his revisionary jurisdiction u/s.263 of the Act could not have expanded the jurisdiction of the Assessing Officer and, directed him to carry out verifications and examination of certain issues which had not formed the basis for which the case was selected for limited 6 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 scrutiny assessment. In order to buttress his aforesaid claim the Ld. AR had taken us through the specific reasons for which the case of the assessee was selected for limited scrutiny u/s. 143(2) of the Act (Page No.1 of APB), which reads as under (relevant extract) : “i. Low income and high loans/advances/ investments ii. Investment in unlisted equities iii. Low income and high investment.” It was submitted by the Ld. AR that one of the issues (out of two issues) on the basis of which the Pr. CIT had held the order passed by the Assessing Officer u/s.143(3) of the Act, dated 21.04.2016 as erroneous, viz. verification of the loss of Rs.26,90,317/- on derivatives did not form the basis for which the case of the assessee was selected for limited scrutiny under CASS. Elaborating on his aforesaid contention, it was submitted by the ld. AR that now when the aforesaid issue had not formed the basis for selection of the assessee’s case for limited scrutiny under CASS, therefore, the Pr. CIT in the garb of his revisionary jurisdiction could not have expanded the scope of the jurisdiction of the Assessing Officer by directing him to carry 7 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 out verifications and examination of such extraneous issue. Apropos the observation of the Pr. CIT that the Assessing Officer had failed to make a proper verification and examination of the investment of Rs.15.25 crores that was made by the assessee company in unquoted equity shares, loans/advances, it was submitted by the Ld. AR that the correct amount of investment was Rs.15 crores and not Rs.15.25 crores (supra) as was stated by the Pr. CIT in his order u/s 263. In order to fortify his aforesaid claim the Ld. AR had drawn our attention to the “balance sheet” of the assessee company for the year under consideration wherein the aggregate amount of the investment in unquoted equity shares was reflected at Rs.15 crores (Page No. 36 & 39 of the APB). It was submitted by the Ld. AR that out of the investment of Rs.15 crore (supra) as was reflected in the “balance sheet” as on 31.03.2015, an amount of Rs.11.42 crore was in the nature of an “opening balance” that was brought forward from the immediately preceding year. As regards the balance amount of Rs.3.58 crores [Rs. 15 crore (-) Rs.11.42 crores], it was submitted by the Ld. AR that the same 8 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 was sourced out of the short term loans and advances of Rs.3.65 crores that were received back by the assessee company during the year under consideration. In order to buttress his aforesaid claim the Ld. AR had once again taken us through the “balance sheet” of the assessee company for the year under consideration, wherein the “short term loans and advances” of Rs.3,81,70,724/- as on 31.03.2014 i.e., opening balance for the year under consideration was reduced to an amount of Rs.16,42,826/- as on 31.03.2015. In sum and substance, it was the claim of the Ld. AR that the fresh investment of Rs. 3.58 crores (supra) in unquoted equity shares, loans/advances made by the assessee company during the year under consideration was sourced out of the old loans and advances of Rs. 3.65 crore (supra) that were received back by it during the year under consideration. Alternatively, it was submitted by the Ld. AR that pursuant to the specific queries that were raised by the Assessing Officer vide his notice u/s. 142(1) of the Act, dated 04.04.2017 in the course of the assessment proceedings, wherein he had, inter alia, queried the assessee company as 9 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 regards its investments, the latter had furnished with him the requisite details/information qua the investments in question. On the basis of his aforesaid contentions, it was the claim of the Ld. AR that in so far the investment of Rs. 11.42 crore (out of 15 crore) was concerned i.e, the opening balance of investment as on 31.03.2014, the Assessing Officer could by no means be held as being in error in failing to have verified and examined the source of such investment as the same did not pertain to the year under consideration but was admittedly made in the preceding year. As regards the balance investment of Rs.3.58 crores [Rs. 15 crore (-) Rs.11.42 crores], it was submitted by the Ld. AR that the Assessing Officer in the course of assessment proceedings had specifically queried about the said investments in question and, the assessee in its reply to the same had furnished the complete details before him. It was submitted by the Ld. AR that as the fresh investment of Rs.3.58 crore (supra) was clearly sourced out of the amount of Rs.3.65 crores (supra) which was available with the assessee out of the short-term loan/advances that were received back during the year under 10 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 consideration, therefore, the Assessing Officer on being satisfied with the details which were filed before him had after due application of mind accepted the same. On the basis of his aforesaid contentions, it was submitted by the Ld. AR that as the Assessing Officer after due application of mind had accepted the explanation of the assessee as regards the source of the investments in question, therefore, the Pr. CIT could not have held the order passed by the A.O u/s 143(3), 21.04.2016 qua the issue in hand, viz. investments made by the assessee company in unquoted equity shares, loans/advances to be erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act. 7. Per contra, the Ld. Departmental Representative ( for short ‘DR’) relied on the orders of the Pr. CIT passed u/s. 263 of the Act, dated 31.03.2020. 8. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial 11 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 pronouncements that have been pressed into service by them to drive home their respective contentions. As the Pr. CIT had held the order passed by the Assessing Officer u/s.143(3) of the Act, dated 21.04.2016 as erroneous in so far it was prejudicial to the interest of the revenue on two grounds, therefore, we shall deal with them in a chronological manner as herein below : (A).Claim of loss from derivatives :- 9. Ostensibly, the Pr. CIT had, inter alia, qua the aforesaid issue held the order passed by the Assessing Officer u/s. 143(3) of the Act, dated 21.04.2016 as erroneous in so far it was prejudicial to the interest of the revenue u/s.263 of the Act, for the reason that the AO had failed to verify the assessee’s claim of loss from derivatives of Rs.26,90,317/-. 10. After giving a thoughtful consideration, it transpires, that as stated by the Ld. AR, and rightly so, as the case of the assessee was selected for limited scrutiny under CASS for certain specific reasons and, examination of its claim for loss from derivatives was not one of those reasons for which the case 12 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 was selected for such limited scrutiny assessment, therefore, the Pr. CIT could not have held the order passed by the Assessing Officer as erroneous, for the reason that the latter while framing the assessment had failed to verify the assessee’s claim of loss from derivatives i.e, an issue which was extraneous to the reasons for which the case was selected for limited scrutiny under CASS. In sum and substance, now when pursuant to the selection of the assessee’s case for limited scrutiny under CASS the jurisdiction of the Assessing Officer was circumscribed qua only those issues which had formed the reason for picking up of its case for such scrutiny, therefore, the failure on his part in not making verification or examination of any other extraneous issue by no means could have justifiably formed a reason for holding the order passed by him as erroneous in so far it was prejudicial to the interest of the revenue u/s 263 of the Act. As per CBDT Instruction No. 20/2015, dated 29.12.2015, scrutiny in cases which are selected through CASS has to be confined only to the specific reasons and issues for which the case has been picked up for 13 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 scrutiny. Accordingly, now when the Assessing Officer pursuant to the selection of the case of the assessee for limited scrutiny through CASS was not vested with any jurisdiction for adverting to and therein dealing with issues which did not form part of the reasons for which the case was picked up for limited scrutiny assessment under CASS, thereupon, the Pr. CIT could not have justifiably stepped in to hold the order passed by the Assessing Officer u/s.143(3) of the Act, dated 21.04.2016 as erroneous, for the reason, that he had failed to verify and examine such unrelated issues while framing the assessment. Our aforesaid view is fortified by the decision of the co-ordinate Bench of the Tribunal in the case of M/s Su-Raj Diamond Dealers Pvt. Ltd Vs. Pr. CIT, (2020) 203 TTJ 137 ( Mum.) (of which one of us i.e., Judicial Member was a party), wherein it was held as under : “6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Admittedly, the case of the assessee was selected for limited scrutiny through CASS for two reasons viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High 14 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 Loans/advance /Investment in shares. Insofar the fact that the case of the assessee was selected for limited scrutiny for the aforesaid reasons is concerned, the same as observed by us hereinabove is not disputed and is clearly discernible from the order passed by the Pr. CIT under Sec. 263 of the Act. In fact, we find, that the Pr. CIT in his order had categorically observed that the case of the assessee was not selected for examination on the issue relating to „closing stock‟, but was selected for limited scrutiny for the aforesaid two reasons viz. (i). Large other expenses claimed in the P&L A/c.;and (ii). Low income in comparison to High Loans/advance /Investment in shares. We find that as per the CBDT Instruction No. 20/2015, dated 29.12.2015, scrutiny in cases selected through Computer Aided Scrutiny Selection (CASS) is to be confined only to the specific reasons/issues for which the case has been picked up for scrutiny. In order to appreciate the issue under consideration, we deem it fit to cull out the CBDT instruction No. 20/2015, dated 29.12.2015., which reads as under: "INSTRUCTION NO. 20/2015, DATED: 29-12-2015 29/12/2015 Subject : Scrutiny Assessments-some Important issues and scope of scrutiny in cases selected through Computer Aided Scrutiny Selection ('CASS') - Reg.- The Central Board of Direct Taxes ('CBDT'), vide Instruction No. 7/2014 dated 26.09.2014 had clarified the extent of enquiry in certain category of cases specified therein, which are selected for scrutiny through CASS Further clarifications have been sought regarding the scope and applicability of the aforesaid instruction to cases being scrutinized. 2. In order to facilitate the conduct of scrutiny assessments and to bring further clarity on some of the issues emerging from the aforesaid Instruction, following clarifications are being made: i. Year of applicability: As stated in the Instruction No. 7/2014, the said Instruction is applicable only in respect of the cases selected for scrutiny through CASS-2014. ii. Whether the said Instruction is applicable to all cases selected under CASS: The said Instruction is applicable where the case is selected for scrutiny under CASS only on the parameters) of AIR/CIB/26AS data. If a case has been selected 15 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 under CASS for any other reason(s)/parameter(s) besides the AIR/CIB/26AS data, then the said instruction would not apply. iii. Scope of Enquiry: Specific issue based enquiry is to be conducted only in those scrutiny cases which have been selected on the parameter(s) of AIR/CIB/26AS data. In such cases, the Assessing Officer, shall also confine the Questionnaire only to the specific issues pertaining to AIR/CIB/26AS data. Wider scrutiny in these cases can only be conducted as per the guidelines and procedures stated in Instruction No 7/2014 iv Reason for selection: In cases under scrutiny for verification of AIR/CIB/26AS data, the Assessing Officer has to intimate the reason for selection of case for scrutiny to the assessee concerned 3. As far as the returns selected for scrutiny through CASS- 2015 are concerned, two type of cases have been selected for scrutiny in the current Financial Year-- one is 'Limited Scrutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in Limited Scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of the Income-tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny Further, the scope of enquiry shall be restricted to the Limited Scrutiny' issues. c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in 'Limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other 16 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr CIT/CIT concerned. However, such an approval shall be accorded by the by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating Complete Scrutiny' in that particular case Such cases Shalt be monitored by the Range Head concerned The procedure indicated at points (a), (b) and (c) above shall no longer remain binding in such cases (For the present purpose, 'Metro charges' would mean Delhi, Mumbai, Chennai, Kolkata. Bengaluru, Hyderabad and Ahmedabad. 4. The Board further desires that in all cases under scrutiny, where the Assessing Officer proposes to make additions or disallowances, the assessee would be given a fair opportunity to explain his position on the proposed additions/disallowances in accordance with the principle of natural justice. In this regard, the Assessing Officer shall issue an appropriate show-cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences/reasons forming the basis of the same. Before passing the final order against the proposed additions/disallowances, due consideration shall be given to the submissions made by the assessee in response to the show- cause notice. 5. The contents of this Instruction should be immediately brought to the notice of all concerned for strict compliance. Now, the case of the assessee before us was selected for limited scrutiny through CASS, for the reasons, that there were viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares.. Accordingly, it can safely be concluded that the assessment framed by the A.O fell within the realm of the limited purpose for which its case was selected for scrutiny assessment viz. viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares. 7. As observed by us hereinabove, as per the CBDT instruction No. 20/2015, dated 29.12.2015, in a case which had been selected for scrutiny assessment on the basis of Computer Aided Scrutiny Selection ('CASS'), the scrutinising of such case 17 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 would be confined only to the specific reasons/issues for which the case has been picked up for scrutiny. However, the case may thereafter be taken up for complete scrutiny with the approval of the administrative Principal commissioner of income-tax/Commissioner of income-tax, where it is felt that apart from the CASS information there is potential escapement of income of more than Rs.10,00,000/-. Accordingly, the CBDT had in clear and unequivocal terms clarified that for broadening the scope of a case selected for limited scrutiny as per CASS information the approval of the administrative Principal commissioner of income-tax/Commissioner of income-tax would be required. In the case before us, it is an admitted fact that the case of the assessee was selected for "limited scrutiny" under CASS,for the reasons, viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares. In fact, it is neither a fact nor the case of the revenue that the said case was thereafter taken up for complete scrutiny with the approval of the administrative commissioner. In the backdrop of the aforesaid facts, we are of the considered view that as the scope of the assessment framed by the A.O under Sec. 143(3), dated 08.12.2016 was circumscribed by the limited reasons for which the case of the assessee was selected for scrutiny assessment, therefore, he was absolutely divested of his powers from traversing on issues which did not fall within the realm of the said limited purpose for which the said case was selected for being scrutinised. 8. We shall now in the backdrop of our aforesaid observations deliberate on the validity of the order passed by the Pr. CIT under Sec. 263. As observed by us hereinabove, the Pr. CIT had held the order passed by the A.O under Sec. 143(3), dated 08.12.2016 as erroneous, in so far it was prejudicial to the interest of the revenue, for the reason, that he had failed to carry out proper investigation as regards the issue of valuation of the “closing stock as reflected in the audited accounts of the assessee. We are of a strong conviction that now when the case of the assessee was selected for limited scrutiny for the reasons viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to the assessment framed by the A.O on the ground that he had failed to deal with other issues which though did 18 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 not fall within the realm of the limited reasons for which the case was selected for scrutiny assessment. In other words, the Pr. CIT in the garb of his revisional jurisdiction u/s. 263 cannot be permitted to traverse beyond the jurisdiction that was vested with the A.O while framing the assessment. In sum and substance, revisional jurisdiction cannot be exercised for broadening the scope of jurisdiction that was vested with the A.O while framing the assessment. As a matter of fact, what cannot be done directly cannot be done indirectly. Accordingly, in terms of our aforesaid observations, we are of the considered view that as the A.O had aptly confined himself to the issues for which the case of the assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for the reason, that he had failed to dwell upon certain other issues which did not form part of the reasons for which the case was selected for limited scrutiny under CASS. We thus not being able to concur with the view taken by the Pr. CIT that the order passed by the A.O under Sec. 143(3), dated 08.12.2016 is erroneous, therefore, „set aside‟ his order and restore the order passed by the A.O. As we have quashed the order passed by the Pr. CIT under Sec. 263 on the ground of invalid assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the ld. A.R on the merits of the case, which thus are left open.” On the basis of our aforesaid observations, we are of a strong conviction, that as stated by the Ld. AR, and rightly so, the Pr. CIT had clearly traversed beyond the scope of his jurisdiction and revised the order passed by the Assessing Officer by holding the same as erroneous, for the reason that he had while framing the assessment failed to look into and carry out necessary verification and examination of the assessee’s claim of loss from derivatives i.e, an issue which was never the subject matter for 19 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 selection of the case of the assessee for limited scrutiny under CASS. (B). Investment in unquoted equity shares and in unsecured loans/advances:- 11. As observed by us hereinabove, it is the claim of the Pr. CIT that the Assessing Officer had while framing the assessment erred in not verifying and examining the investments that were made by the assesee company in unquoted equity shares and unsecured loans/advances. As stated by the Ld. AR, and rightly so, the amount of the aforesaid investments as on 31.03.2015 was Rs.15 crores not Rs.15.25 crores as had been mentioned by the Pr. CIT in the impugned order. 12. Adverting to the claim of the ld. AR that as the AO in the course of the assessment proceedings had vide notice(s) issued u/s. 142(1) of the Act, dated 04.04.2017 and 28.10.2016 specifically queried about the details of the investments reflected in its “balance sheet” a/w the source of the same (Page 42 to 44 of the APB), and had only after duly applying his mind to the requisite details and the explanation furnished by the 20 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 assessee accepted the same, therefore, the Pr. CIT in exercise of his revisional jurisdiction could not have substituted his view as as against the possible and plausible view that was arrived at by the AO as regards the aforesaid issue under consideration, we are unable to persuade ourselves to subscribe to the same. Ostensibly, the Pr. CIT on a perusal of the assessment records noticed that the assessee company had during the year under consideration made substantial investment in unquoted equity shares. Observing, that the AO had not made any enquiry as regards the investments made by the assessee in unquoted equity shares during the year, the Pr. CIT held the assessment framed by the AO vide his order passed u/s 143(3), dated 21.04.2017, to the said extent, as erroneous in so far it was prejudicial to the interest of the revenue under Sec. 263 of the Act, observing as under : “ 1. The case of the assessee was selected for the reason ‘Low income in comparison to very high investment’ and ‘Large increase in investment in unlisted equities during the year’. From the balance sheet of the assessee it is seen that as at 31st March, 2015, the total investment of the assessee in unquoted equity shares was Rs. 15,00,00,000/- and the same stood at Rs. 11,42,00,000/- as at 31/03/2014. The assessing officer vide notice under section 142(1) dated 04/04/2017 has 21 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 simply asked the assessee to furnish the details of investment. Counsel for the assessee vide his reply, received by the AO on 10/04/2017, has furnished list of investment. The list shows that during the year under consideration assessee has made substantial investment in unquoted equity shares. It is seen that the assessing officer has not made any enquiry in this regard. He has not asked the assessee to furnish the detail ledger of investment. He has not asked for the relevant documents such as broker’s details, ledger account of the assessee in the broker’s books of account etc,, He has not made any enquiry so as to enquire that whether the assessee company, director or family members of the assessee company in which the investment has been made by the assessee. Thus the AO has not properly examined the issue.” On a perusal of the order passed by the Pr. CIT u/s 263 of the Act, it transpires that the Assessing Officer vide his notice u/s. 142(1) of the Act, dated 04.04.2017 had in the course of the assessment proceedings simply asked the assessee to furnish the details of investment. In reply, the assessee had vide its letter dated 10.04.2017 furnished with the AO the bifurcated details of its investments. Ostensibly, though the AO in the course of the assessment proceedings had queried as regards the investments reflected in the balance sheet of the assessee, and, the assessee in its reply had furnished the details of said investments, but in our considered view such furnishing of bare basic details can by no means be brought within the realm of 22 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 making of inquiries or carrying out verifications qua the issue in hand by the AO. Be that as it may, the view of the Pr. CIT that the AO had passed the order without making inquiries or verifications which should have been made as regards the aforesaid issue i.e, substantial investments in unquoted equity shares made by the assessee company during the year under consideration, therein, renders the order passed by him as deemed to be erroneous in so far it is prejudicial to the interest of the revenue is supported by the “Explanation 2(a)” of Sec. 263, which reads as under (relevant extract) : “Explanation 2 – For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer 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 Commissioner or Commissioner, - (a). the order is passed without making inquiries or verification which should have been made. (b) to (d)....................................................................................” We, thus, in terms of our aforesaid observations are principally in agreement with the view taken by the Pr. CIT that the order passed by the AO under Sec. 143(3), dated 21.04.2017 is erroneous in so far it is prejudicial to the interest of the revenue 23 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 under Sec. 263, on the said count i.e, failure on the part of the AO in carrying out verifications as regards the substantial investments made in equity shares by the assessee during the year under consideration. Although, we have principally concurred with the Pr. CIT on the aforesaid issue, but at the same time find some substance in the claim of the ld. AR, that as stated by the assessee before the AO in the course of the assessment proceedings, as the fresh investment of Rs. 3.58 crores [Rs. 15 crore (-) Rs.11.42 crores] in unquoted equity shares made by the assessee company during the year under consideration was sourced out of its old loans and advances of Rs. 3.65 crore (supra) that were received back during the year, therefore, the same were made out of it duly disclosed sources. Be that as it may, having principally concurred with the order passed by the Pr. CIT under Sec. 263 qua the aforesaid issue in hand i.e, failure on the part of the AO in carrying out verifications as regards the substantial investments made in equity shares by the assessee during the year under 24 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 consideration, we herein direct the AO to consider the aforesaid claim of the assessee in the course of the set-aside proceedings. 13. We, thus, in terms of our aforesaid observations modify the order passed by the Pr. CIT under Sec. 263 of the Act, dated 31.03.2020 and restore the order passed by the AO under Sec. 143(3) to the said extent. 14. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 05 th day of August, 2022. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANTMEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 05 th August, 2022 ***SB आदेशकȧĤǓतͧलͪपअĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT, Bilaspur (C.G) 4 .ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 5. गाड[फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, 25 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 26 Aryadeep Complex Pvt. Ltd. Vs. Pr.CIT ITA No. 85/RPR/2020 Date 1 Draft dictated on 01.08.2022 Sr.PS/PS 2 Draft placed before author 03.08.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 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