MOHAMMAD OSMAN MOHAMMAF HAROONMOTIWALA,AURANGANBAD V. PCIT- NASHIK 1, NASHIK

ITA 1133/PUN/2024

AI Insights

The case involves Mohammad Osman Mohammad Haroon Motiwala, who is engaged in the business of trading and repairing machinery tools and hardware. A survey under section 133A of the Income Tax Act, 1961, conducted at his business premises led to the declaration of excess stock valued at Rs. 50,00,796. The AO accepted the declaration as business income, taxing it at 30% except for Rs. 4,90,566 considered as dead stock, which was taxed at 60% under section 115BBE. The PCIT later invoked section 263, finding the assessment order erroneous and prejudicial to the revenue's interest, leading to an appeal by the assessee before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28927 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: CIT v/s Bajargan Traders, Shri Ram Swaroop Singhal Vs. ACIT, Chokshi Hiralal Maganlal vs DCIT, Shri Lovish Singhal vs ITO, Hema Raman Vs. PCIT, PCIT Vs. Deccan Jewellers, Ashokkumar Kesherchand Pande Vs. ACIT, Malabar Industrial Co. Ltd. vs. CIT, CIT vs. Greenworld Corporation, CIT Vs. Amitabh Bachhan
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: KISHOR B. PHADKE
• Keywords: Set aside; Business income; Question of law; Bad and doubtful debts; Unexplained investment; Income from undisclosed sources; Source of fund; Revision of order
• Section: 143(3); 263; 48; 131; 69; 44AD; 69B; 13; 69A; 73; 28; 2; 133A; 20

Judgement Text

" आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1133/PUN/2024 धििाारण वर्ा / Assessment Year : 2019-20 Mohammad Osman Mohammad Haroon Motiwala, Opp. Arish Masjid, Yunus Colony, Aurangabad – 431001 PAN : APSPM4946E Vs. PCIT -1, Nashik अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Kishor B. Phadke Department by : Shri Amol Khairnar Date of hearing : 07-11-2024 Date of Pronouncement : 05-02-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 21.03.2024 of the Ld. Principal Commissioner of Income Tax, Nashik-1 (“PCIT)” passed u/s 263 of the Income Tax Act, 1961 (the “Act”) pertaining to Assessment Year (“AY”) 2019-20. 2. The assessee has raised the following grounds of appeal :- “1. The learned PCIT-1, Nashik erred in law and on facts in assuming jurisdiction u/s 263 of the ITA, 1961 on the analogy that the order passed u/s 143(3) of the ITA, 1961 dated 08/09/2021 was erroneous and prejudicial to the interest of the revenue. 2. The learned PCIT-1, Nashik erred in law and on facts in directing the learned AO to frame the assessment afresh considering provisions of law instead of giving specific directions. As such the order passed u/s 263 of the ITA, 1961 is erroneous. 3. The learned PCIT-1, Nashik erred in law and on facts in invoking provisions of section 69 r.w.s 115BBE of the ITA, 1961 on amount of Rs. 50,00,796/- for undisclosed stocks; and taxing the same @ 60% instead of regular rate of 30%. 2 ITA No.1133/PUN/2024, AY 2019-20 4. The learned PCIT-1, Nashik erred in law and on facts in considering the undisclosed stocks amounting to Rs. 50.01 Lakhs as unexplained investments u/s 69 of the ITA, 1961 in spite of the fact that the appellant has declared the stock in ROI i.e. already declared source of income. Appellant contents that, provisions of section 69 of the ITA, 1961 are not applicable to the present facts. 5. Appellant craves leave to add / amend /modify/delete all / any of the grounds of appeal.” 3. Briefly stated, the assessee is an individual, engaged in the business of trading and repairing of various machinery tools and hardware in the name of his proprietary concern M/s. Indian Tools. For AY 2019-20, the assessee filed his return of income on 31.12.2019 declaring total income of Rs.47,92,860/-. A survey action u/s 133A of the Act was conducted at the business premises of the assessee, M/s Indian Tools on 25.02.2019. During the survey proceedings, the assessee made disclosure of Rs.50,00,796/- on account of excess stock over and above his regular income. Accordingly, the case was selected for compulsory scrutiny. Statutory notice(s) u/s 143(2)/142(1) of the Act were issued and duly served upon the assessee. 3.1 During the assessment proceedings, out of Rs.50,00,796/- the assessee declared an amount of Rs.45,10,230/- on account of survey declaration and the difference of Rs.4,90,566/- which the assessee claimed to be the dead stock was added to the income of the assessee as unexplained investment u/s 69B of the Act. However, the said claim of the assessee was not found to be acceptable by the Ld. Assessing Officer (“AO”) who observed that during the course of survey proceedings, the assessee himself has accepted difference in stock amounting to Rs.50,00,796/- (value of stock as per physical verification Rs.60,13,780/- - value of stock as per books of account Rs.10,12,984/-) and offered the same for taxation in AY 2019-20. Therefore, the entire excess stock has to be naturally brought to tax as “undisclosed income” by itself and there is no question of any deduction in respect of dead stock amounting to Rs.4,90,566/-. Hence, sum of Rs.4,90,566/- has to be added to the total income of the assessee as unexplained investment u/s 69B of the Act. He, therefore, completed the assessment bringing the said amount of Rs.4,90,566/- to tax @ 60% under the provisions of section 115BBE of the Act vide his order dated 08.09.2021 passed u/s 143(3) r.w.s. 144B of the Act. 3 ITA No.1133/PUN/2024, AY 2019-20 4. The Ld. PCIT examined and verified the case records and observed that the Ld. AO has completed the assessment without making due verification, inquiries and has also not applied correct provision of the Act which were warranted in the facts and circumstances of the case. The Ld. PCIT noticed that the Ld. AO has made an addition of Rs.4,90,566/- to the income returned of Rs.47,92,860/- thereby assessing the income of the assessee at Rs.52,83,426/-. The Ld. AO has calculated the tax payable as per the provisions of section 115BBE of the Act on the amount of Rs.4,90,566/- only, however, the whole declaration of Rs.50,00,796/- during the course of survey proceedings should have been taxed applying the provisions of section 115BBE of the Act. He, therefore concluded that the impugned order passed by the Ld. AO is erroneous in so far as it is prejudicial to the interest of the revenue because the assessment has been made without making inquiries or verification which should have been made. Accordingly, the Ld. PCIT issued notice u/s 263 of the Act to show cause as to why the impugned order of the Ld. AO be not set aside. In response thereto, the assessee neither attended the hearing nor filed any written submission. Therefore, one more opportunity was granted calling for certain information mentioned in the notice. The assessee responded and filed written submissions to the said notice, the relevant portion of which has been reproduced in para 5 and 5.1 by the Ld. PCIT in his order and the same are reproduced below : “05. In response to the opportunity letter, the assessee filed written submission received in this office on 16.02.2024. The relevant portion of the submissions of the assessee filed during the proceedings u/s 263, is as under : \"That the appellant the original assessee in the assessment proceedings filed before the Lit ITO at Aurangabad The appellant being aggrieved by the order dated 08/09/2021 passed by the LITO of Aurangabad bearing no TBA/AST/S/143(3)/2021- 22/1035372039(1), whereby appellant is filing the present appeal The copy of the said order is annexed herewith for the kind perusal of this Hon'ble Commissioner. 2. That the present appellant is carrying out business of trading and repairing of various machinery tools and hardware. 3 That With reference to above order number of the Income Tax Act, 1961 for the Assessment Year 2019-2020 in this regard we are submitting the following documents and as required by you. Statement of Facts – 1. That we have filed return of income u/s 44AD, we have declared income form other sources of Rs. 45, 10.230 of stock which was found during the survey under section 1334 of the income tax Act 1961 was 4 ITA No.1133/PUN/2024, AY 2019-20 conducted on 25.02.2019 to 27.02.2019 at the premises of the assessee le proprietary concern M/s Indian Tools, Baba Lane, Rajabazar. 2. That, while the Remaining amount (as per Assessing Officer) of Rs.4.90,566 was dead stock found during the survey and is loss and expired stock, which needed to be completely written off with zero residual value. Hence, we have reduced the value of closing stock. 3. That the method of valuation of stock, it is respectfully submitted, is in accordance with the accepted principles of accounting propounded by the institute of Chartered Accountants of India The Courts in India, too, have accepted the method of valuation of obsolete/defective stock af net realizable value being lower than cost. …………………………….” 5.1 The assessee has further filed a written submission dated 16.03.2024 received in this office on 17.03.2024. The relevant portion of the submission is as under: “……………………… 3.1 in this case, assessee is an Individual qualified upto 9th Standard and running a small proprietary concern under the name and style as\" M/s Indian Tools, Baba Lane, Raja Bazar, Aurangabad-431001 which is mainly engaged in trading of small machines tools including repairs on retail basis. The aforesaid business was being carried out by the assessee since last 20 years. The assessee was regularly filing the return of income for last 8-9 years by disclosing the presumptive net profit as per the provisions of section 44AD of the income-tax Act, 1961 and for all these years assessee's turnover was not exceeded the threshold limits for maintained the books of accounts and getting it audited. The assessee has maintained only purchase and sale details for the business carried out by him. 3.2 In the case of the assessee an action under section 133A of the Income tax Act, 1961 was conducted by the Authorized Officer at the business premises of the assessee between 25.2.2019 to 27.02.2019 During the course of survey action, an inventorisation of the stock was physically taken and also statement under section 131 of the Income-tax Act, 1961 was also recorded in respect of Proprietary Mohammad Haroon Motiwala dated 27.02.2019. The Authorised Officer vide question No. 11 of the aforesaid statement had asked to explain the discrepancies/difference found in the value of stock. The aforesaid Question No. 11 and its reply of the assessee is reproduced below :- “Q11 During the course of survey proceedings, an inventory of physical stock was taken in your premises amounting to Rs. 60, 13,780/- at cost price, whereas, the closing stock as on the date of survey as per tentative trading account presented by you shows the value of closing stock as on the date of survey as per cost price which works sout to Rs. 10,12,984/. Thus, there is difference in closing stock to the extent of Rs. 50,00,796/- at cost price. Please explain the discrepancy. Ans. As regards the difference pointed out by you, I have to explain that I am totally uneducated person only know how to do the business and also I am not having regular person for maintaining the books of accounts. Therefore, there are little chances of mistake in maintaining the proper records or purchases and sales, which ultimately has resulted into maintaining the inaccurate records of stock. I have to only concentrate for purchase and sale of the goods. My business is involved dealing in number of small items, therefore, it is not practicably possible to maintain the accurate details and there might be certain chances of 5 ITA No.1133/PUN/2024, AY 2019-20 differences in the stock. I wold like to also mention here that you have taken the stock as per the cost price but certain stock is dead stock which is dumped I am unable to explain the difference in correct manner. In addition to the above I have not also recorded the proper details of the stock including the purchase and sales in certain instances. Therefore, to sum up the discrepancies, I am offering the difference in stock amounting to Rs.50,00,796/- over and above regular income on account of inventories for F.Y. 2018-19 (A.Y. 2019-20) to buy peace of mind which is my regular income arose out of the only business activities.” 3.3 From the above, statement under section 131 of the Income-tax Act, 1961, It was apparent that the assessee had offered an amount of Rs 50,00,796/ on account of over and above regular income on account of inventories for the financial year 2018-2019 relevant to the assessment year 2019-2020 to buy peace of mind which is assessee's regular income arose out of the only business activities. Further, it has categorically stated in the statement by the assessee that, value of closing stock as on the date of survey arrived at by the Survey Party on the basis of cost price includes certain dead and dumped stock which has no value Therefore, considering the reasonableness of such dead stock being 8% approximately amounting to Rs. 4,90,566 on the total value of stock at cost price amounting to Rs 60,13,786/- was considered and accordingly an amount of Rs 45,10,230/- was computed while filing the return of income on account of income offered during the course of survey out of regular business income activities of the present assessment year under consideration to buy peace of mind in view of this position, assessee filed the return of income in ITR-4 on dated 31.12.2019 declaring total income amounting to Rs. 48,33,063/- which includes regular income amounting to Rs.3.22,833/- on presumptive basis under section 44AD of the Income-Tax Act, 1961 and Rs. 45. 10,230/- as business income of the current year. 3.4 The case of the assessee was manually selected for scrutiny and accordingly notices under section 143 (2) and 142 (1) of the income-tax Act, 1961 were issued by the AO NAFC asking the reason of short declaration of income amounting to Rs. 4,90,566 In response to the same it was categorically submitted before the AO NFAC that, the assessee had declared current year's business income amounting to Rs.50.00,796, however, the value of dead/dumped stock having no market value has accordingly reduced by following factual principles amounting to Rs. 4.90.566/ Though the AO NFAC at Para No.3.2 of the order passed under section 143 (3) read with section 1448 of the income-tax Act, 1961 dated 8.9.2021 undisputedly observed that, \"Dead stock is a certain portion of a stocked item refers to the amount of a product that remains in stock too long because it could not be sold. It is not bad debts, but dead stock means loss of stock due to changing of fashion or rejection or changing of technology and will not sale in the market. But concluded that, this is abnormal loss will not be deducted from the closing stock and accordingly completed the assessment by making an addition of Rs. 4.90,566/- under section 698 of the income-tax Act, 1961 charging the tax at the rate of 60% as per the amended provisions of section 115BBE of the Income-Tax Act 1961. 3.5 Being aggrieved with the said order, assessee preferred an appeal before the CIT(A) NFAC against the addition made which is pending for decision. The assessee has taken necessary grounds of appeal before the CIT(A) for the addition which are being altered amended or modified, if any, during the course of regular upcoming appellate proceedings in the matter. 4. From the above, it was apparent that, during the course of survey proceedings, assessee had offered an amount of Rs. 50,00,796 on account of over and above regular income on account of inventories for the financial year 2018-2019 relevant to the assessment year 2019-2020 to buy peace of 6 ITA No.1133/PUN/2024, AY 2019-20 mind which is assessee's regular income arose out of the only business activities. Further, after considering the value of dead stock of Rs.4,90,566/- an amount of Rs.45,10,230/- had offered as an additional income over and above the normal income for the present assessment year under consideration on account of business income of the year under the head Income from business chargeable under the provisions of section 28 of the Income-tax Act, 1961. Further, from the entire survey proceedings and evidences gathered shows that, the aforesaid amount offered had a direct nexus with the assessee's own business activities and there exists no undisclosed activities of the assessee. 5. In view of the abovementioned facts, circumstances of the case and the evidences available on records establishes beyond doubt that, the aforesaid declaration of income is wholly and exclusively relates to the eligible business activities of the assessee and not from any other undisclosed activities detected by the Department. Since the assessee had disclosed the surrendered income in his return of income under the head income from business and categorically explained the sources of such income earned from the business activities. The Learned AO NAFC after examination and having been satisfied with the declaration made and income offered accepted the said amount as income from business activities of the assessee for current year while passing the assessment under section 143(3) of the Income-tax Act, 1961 dated 8.9.2021 without applying deeming provisions of section 698 of the Income-tax Act, 1961 and also subsequent provisions of section 115BBE of the Income-tax Act, 1961. 6. In light of the above discussion assessee submits the following judicial precedents wherein the Courts have held that when the sources of income are explained in relation to surrendered income then invoking of deeming provisions under sections 68, 69, 69A to 69D is not warranted and consequently the higher rate of tax under section 1158BE is not applicable. (a) Hon'ble Rajasthan High Court in the case of CIT v/s Bajargan Traders D.B. I.T. No. 258/2017 dated 12/09/2017: (b) Shri Ram Swaroop Singhal Vs. ACIT in ITA No. 142 to 146 of ITAT Jodhpur: (c) Chokshi Hiralal Maganlal vs DCIT (ITA No. 3281/Ahd/2009 AY 2004-05 dated 5 August 2011); (d) Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014-15 dated 25 May 2018) 7. In addition to the above, it is to be further submitted that, there was a direct nexus of the surrendered income with business activities exclusively and accordingly the assessee has rightly treated the said income as business income under the head income from business or profession which was duly shown in the return of income filed and accepted by the AO NFAC after examination and inquiries. Further, the survey party has not brought on record any evidence or material to establish that, the assessee was involved in any other undisclosed activities and as such the income disclosed as business income by the assessee was in accordance with the law and Act which also supported from various judicial decisions. In view of the discussion supra, it is humbly requested to kindly not to invoke the provisions of section 263 of the Income-tax Act, 961. 8. From the above, it was apparent that the Assessing Officer duly considered and accepted that, the income offered during the course of the survey was out of the business activities and taxed the additional income as business income charging the tax at the rate of 30 percent normally. The 7 ITA No.1133/PUN/2024, AY 2019-20 reasons mentioned for issuance of a present notice under section 263 of the Income-tax Act, 1961 under reference revealed the fact that, there are two possible views on the matter and one view has been accepted by the Assessing Officer after verification of the issue during the course of scrutiny proceedings under section 143(3) of the Income-tax Act, 1961 and upon being satisfied on such verification view cannot be said to be erroneous. In this factual matrix, it cannot but be accepted that a possible view on the matter had been followed by the Assessing Officer. In doing so, the Assessing Officer, in fact, followed the consistent view of various judicial authorities binding on him, namely, where excess stock found in the course of survey is neither separately identifiable nor had independent physical existence, it cannot be treated as 'undisclosed investment under Section 698 of the Income-tax Act, 1961. 9. In response to the elaborate explanation offered by the assessee in response to queries raised while recording the statement under section 131 of the Act specifically stating that, the offered income pertains to the business activities of the assessee, which were fortifiable by consistent views by various Benches of the Tribunal as well as the High Courts. The Assessing Officer, upon consideration, accepted the explanation and taxed the additional income as 'business income at the rate of 30% instead of 60% as per Section 115BBE of the Income-tax Act, 1961. …………………………. 12. In view of the above written submission, factual aspect of the case and decisions of the honourable High Court and various Tribunals, it is humbly requested not to invoke the provisions of section 263 of the Income-tax Act, 1961 and drop the proceedings initiated\" 4.1 The above submissions of the assessee were not acceptable to the Ld. PCIT. Considering the provisions of section 69 of the Act, the Ld. PCIT was of the opinion that the proceedings initiated by him u/s 263 of the Act is in accordance with the law because the assessment has been made not only without proper verification but also without applying the relevant provisions of the Act properly. The Ld. PCIT observed that the declaration of Rs.50,00,796/- on account of excess stock during the survey proceedings was not a voluntary disclosure of the assessee. If the survey has not been conducted this income could not have been unearthed. Therefore, section 69 is squarely applicable on the whole amount of declaration of Rs.50,00,796/- and required to be taxed under the provisions of section 115BBE of the Act as against the normal rate of 30% applied by the Ld. AO on Rs.45,10,230/- and the rate of 60% under the provisions of section 115BBE of the Act only in respect of addition of dead stock of Rs.4,90,566/-. The Ld. AO has failed to consider that the whole amount of declaration of Rs.50,00,796/- should have been taxed by applying the provisions of section 115BBE of the Act and therefore it can be inferred that he has failed to cause proper inquiries and consequential verifications rendering the impugned assessment order erroneous and 8 ITA No.1133/PUN/2024, AY 2019-20 prejudicial to the interest of the revenue. The relevant findings and observations of the Ld. PCIT are as under : “6.2 On perusal of assessee's submission filed during the revisionary proceedings, it is seen that the assessee has declared an amount of Rs.50,00,796/- on account of excess stock over and above regular income during the survey proceedings. It is pertinent to mention here that, if the survey might not have been conducted, this income could not have been unearthed. It is therefore, not a voluntary disclosure of the assessee, but had disclosed this income (i.e. unexplained investment) only after survey action. Therefore, section 69 is squarely applicable and required to taxed under provisions of section 115BBE of the Income Tax Act. The relevant portion of the section 69 is read as under: “69. Unexplained investments. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing Officer] [Substituted by Act 4 of 1988, Section 2, for Income-tax Officer\" (w.e.f. 1.4.1988).], satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. During the assessment proceedings, the AO has failed to consider the same by adding the whole amount of declaration of Rs.50,00,796/- by applying the provisions u/s 115BBE of the Act. Considering the overall facts of the case, it is clearly established that all these details have escaped proper scrutiny in the hands of A.O. Therefore, it can be inferred safely that AO has failed to cause proper inquiries and consequential verifications which rendered assessment order erroneous and prejudicial to the interest of revenue. 07. In the light of the detailed discussion made hereinabove, I am of the considered opinion that the assessment order passed u/s.143(3) r.w.s.144B of the Act for Assessment Year 2019-20 on 08.09.2021 by the then AO, is erroneous in so far as it is prejudicial to the interests of Revenue, because the assessment has been made not only without proper verification but also without applying the relevant provisions of the Act properly. Therefore, the provisions of section 263 of the I.T. Act, 1961 are hereby invoked and assessment order passed by the AO on the above issue is hereby set aside as mentioned in para 3 above. The AO is directed that the assessment order be framed afresh as per the provisions of law, after considering proper facts and submissions of the assessee on the issue set-aside herein above, after affording proper opportunity to the assessee within the time allowed under the Income-tax Act, 1961.” 5. It is against the directions of the Ld. PCIT to the Ld. AO to frame the impugned assessment order afresh in the light of the aforesaid discussion that the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto. 9 ITA No.1133/PUN/2024, AY 2019-20 6. Referring to para 3.3 of the assessment order and the statement of the assessee recorded on oath u/s 131 of the Act (page 10 of the paper book refers), the Ld. AR submitted that during the course of the survey proceedings vide Q. No. 11 the assessee was asked to explain difference in closing stock to the extent of Rs.50,00,796/- to which the assessee responded as under : “Q. 11 During the course of survey proceedings, an inventory of physical stock was taken in your business premises amounting to Rs. 60.13.780/- at cost price, whereas, the closing stock as on the date of survey as per tentative trading account presented by you shows the value of closing stock as on the date of survey as per cost price which works out to Ra 10.12.984/ Thus, there is difference in closing stock to the extent of Rs.50.00.796/at cost price. Please explain the discrepancy. Ans. As regards the difference pointed out by you, I have to explain that I am totally uneducated person only know how to do the business and also I am not having regular person for maintaining the books of accounts. Therefore, there are little chances of matakes in maintaining the proper records or purchases and sales, which ultimately has resulted into maintaining the inaccurate records of stock. I have to only concentrate for purchase and sale of the goods. My business is involved dealing in number of small items, therefore, it is not practicably possible to maintain the accurate details and there might be certain chances of differences in the stock. I would like to also mention here that you have taken the stock as per the cost price but certain stock is dead stock which is dumped. I am unable to explain the difference in correct manner. In addition to the above I have not also recorded the proper details of the stock including the purchases and sales in certain instances. Therefore, to sum up the discrepancies, I am offering the difference in stock amounting to Rs. 50,00,796/- over and above regular income on account of inventories for F.V. 2018-19 (AY. 2019-20) to buy peace of mind which is my regular income arose out of the only business activities.” 6.1 He submitted that only after considering the above response of the assessee, the Ld. AO proceeded to complete the assessment by accepting the amount of Rs.45,10,230/- as business income of the assessee taxing the same at the normal rate of 30% and of Rs.4,90,566/- claimed as dead stock @ 60% under the provisions of section 115BBE of the Act out of the total stock of Rs.50,00,796/- declared as excess stock during the course of survey proceedings conducted at the business premises of the assessee. The Ld. AR submitted that the assessee has challenged the addition of Rs.4,90,566/- by the Ld. AO charging the tax @ 60% before the Ld. CIT(A)/NFAC which is pending for decision. The assessee has offered an amount of Rs.50,00,796/- on account of excess inventory over and above the regular income for AY 2019-20 to buy peace of mind. This income is assessee’s regular income which arose out of the business activities only. After considering the value of dead stock of Rs.4,90,566/- the differential amount of Rs.45,10,230/- has been offered to tax as business income of 10 ITA No.1133/PUN/2024, AY 2019-20 the assessee for the relevant AY. Since, the assessee has disclosed the surrendered income in his return of income as business income and categorically explained the source of income earned from business activities, the Ld. AO after examination and having been satisfied with the declaration made and income offered accepted the said amount as income from business activities of the assessee without applying the deeming provisions of section 69B of the Act and also provisions of section 115BBE of the Act. 6.2 The Ld. AR further submitted that the survey team has not brought on record any evidence or material to establish that the assessee was involved in any other undisclosed activities and as such the income disclosed as business income by the assessee was in accordance with law and facts and supported by various judicial decisions. 6.3 Then the Ld. AR reiterated the submissions made by the assessee before the Ld. PCIT in support of its claim including certain judicial precedents mentioned therein which are placed on page 40 to 48 of the paper book and submitted that invocation of the provisions of section 263 of the Act by the Ld. PCIT in the assessee’s case is not correct. The Ld. AO duly considered and accepted that, the income offered during the course of the survey was out of the business activities and taxed the additional income as business income charging the tax at the rate of 30% normally. The reasons mentioned for issuance of notice u/s 263 of the Act under reference revealed the fact that, there are two possible views on the matter and one view has been accepted by the Ld. AO after verification of the issue during the course of scrutiny proceedings u/s 143(3) of the Act and upon being satisfied on such verification view cannot be said to be erroneous. In this factual matrix, it cannot but be accepted that a possible view on the matter had been followed by the Ld. AO. In doing so, the Ld. AO, in fact, followed the consistent view of various judicial authorities binding on him, namely, where excess stock found in the course of survey is neither separately identifiable nor had independent physical existence, it cannot be treated as 'undisclosed investment’ u/s 69B of the Act. In light of the elaborate explanation offered by the assessee in response to queries raised while recording the statement u/s 131 of the Act specifically stating that, the offered income pertains to the business activities of the assessee, which were fortifiable by consistent views by various Benches of the Tribunal as 11 ITA No.1133/PUN/2024, AY 2019-20 well as the High Courts, the Ld. AO, upon consideration, accepted the explanation and taxed the additional income as 'business income' at the rate of 30% instead of 60% as per section 115BBE of the Act. 6.4 The Ld. AR relied on the following case laws in support of its arguments. i. Hema Raman Vs. PCIT in ITA No. 1012/DEL/2022 for AY 2017-18, dated 12.05.2023; ii. PCIT Vs. Deccan Jewellers in I.T.T.A. Nos. 8, 9 and 14 of 2021 (AP HC); and iii. Ashokkumar Kesherchand Pande Vs. ACIT in ITA No. 389/PUN/2023 for AY 2019-20, dated 31.07.2023. 7. The Ld. DR, on the other hand, strongly supported the order of the Ld. PCIT and submitted that the Ld. CIT(A) was completely justified in invoking the provisions of section 263 of the Act and directed the Ld. AO to revise the assessment order in the light of his observations and findings reproduced above. 8. We have heard the Ld. Representatives of the parties and perused the records and also considered the various judicial precedents cited by the Ld. AR. The facts are not disputed. The Ld. PCIT examined the case record of the assessee. To him it appeared that the impugned assessment order is erroneous and prejudicial to the interest of the revenue. He, therefore, invoked his powers u/s 263 of the Act and issued notice to the assessee to which the assessee filed its reply. The Ld. PCIT considered the submissions of the assessee which is reproduced in para 5 and 5.1 of his revisional order and thereafter he set aside the impugned assessment order and directed the Ld. AO to frame the assessment afresh for the reason that the assessment has been made without proper inquiries and consequential verifications as also without applying the relevant provisions of the Act properly. The Ld. Counsel for the assessee has broadly reiterated its detailed submissions made before the Ld. PCIT and contended that the excess stock declared during the course of survey carried out at the premises of the assessee was clearly attributable to the business operations of the assessee and thus partakes the character of business income which was rightly offered for taxation as business income in the return of income and hence the application of provisions of section 69 of 12 ITA No.1133/PUN/2024, AY 2019-20 the Act is unwarranted and the consequential calculation of tax @ 60% under the provisions of section 115BBE of the Act is not attracted. In support thereof the Ld. AR has relied on the decision of Delhi Benches of the Tribunal in the case of Hema Raman Vs. PCIT (supra) wherein under the similar set of facts the Tribunal observed that the determination of true nature and character of income is highly contextual and law has not devised any straight jacket formula in this regard. Relying on the decision of the Hon’ble Andhra Pradesh High Court in the case of PCIT Vs. Deccan Jewellers (P) Ltd. (2021) 132 taxmann.com 73 (AP), the Tribunal set aside the revisional order. The Tribunal also observed that the approach adopted by the Assessing Officer being plausible, the action of the Assessing Officer cannot be labeled as ‘erroneous’ although it may be prejudicial to the interest of the revenue. Thus, twin conditions of Section 263 are not simultaneously satisfied hence the revisional order cannot be sustained in law. The relevant findings and observations of the Tribunal are as under : “11. In this backdrop, turning to the facts, the Assessing Officer in the assessment order duly noted the factum of survey operation carried out under Section 133A of the Act at the business premises of the assessee on 16.04.2016. In the course of survey proceedings, certain loose documents were found and impounded on the basis of which the assessee surrendered Rs.40 lakh during the year as his unaccounted income. It is also an admitted position that assessee has duly reflected the aforesaid amount in his income tax return and has paid taxes thereon albeit at normal rate. Thus, the controversy as per the revisional order hinges on a narrow compass. The assessment order has been sought to be revised on the ground that undisclosed income in the nature of unexplained cash, unexplained stock and unexplained advances surrendered during the course of survey proceedings were required to assessed under Section 68/69/69A/69C etc. and consequently the assessee was required to pay tax under Section 115BBE at a penal rate of 60% applicable w.e.f. 01.04.2017 and thus applicable to Assessment Year 2017-18 in question. The nature and character of income so offered, has thus sought to be realigned by the revisional action to tax such income at penal rate. 12. The assessee, on the other hand, contends that firstly, the income declared in survey at business premises bears proximate nexus to the business operations and therefore, assessable under Section 28 of the Act as offered, in distinction to Section 68/69/69A/69C etc which are essentially meant to cover unidentified undisclosed income genre unconnected to business activities. As contended, the undisclosed income was detected in the course of survey and was found to be integrally connected to business activities. The applicability of S. 68/ 69/69A/69C thus stands ousted in the fact situation. As a corollary, the provisions of Section 115BBE have no applicability in the facts of the case. Secondly, the Co-ordinate Bench of Tribunal in the case of DCIT vs. Punjab Retail Pvt. Ltd. in ITA No.677/Ind./2019 Assessment Year 2017-18 order dated 08.10.2021 has noted that 2nd amendment to Section 115BBE has come into force w.e.f. 15.12.2016 whereas the income tax survey was conducted prior thereto and therefore, the additional income surrendered before the 2nd amendment will be chargeable at the ordinary rate of 30%. 13 ITA No.1133/PUN/2024, AY 2019-20 13. On appraisal of facts, we are persuaded by the first limb of the arguments. The determination of true nature and character of income is highly contextual and law has not devised any straight jacket formula in this regard. The classification of income under a particular head of income may significantly vary having regard to the nuanced facts of each case. When seen contextually, the additional income in instant case was conceded by the assessee in the course of survey operations at her business premises. The income surrendered is sort of lumpsum figures offered in the form of excess stock, unaccounted advance to staff, excess cash generated etc. from business operations. Such additional income confessed in survey at business premises gives a facial impression of business attributes. In the light of assertions made in statement in survey and post survey proceedings placed in the paper book, the assessee appears to have made out an arguable case that such income is concomitant of business activities and thus impressed with the character of business income as correctly disclosed in the ROI. The action of AO is not open to attack as erroneous where a view taken is in the realm of a possible view and not found to be wholly incongruous to facts or law. On the face of available facts, one can not say without any reservation that no plurality of opinion can exist on the point and such additional income cannot be treated as business income at all as adjudged by AO. This makes the action of the AO is the league of being plausible. The power of review cannot be exercised to collect more taxes merely owing to the reason that the law now provides for penal and steep rate of taxation by bringing such income within the ambit of S. 68/ 69 etc. 13.1 Significantly, the PCIT, while seeking to set aside the action of AO and remitting the matter back for further enquiries, did not bring any definite material to show any incorrect assumption of such facts on this score. Besides, no observations are found in the impugned revisional order suggesting a course to be adopted towards manner of determining true character of additional income or the nature of enquiries expected from AO. 13.2 In the similar factual circumstances and in the context of section 263, the Hon’ble Andhra Pradesh High Court in the case of PCIT vs. Deccan Jewellera (P) Ltd. ( 2021) 132 taxmann.com 73(AP) held the action of AO cannot be said be marred by any perversity and the revisional order was set aside. 13.2 Taking into account the entire conspectus of the matter, we thus find merit in this plea. The pre-requisites of S. 263 are clearly not found to be fulfilled. ………………………….. ………………………….. 17. In conclusion, in the light of discussion in para 13 supra, the approach adopted by the Assessing Officer being plausible, the action of the Assessing Officer cannot be labeled as ‘erroneous’ although it may be prejudicial to the interest of the revenue. Thus, twin conditions of Section 263 are not simultaneously satisfied in the instant case. The jurisdiction usurped by the Pr.CIT under Section 263 thus fails on this parameter and hence the revisional order cannot be sustained in law. Consequently, the revisional order passed under Section 263 is quashed.” 9. Referring to the decision in the case of PCIT Vs. Deccan Jewellers (supra), the Ld. AR submitted that the Ld. AO upon consideration accepted the explanation and taxed the additional income as business income @ 14 ITA No.1133/PUN/2024, AY 2019-20 30% instead of @ 60% except the dead stock amounting to Rs.4,90,566/- as per section 115BBE of the Act. We observe that one of the questions before the Hon’ble High Court in Deccan Jeweller’s case (supra) was “Whether on the facts and in the circumstances of the case the Tribunal is correct in law in holding that unaccounted and excess stock found during the course of search shall be assessed as business income at the rate of 30%?” and the Hon’ble High Court held that no case of perversity or lack of enquiry on the part of the Assessing Officer is made out so as to render his decision erroneous under Explanation 2 of Section 263 of the Act. The relevant observations and findings of the Hon’ble High Court is as under : “The Assessing Officer duly considered and accepted such explanation and taxed the additional income as 'business income' @ 30%, which was approved by the Joint Commissioner, Income Tax, Central Range under Section 153D of the Act. In all the aforesaid cases, the Principal Commissioner invoked revisional powers under Section 263 of the Act purportedly on the ground that the decision of the Assessing Officer was erroneous and prejudicial to the interest of the revenue and assessment orders were set aside with a direction to review the assessment orders as per law. The said orders were appealed before the Income Tax Appellate Tribunal (for short, 'the Tribunal'), which set aside the orders of Principal Commissioner in all these cases holding the decision of the Assessing Officer was a possible view on the matter and could not have been revised under Section 263 of the Act. Challenging the said orders, Ms. M. Kiranmayee, learned Senior Standing Counsel for Income Tax, argues that the additional excess stock found in the course of search in these cases ought to have been treated as 'undisclosed investment under Section 69 of the Act. The Assessing Officer did not consider such fact and assessed the additional income as business income 30% instead of 60% by applying Section 115BBE of the Act. Thus, the assessment orders being erroneous were rightly revised by the Principal Commissioner. Hence, the appeals ought to be admitted on the aforesaid substantial questions of law. When there are two possible views on the matter and one view has been accepted by the Assessing Officer after inviting explanation from the assessee and upon being satisfied on such explanation such view cannot be said to be erroneous. As discussed above, explanations had been given by the assessees with regard to the additional income, which were considered and duly accepted by the Assessing Officer. Assessees relied upon various authorities in support of their explanations which had been duly accepted by the Assessing Officer. Views of the Assessing Officer appear to have been approved by the Joint Commissioner, Income Tax, Central Range, under Section 153D of the Act. In this factual matrix, it cannot but be accepted that a possible view on the matter had been followed by the Assessing Officer. In doing so, the Assessing Officer, in fact, followed the consistent view of various judicial authorities binding on him, namely, where excess stock found in the course of search is neither separately identifiable nor had Independent physical existence, it cannot be treated as 'undisclosed investment' under Section 69 of the Act. 15 ITA No.1133/PUN/2024, AY 2019-20 In the present cases, explanations have been offered by the assessees that excess stock was a result of suppression of profits from business over the years and is a part of the overall stock found. In ITTA Nos.9 & 14 of 2021, the assessees concerned gave further clarification that the excess stock had been admitted in Schedule 'L' under the heading, 'other operating income under the head \"Profits and Gains of the Business\" in Part A of the Return filed for the relevant Assessment Year. Hence, the excess stock could not have been treated as 'undisclosed investment under Section 69 of the Act. Section 69 of the Act reads as follows: \"69. Unexplained investments. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.\" The above section provides investments would fall within the definition of 'undisclosed investment' in the event the following conditions are satisfied: (a) Such investment is made in the course of the financial year and not reflected in the books of account, if any, maintained by the assessee for any source of income, (b) No explanation is offered by the assessee about the nature and source of investments, and (c) Such explanation is not found to be satisfactory in the opinion of the Assessing Officer. As explanations pursuant to the Show-cause notices issued by the Assessing Officer had been submitted claiming that the nature and source of the excess stock fell under the heading 'Profits and Gains of the Business' and such stock was not specifically identifiable from the profits which had accumulated from earlier years and such explanations being considered and accepted by the Assessing Officer, which came to be approved by the Joint Commissioner, Income Tax, it cannot be said that the condition precedents for holding that the excess stock as 'undisclosed investment' under Section 69 of the Act are satisfied. Relying on the decision of this Court in Spectra Shares and Scrips P.Ltd. Vs. CIT, the Tribunal held non-recording of reasons cannot be a ground to come to a conclusion that the opinion of the Assessing Officer was erroneous for the purposes of Section 263 of the Act. Explanation (2) of Section 263 of the Act elucidates cases where the opinion of the Assessing Officer can be treated to be erroneous and prejudicial to the interest of the revenue. Explanation (2) reads as follows: \"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; 16 ITA No.1133/PUN/2024, AY 2019-20 (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.\" In the present cases, the Assessing Officer had issued show-cause notices calling for explanations from the assessees whether excess stock be not treated as 'undisclosed investment' under Section 69 of the Act. In response to the notices, elaborate explanations were offered by the assessees, which were fortifiable by consistent views by various Benches of the Tribunal as well as the High Courts. The Assessing Officer, upon consideration, accepted the explanation and taxed the additional income as 'business income 30% instead of 60% as per Section 115BBE of the Act. No contrary view either of any High Court or the Apex Court has been placed before us to demonstrate that the explanations offered by the assessees in the course of assessment were either perverse or contrary to law. In view of such matter, we are constrained to hold no case of perversity or lack of enquiry on the part of the Assessing Officer is made out so as to render his decision erroneous under Explanation 2 of Section 263 of the Act. Thus, the revisional powers under the said provision were illegally invoked by the Principal Commissioner and his order was rightly set aside by the Tribunal. For the aforesaid reasons, we are of the opinion that no substantial question of law is made out in the factual matrix. Hence, we are not inclined to admit the appeals.” 10. The assessee has also placed reliance on the decision of Co-ordinate Bench of the Pune Tribunal in the case of Ashokkumar Kesherchand Pande Vs. ACIT (supra) wherein the Tribunal under similar set of facts reversed the order passed by the Ld. AO and CIT(A) and directed the Ld. AO not to tax the additional income under the provisions of section 115BBE of the Act. The relevant findings and observations of the Tribunal is as under : “7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the applicability of provisions of section 115BBE of the Act in respect of income declared during the course of survey proceedings and offered to tax in the return of income. There is no dispute about the amount of addition to be made nor was there any dispute regarding the head of income under which the same was assessed to tax. The dispute is only with regard to the applicability of provisions of section 115BBE of the Act. Admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account. The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered to tax under the head “Income from business”, the Assessing Officer also assessed the same under the head “Income from business”. 17 ITA No.1133/PUN/2024, AY 2019-20 Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case. The ratio of the decision of the Hon’ble Rajasthan High Court in the case of Bajargan Traders (supra) is squarely applicable to the facts of the present case. The reliance placed by the ld. CIT(A) on the decision of the Hon’ble Madras High Court in the case of M/s. SVS Oils Mills (supra) have no application to the facts of the present case, inasmuch as, in the said case, no explanation as to the source of excess stock was offered, whereas, in the present case, it is undisputed fact that the additional income was derived from business. Therefore, the orders of the Assessing Officer as well as the ld. CIT(A) are reversed and direct the Assessing Officer not to tax the additional income under the provisions of section 115BBE of the Act. The Assessing Officer shall tax the additional income under the normal rate of income tax. Accordingly, the grounds of appeal filed by the assessee stand allowed.” 11. Having considered the above contentions and legal position, let us now understand the applicability of provisions of section 263 of the Act in the context of the facts of the present case of the assessee. The fundamental vital pre-requisite for invoking the provisions of section 263 of the Act is that the twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue should be simultaneously satisfied. In Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83(SC), the Hon’ble Supreme Court observed as under:- “A bare reading to section 263 of the Income Tax Act, 1961, makes it clear that the pre-requisite for the exercise of jurisdiction by the Commissioner suo- moto under it, is that the order of the ITO is erroneous insofar as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous ; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the ITO, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase “prejudicial to the interests of Revenue” is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the ITO, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase “Prejudicial to the interests of the Revenue” has to be read with conjunction with an erroneous order passed by the ITO. Every loss of Revenue as a consequence of the order of the ITO cannot be treated as prejudicial to the interests of Revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of Revenue or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order 18 ITA No.1133/PUN/2024, AY 2019-20 prejudicial to the interests of Revenue unless the view taken by the ITO is unsustainable in law”. 12. The Hon’ble Supreme Court reiterated the above observation in CIT vs. Greenworld Corporation (2009) 181 Taxman 111 (SC) / (2009) 314 ITR 81 (SC). The Hon’ble Apex court observed as under:- “Section 263 provides for a revisional power. It has its own limitations. An order can be interfered with suo-moto by the said authority not only when an order passed by the Assessing Officer is erroneous but also when it is prejudicial to the interest of the revenue. Both the conditions precedent for exercising the jurisdiction under section 263 of the Act are conjunctive and not disjunctive. The scope of provisions of section 263 is no longer res integra. The power to exercise suo-moto revision in terms of section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein, viz.,(1) the order is erroneous and (2) by virtue of order being erroneous, prejudice has been caused to the interest of the revenue, exist. An order of assessment passed by an Assessing Officer, therefore, it should not be interfered with only because another view is possible.” 13. In CIT Vs. Amitabh Bachhan (2016) 384 ITR 200 (SC), the Hon’ble Supreme Court held that so long as the view taken by the Assessing Officer is a possible view it ought not to be interfered with by the Commissioner merely on the ground that there is another possible view of the matter. 14. The Finance Act, 2015 has inserted Explanation 2 w.e.f. 01.06.2015 and CBDT in Circular No. 19 of 2015, dated 27.11.2015: (2015) 379 ITR (st) 19 has explained that interpretation of the expression “erroneous in so far as it is prejudicial to the interests of the revenue” has been a contentious one. In order to provide clarity on the issue, section 263 of the Income Tax Act has been amended to provide 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 the order is passed without making inquiries or verification which, should have been made. Thus, by the above amendment an assessment order passed without making requisite inquiries or verification shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue. This will enable the Ld. PCIT to exercise jurisdiction u/s 263(1) of the Act in respect of such an assessment order passed by the Ld. AO. 19 ITA No.1133/PUN/2024, AY 2019-20 15. It is now well established that an incorrect assumption of fact and an incorrect application of law will satisfy the requirement of assessment order being erroneous. The assessee had declared the excess stock in return of income and offered the same for tax after setting off the amount of dead stock. The facts of the case are not disputed by the Revenue. In the assessee’s case it would be obvious that the Ld. AO has neither assumed facts incorrectly nor there is incorrect application of law. On the contrary, he applied his mind. In our opinion, therefore the impugned order of the Ld. AO is not erroneous. The assessment order cannot be held as erroneous when the Ld. AO has examined the issue. If that be so, the question of it being prejudicial to the interest of revenue will hardly arise in the given facts and law related to them. 16. In the present factual matrix of the case, in our view, by no stretch of imagination, the decision of the Ld. AO to tax the additional income on account of excess stock declared during the survey proceedings at the normal rate of 30% and applying tax rate of 60% under the provisions of section 115BBE of the Act only in respect of dead stock claimed as deduction therefrom, can be termed as “erroneous”. This is because the Ld. AO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion. Such a conclusion cannot be termed to be erroneous because the Ld. PCIT does not feel satisfied with the conclusion as held by the Hon’ble Bombay High Court in CIT vs. Gabriel India Ltd. 203 ITR 108 (Bom). In other words, erroneous order does not mean an order with which the Ld. PCIT is unable to agree as observed by the Hon’ble Gauhati High Court in Smt. Lila Chaudhary vs. CIT 167 Taxman 1 (Gau). Prejudicial to the interest of revenue would mean an erroneous order which goes against the interest of revenue collection. Both the conditions i.e. erroneous as also prejudicial to the interest of revenue must pre-exist to enable the Ld. PCIT to exercise the power under section 263 of the Act. The revisional power under section 263 of the Act is a quasi- judicial power hedged in with limitations and has to be exercised subject to the same and within its scope and ambit. Moreover, once a plausible view is taken by the Ld. AO, the Ld. PCIT cannot substitute his view to invoke the revisionary power under section 263 of the Act as held in numerous judicial precedents. 20 ITA No.1133/PUN/2024, AY 2019-20 17. On testing the order of the Ld. PCIT in assessee’s case on the touchstone of the principles of law enunciated by the Hon’ble Supreme Court in their decisions (supra) and enshrined in the amended law which came into effect from 01.06.2015 and also various judicial precedents relied by the assessee covering the impugned issue in its favour, we are of the considered opinion that the impugned order of the Ld. PCIT is not sustainable both on facts and in law. 18. In the light of the facts and circumstances and the legal position enumerated above and in the absence of any contrary material/adverse judicial precedent brought on record by the Revenue, we are of the opinion that assumption of jurisdiction by the Ld. PCIT u/s 263 of the Act in the case of the assessee is not sustainable. We, therefore set it aside and restore the order of the Ld. AO. 19. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 05th February, 2025. Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 05th February, 2025. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune "