SANGUINE MEDIA LIMITED,CHENNAI V. PCIT-3, CHENNAI, CHENNAI

ITA 936/CHNY/2024

AI Insights

The case involves Sanguine Media Ltd., which appealed against the order of the PCIT, Chennai, under section 263 of the Income Tax Act, 1961, concerning the assessment year 2017-18. The PCIT had set aside a reassessment order, directing further enquiries into a loan of Rs.73,60,956 allegedly received from Shri Jignesh Shah, which was deemed fictitious. The Tribunal examined whether the PCIT's order was justified, considering the reassessment had already been conducted and the assessee had denied any such transaction. The Tribunal noted that the PCIT did not provide concrete evidence to substantiate the claim of fictitious loans and that the assessee had denied the transactions both before the Assessing Officer and the PCIT.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469595 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Malabar Industrial Co. Ltd. vs. CIT, L G Electronics India (P) Ltd. V. Principal Commissioner of Income-tax, Kaivan Jitendrakumar Shah HUF vs. PCIT, Dee Are Texfab Pvt. Ltd. vs. PCIT, HBC Lifesciences Pvt. Ltd. vs. PCIT, M/s. Pramukh Realty vs. PCIT, CIT vs. Kamal Galani, Ahlcon Parenterals (India) Pvt. Ltd. vs. PCIT, Shri Jignesh Lilachand Shah vs. PCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. CLEMENT RAMESH KUMAR; LETTER DATED
• Assessee Lawyers: NEERAJ MANGLA
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained cash credit; Reopening of assessment; Principle of natural justice; Accommodation entries; Reason to believe; Revision of order; Tangible material; Bogus
• Section: 147; 148; 144; 143(3); 142(1); 263; 132; 68; 13

Judgement Text

"आयकर अपीलȣय अͬधकरण,‘सी’ Ûयायपीठ, चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI Įी जॉज[ जॉज[ क े, उपाÚय¢ एवं Įी जगदȣश, लेखा सदèय क े सम¢ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 936/CHNY/2024 िनधाᭅरण वषᭅ/Assessment Year:2017-18 Sanguine Media Ltd., Plot No.135A, 1st Floor, Chandran Nagar Main Road, Chrompet, Chennai – 600 044. PAN: AAECS 2217C Vs. The Principal Commissioner of Income Tax - 3, Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Neeraj Mangla, CA (Through virtual mode) ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri R. Clement Ramesh Kumar, CIT सुनवाई कᳱ तारीख/Date of Hearing : 18.12.2024 घोषणा कᳱ तारीख/Date of Pronouncement : 01.01.2025 आदेश /O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal at the instance of the assessee is directed against PCIT’s order dated 28.03.2024, passed under section 263 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18. - 2 - ITA No.936/CHNY/2024 2. The assessee has raised four grounds. Grounds 1 and 4 are general in nature and no specific adjudication is called for and so, the same are dismissed. During the course of hearing, the ld.AR did not press Ground No.2, hence the same is dismissed. The solitary surviving ground namely Ground No.3 reads as follows:- “That the Ld.PCIT grossly erred in law and in facts of the case in holding the reassessment order passed by Ld.AO u/s 147 of the Act to be passed without necessary enquiries and verification and thus, to be erroneous and prejudicial to the interest of revenue.” 3. Brief facts of the case are as follows:- The assessee is a company. For the assessment year 2017-18, the return of income was filed on 03.11.2017 declaring total income of Rs.7,03,710/-. The assessment u/s.143(3) of the Act was completed on 30.12.2019 determining total income at Rs.16,01,75,252/-. Thereafter, notice was issued u/s.148 of the Act on the information that assessee had received fictitious loan of Rs.13,00,000/- from Wellman Tradelinks Pvt. Ltd., and Rs.73,60,956/- from Shri Jignesh Shah. The assessment was completed u/s.147 r.w.s. 144B of the Act vide order dated 30.03.2022 wherein total income was determined at Rs.17,26,21,549/-. Out of the total impugned fictitious loan received by the assessee company amounting to Rs.86,60,950/- - 3 - ITA No.936/CHNY/2024 (Rs.13,00,000/- from Wellman Tradelinks Pvt. Ltd., and Rs.73,60,956/- from Shri Jignesh Shah), the AO added only a sum of Rs.13,00,000/- in the re-assessment order completed u/s.147 r.w.s. 144B of the Act. 4. Thereafter, the PCIT initiated revisionary proceedings u/s.263 of the Act in order to examine the genuineness of loan received by the assessee of Rs.73,60,956/- from Shri Jignesh Shah. The PCIT was of the view that the reassessment order passed u/s.147 r.w.s.144B of the Act dated 30.03.2022 was erroneous and prejudicial to the interest of Revenue in terms of clause (a) of Explanation 2 under sub-section (1) of section 263 of the Act. In response to the show-cause notice issued by the PCIT, the assessee filed its written submissions vide letter dated 05.03.2024. However, the objections of the assessee was rejected and PCIT passed the impugned order by setting aside the reassessment order and directing the AO to make necessary enquiries into unsecured loan amounting to Rs.73,60,956/- received from Shri Jignesh Shah and pass such orders after giving due opportunity of being heard to the assessee. The relevant findings of the PCIT in the revisionary order passed u/s.263 of the Act, read as follows:- - 4 - ITA No.936/CHNY/2024 6. The assessment was re-opened in this case based on the information available with the department that the assessee has availed loan from the group concern as a) M/s. Wellman Tradelinks Pvt. Ltd., - Rs.13,00,000/- b) Jignesh Shah - Rs.4,48,250/- c) Jignesh Shah – Rs.23,95,660/- d) Jignesh Shah – Rs.45,17,046/- 7. The AO was in possession of the information about the above loans, which has to be substantiated / declined by the Assessee as per the nature of the transactions done by them. In the letter submitted by the assessee, the assessee has mentioned that as per the letter of FAO, \" as per the insight portal information, it is found that Jignesh Shah has paid loan to M/s. Sanguine Media Ltd.\" 8. Hence, the assessee's contention that \"only due to non-availability of any details or information on record, the Ld. AO proceeded to not to make any additions to the income of the assessee on this ground is untenable. 9. As per the information available with the department, the assessee had loan transactions to the tune of Rs.86,60,956/- .Further, the assessee itself has stated that \"the Ld. AO has duly communicated the reasons recorded for reopening containing the issue\". It is the duty of the assessee to explain the loan transaction done by them during the financial year with evidences. But, the assessee cannot take shelter on the observations of the AO that \"only due to non-availability of any details or information on record, the Ld. AO proceeded to not to make any additions to the income of the assessee on this ground\" and need to explain the transactions on its own. 10. During the course of assessment proceedings, in the show cause notice dated 29/03/2022, the following was communicated to the assessee: \"On perusal of the submissions, it reveals that assessee failed to substantiate the loan transactions. The assessee has merely relied upon the assessment order passed in its case for the year under consideration. It is pertinent to note that the case was reopened only on the loan transaction that was not considered during assessment proceedings. Further the asssesee has failed to submit the loan transactions with M/s. Wellman Trade Links Pvt. Ltd. and other loan transactions as mentioned in the reasons recorded. No explanation/evidences were submitted to substantiate - 5 - ITA No.936/CHNY/2024 the claim in respect of loan transactions. In absence of documentary evidence to establish the identity, genuineness and credit worthiness of loan transaction, an addition of Rs.86,60,956/- is made in the hands of the assessee as unexplained credit u/s.68 of the IT Act. Penalty proceedings u/s.271AAC(1) are initiated in respect of such addition. Addition:Rs.86,60,956/\" 11. From the assessee's submission, it may be noted that the assessee denied loan transaction with M/s. Wellman Tradelink P. Ltd. as well as Jignesh Shah. Thus, at the time of passing the assessment order, the entire loan transactions of Rs.86,60,956/- remained unexplained. However, the AO made addition in respect of M/s. Wellman Tradelink P. Ltd. only. 12. The Assessing Officer in para No. (3) of the assessment order dated 30/03/2022, has mentioned that \"on perusal of the submissions, it reveals that the assessee failed to substantiate the loan transaction with M/s. Wellman Tradelinks P. Ltd. The assessee has merely relied upon the original assessment order passed in its case for the year under consideration. It is pertinent to note that the case was reopened only on the loan transaction that was not considered during the assessment proceedings. In absence of documentary evidence to establish the identity, genuineness and credit worthiness of loan transaction, an addition of Rs.13,00.000/- is made in the hands of the assessee as unexplained credit u/s.68 of the IT Act. Penalty proceedings u/s.271AAC(1) are initiated in respect of such addition\". 13. Thus, while passing order u/s 147 r.w.s. 144B, the following day, ie, on 30/03/2022 after show cause, the Assessing Officer simply changed his / her stand added only Rs.13,00,000/- u/s 68 and did not make any addition in respect of the balance loan transactions of Rs.76,60,956/- without any evidence or explanation from the assessee. The Assessing Officer ought to have obtained from the assessee, explanation / reply regarding the identity genuineness and credit worthiness of loan transaction and more importantly the genuineness of the transactions in respect of the amount of Rs76,60,956/- and instead condensing the amount of addition than what was communicated to the assessee through show cause notice is improper and therefore, the act of which is erroneous in so far as it is prejudicial to the interests of revenue. - 6 - ITA No.936/CHNY/2024 14. It is known fact that Shri Jignesh Shah was involved in NSEL scam and many persons/entities are involved. When there is insight portal information available on record, it is the duty of the Assessing Officer to verify the loan transaction. The information was communicated in result of search operations u/s 132 of the Income-tax Act, 1961 which shall have concrete basis for the transactions and cannot be ignored without valid explanation. 15. The Assessing Officer ought to have called for the complete financials of the assessee, unsecured loan creditors details and ledger of the unsecured loans and Creditors for verifying the above loan transactions including fresh loans and squared up loans during the year, which was not done. No finding on the information regarding Rs.73,60,956/- has been given by the assessing Officer. 16. In the circumstances, the action of the Assessing Officer, making addition in respect of one loan creditor to the tune of Rs.13.00.000/- and leaving the balance without any finding is untenable. When no explanation was given by the Assessee in respect of the source of the loan creditors. the AO should have added the entire amount u/s 68 of the Income-tax Act, 1961. 17. In the case of Malabar Industrial Co. Ltd. vs. CIT[2000] reported in (2000) 109 Taxman 66/ 243 ITR 83(SC), the Supreme Court held that when the Assessing Officer does not apply his mind to the issue at hand or violates any of the principles of natural justice, the order shall be prejudicial to the interests of the Revenue. Also, it is held that an incorrect assumption of facts or incorrect application of law by the AO would make the order of assessment erroneous and prejudicial to the interests of the Revenue. 18. Further, the Supreme Court in case of L G Electronics India (P) Ltd. V. Principal Commissioner of Income-tax (2022)134 taxmann.com 330(SC) / (2022) 285 Taxman 88 (SC)/(2022)443 TR 45 (SC) has upheld the revision order u/s.263 though the issue has been considered by the AO but the order was passed without any discussion. 19. Therefore, the order of the Assessing Officer dated 30/03/2022 is deemed to be erroneous in so far prejudicial to the interests of revenue in - 7 - ITA No.936/CHNY/2024 terms clause(a) of Explanation(2) to section 263 of the Income-tax Act, 1961. 20. Therefore, the order of the Assessing Officer passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 dated 30/03/2022 vide DIN : ITBA/AST/S/147/2021-22/1042139547(1) is partly set aside and restored back to the file of the Assessing Officer with a direction to make necessary enquiries into the unsecured loans of the amount of Rs.73,60,956/- and pass such order, after giving due opportunity of being heard in accordance with law.” 5. Aggrieved by the order of PCIT passed u/s.263 of the Act, assessee has filed the present appeal before the Tribunal. 6. The ld.AR stated twice assessment was subjected to scrutiny (assessment order u/s.143(3) dated 30.12.2019 and the reassessment order passed u/s.147 r.w.s.144B dated 30.03.2022). Therefore, it was submitted that the revisionary proceedings without any fresh material is legally not justifiable and needs to be quashed. It was submitted that during the course of reassessment proceedings, the assessee had denied any knowledge of loan taken from Shri Jignesh Shah and had requested the AO to furnish the details if any available to prove the assessee had availed the loan. Since the AO could not produce the necessary details, the reopening of assessment was concluded without making any additions on account of so called fictitious loan of Rs.73,60,956/- - 8 - ITA No.936/CHNY/2024 from Shri Jignesh Shah. It was submitted that the PCIT in the revisionary order has not stated anywhere that he is in possession of certain material that assessee had availed the afore mentioned fictitious loan and therefore, the assessment needs to be redone. It was submitted that the assessee cannot be expected to prove the negative that he has not availed afore mentioned fictitious loan (since the assessee has totally denied having received the loan from Shri Jignesh Shah). The ld.AR further submitted, on identical issue, the Ahmedabad Bench of the Tribunal in the case of Kaivan Jitendrakumar Shah HUF vs. PCIT in ITA No.644/AHD/2024 (order dated 14.08.2024) had held that since there is nothing on record to suggest that assessee in the said case had received fictitious loan from the entry operator namely Shri Jignesh Shah, the revisionary proceedings u/s.263 of the Act is legally not tenable. The ld.AR also relied on the following judicial pronouncements in support of his contentions that section 263 cannot be invoked since the order of the AO was not erroneous and prejudicial to the interest of the Revenue:- i) ITAT, Ahmedabad Bench in the case of Dee Are Texfab Pvt. Ltd., vs. PCIT, order dated 25.07.2024 ii) ITAT, Ahmedabad Bench in the case of HBC Lifesciences Pvt. Ltd., vs. PCIT, order dated 05.07.2024 iii) ITAT, Rajkot Bench in the case of M/s. Pramukh Realty vs. PCIT, order dated 21.03.2023 - 9 - ITA No.936/CHNY/2024 iv) Hon’ble High Court of Gujarat in the case of CIT vs. Kamal Galani (order dated 11.06.2018) v) Hon’ble Delhi High Court in the case of PCIT vs. Klaxon Trading Pvt. Ltd., (order dated 29.11.2023) vi) ITAT, Delhi Bench in the case of Ahlcon Parenterals (India) Pvt. Ltd., vs. PCIT, (order dated 21.05.2024) vii) ITAT, Ahmedabad Bench in the case of Shri Jignesh Lilachand Shah vs. PCIT in ITA No.149/Ahd/2021 (order dated 21.03.2023) 7. The ld.DR on the other hand has filed a paper-book of 15 pages enclosing therein the scrip name referred in the seized document as provided by the DCIT, Central Circle, Ahmedabad, insight information that prompted reopening of assessment, details of the entry provider, ITI’s report to the DDIT (Inv), Ahmedabad, etc. The ld.DR supported the supported the order of PCIT passed u/s.263 of the Act. 8. We have heard rival submission and perused the material on record. The return of income for AY 2017-18 was filed by the assessee company on 03.11.2017 declaring income of Rs. 7,03,710/-. Subsequently, assessment u/s. 143(3) of the Act was completed on 30.12.2019 and income of the assessee was assessed at Rs. 16,01,75,252/-. Thereafter, the Ld. AO had issued notice u/s 148 of the Act on 29.03.2021. The assessee vide its - 10 - ITA No.936/CHNY/2024 letter dated 18.11.2021 sought for the reasons recorded for reopening the assessment and approval u/s.151 of the Act. The approval u/s.151 of the Act and the reason recorded was provided to assessee company by the AO vide his letter dated 30.12.2021. The reasons recorded by the AO for reopening of assessment are as follows:- \"An information available with this office, a search u/s 132 was launched on 11/09/2018 in the case of Jignesh Shah and Sanjay Shah of Ahmedabad. The search resulted into incriminating digital as well as documentary evidences. Further, it was found during investigation that both Jignesh Shah and Sanjay Shah controlling multiple companies and concerns. They are involved into activity of providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gain, contrived losses etc. As per the information, assessee has loan from the Group concern as under: 1.M/s. Wellman Tradelinks Private Limited-Rs. 13, 00, 000/- - F.Y:2016-17 2.Jignesh Shah -Rs.4,48,250-FY:2016-17 3. Jignesh Shah -Rs. 23,95,660 -FY:2016-17 4. Jignesh Shah -Rs. 45,17,046-FY:201 6-17 Further, it is seen that the assessee has claimed current year loss of Rs.32,07,156/- and the expenses claimed in P&L account of Rs. 5,57,31,489/- which was not considered in the limited scrutiny proceedings. In view of the above, I have every reason to believe that an amount exceeding more than 1 lakh has escaped assessment for the AY 2017-18 in the case of the assessee and accordingly, it is a fit case where action u/s 147 is warranted. - 11 - ITA No.936/CHNY/2024 Hence, the proposal to initiate proceedings u/s 147 is prepared and submitted for the approval of Addl.Commissioner of Income Tax, Non- Corporate Range-10, Chennai.\" 9. From the above reasons recorded by the AO, it is evident that the notice u/s.148 of the Act has been issued primarily to examine the loan transaction of the assessee company with a) M/s. Wellman Tradelinks Pvt. Ltd., - Rs.13,00,000 b) Jignesh Shah - Rs.4,48,250 c) Jignesh Shah – Rs.23,95,660 d) Jignesh Shah – Rs.45,17,046 10. The assessee company in this regard, had given submissions on 16.02.2022 stating therein the assessee has not availed any of the above stated loans during the year under consideration. It stated that assessee company had given advance to M/s. Wellman Tradelinks Pvt. Ltd., in the preceding year which was recovered during the relevant assessment year. In this context, the copy of the ledger account was also enclosed in the submissions to substantiate the contention of the assessee company. In respect of loan transaction from Shri Jignesh Shah, the assessee company in the submissions 16.02.2022, stated that it had not availed any loan from Shri Jignesh Shah and the information appears to be incorrect. - 12 - ITA No.936/CHNY/2024 Further in the said submission, the assessee company had requested the details of said loan transaction may be provided to it. Thereafter, the AO issued notice u/s 142(1) of the Act dated 12/03/2022 wherein no details w.r.t. transactions with Jignesh Shah were called for. Further, notice dated 21.03.2022 was issued by AO stating as under: \"As per insight portal information, it is found that Jignesh shah has paid loan to M/s. Sanguine Media limited. Documentary evidence including statement of key persons recorded may kindly be provided'\" 11. Again, the AO vide show-cause notice dated 29.03.2022 proposed additions with respect to alleged transactions with Shri Jignesh Shah. The assessee company vide submission dated 29.03.2022 objected to making of additions with respect to alleged transaction with Sh. Jignesh Shah and submitted that no additions can be made without possessing and providing evidences and details for rebuttal. The relevant portion of submission of the assessee company reads as follows:- “That pursuant to request of the assessee company to provide details of alleged loan transactions vide notice dated 21/03/2022, the assessee company was asked to furnish documentary evidences including statement of Sh. Jignesh Shah on the pretext that since the reassessment proceedings are Faceless and the office of Ld. AO is unable to contact to Central Charges. - 13 - ITA No.936/CHNY/2024 This substantiates that even details of alleged transactions or statement of alleged operator are not available on records and the reassessment proceedings are being undertaken only on hearsay or some information received which is not at all backed by any evidence which could be provided to the assessee company for verification or rebuttal. In view of the unconditional acceptance by revenue by letter dated 21.03.2022, that no information is available on records, no addition should have been proposed on the basis of such information and thus, it is most humbly requested that no addition for availing accommodation entry of unsecured loans shall be made to income of the assessee. Making additions to the income of the assessee company without having any negative evidences on records or without providing the same for rebuttal is against the principles of natural justice and law. It is most humbly prayed that such injustice may please not be done with the assessee company.” 12. Considering the facts of the case as well as the replies submitted by the assessee, the assessment order u/s 147 r.w.s. 144B of the Act was passed on 30.03.2022 and no addition with respect to alleged transaction with Jignesh Shah was made. 13. After completion of two assessments in the case of the assessee company, the PCIT had passed the impugned order u/s.263 of the Act on 20.03.2024 stating that the order of the AO passed u/s.147 r.w.s. 144B of the Act dated 30.03.2022 is erroneous and prejudicial to the interest of Revenue. The PCIT had concluded that the AO ought to have obtained the explanation / - 14 - ITA No.936/CHNY/2024 reply regarding the identity, genuineness and creditworthiness of loan transaction in respect of the amount received as loan amounting to Rs.73,60,956/- from Shri Jignesh Shah. The re- assessment proceedings have been initiated by the AO specifically to examine the loan transactions and during the re-assessment proceedings, the assessee had totally denied any alleged accommodation entry from Shri Jignesh Shah. Then the PCIT for initiating proceedings u/s.263 of the Act ought to have brought on record some material to reflect that assessee had actually received these accommodation entries. The assessee’s books of accounts are properly maintained and duly audited u/s.44AB of the Act and the same is placed on record from pages 7 to 100 of the paper- book filed by the assessee. Neither the AO nor the PCIT has found any entry in the books of accounts of the assessee in respect of these alleged accommodation entries nor from the bank statement of the assessee that assessee had received any sum from Shri Jignesh Shah. Therefore, in the absence of any entries in the books of accounts or bank account statement indicating any transaction between assessee and Shri Jignesh Shah, the invocation of revisionary proceedings u/s.263 of the Act merely on suspicion is not legally tenable. Though the AO has not discussed in detail in the reassessment order about the reply and documents filed by the - 15 - ITA No.936/CHNY/2024 assessee, it is a matter on record that assessee had produced all the details as well as books of accounts and bank account statements to show that no such entry is reflected in the books of accounts or in the bank account statement of the assessee. Once the assessee has produced the relevant records to establish it had not received any loan amount from Shri Jignesh Shah, then the burden shifts to the Revenue to bring some tangible material to show that assessee had actually received the amount from Shri Jignesh Shah as accommodation entries. On identical facts (in a case of loan/advance from Shri Jignesh Shah), the Ahmedabad Bench of the Tribunal in the case of Kaivan Jitendrakumar Shah, supra had held invocation of revisionary jurisdiction u/s.263 of the Act is not correct and quashed the same. The relevant finding of the Ahmedabad Bench of the Tribunal read as follows:- 6. We have carefully considered the rival submissions and facts of the case. It is found that the reason for which the case for AY 2013-14 was reopened by the Assessing Officer was duly confronted to the assessee vide notice u/s 142(1) of the Act dated 28.01.2022. In fact, this reason was reproduced in the notice and the assessee was asked to explain as to why the amount of Rs. 35,04,500/- should not be added to the income of the assessee. It transpires that the information was received regarding accommodation entry taken by the assessee from paper/dummy company controlled and managed by one Shri Rajiv Shah. The assessee had filed a detailed reply dated 24.02.2022 wherein he had denied having received any amount from Shri Rajiv Shah (of Jignesh Shah & Sanjay Shah Group). In fact, the assessee had also enclosed the details of his unsecured loans and the bank book copy to establish the fact that there was no entry from anyone amounting to Rs.35,04,500/-. Further, the assessee had requested the - 16 - ITA No.936/CHNY/2024 Assessing Officer to provide the evidence for such transaction and also the supporting documents as available with the Assessing Officer in support of the information on the basis of which the case was reopened. After considering the reply of the assessee, the Assessing Officer had completed the assessment and the returned income was accepted. It is found that the issue on which the case was reopened was duly examined by the Assessing Officer in the course of assessment proceedings. The assessee had denied the alleged transaction and thereafter no evidence was brought on record by the Assessing Officer to establish the alleged transaction on the basis of which the case was reopened. No evidence in respect of the alleged transaction was provided to the assessee as requested by him. The AO had, in essence, accepted the reply of the assessee that there was no such transaction. Under these circumstances, the order of the Assessing Officer cannot be held to be erroneous or prejudicial to the interest of the Revenue. 7. In the course of proceedings u/s 263 of the Act as well, the assessee had denied having made any transaction with Shri Rajiv Shah or Jignesh Shah or Sanjay Shah Group as referred in the notice issued by the ld. PCIT. In fact, the assessee had also requested the ld. PCIT to provide the details of the transactions on the basis of which the proceedings u/s 263 was proposed to be invoked. However, the ld. PCIT did not make any inquiry in the matter, and dismissed the objection of the assessee. The alleged transaction was categorically denied by the assessee before the Assessing Officer as well as before the ld. PCIT. It was incumbent upon the Revenue to provide the evidence on the basis of which the case was reopened by the Assessing Officer, when the transaction was out-rightly denied by the assessee. Since the matter was duly examined by the Assessing Officer in the course of assessment proceedings, we do not find the order of the Assessing Officer as erroneous and prejudicial to the interest of the Revenue. The Assessing Officer had taken a view after considering the reply of the assessee and dropped the proceeding u/s 147 of the Act, by accepting the returned income. The action of the ld. PCIT to impose his own view in the proceedings u/s 263 of the Act on the view as taken by the AO, without bringing any new fact or anything adverse on record, cannot be held as correct. 8. It has been held by the Hon’ble Jurisdictional High Court in the case of CIT vs. Kamal Galani 95 taxmann.com 261 (Gujarat) that once the Assessing Officer carried out detailed inquiries, it was not open for the Commissioner to reopen the issue on mere apprehension and surmises. The Explanation-2 to - 17 - ITA No.936/CHNY/2024 Section 263 of the Act stipulates that the order of the AO will be deemed to be erroneous and prejudicial to the interest of the revenue, if such order is passed without making enquiries for verifications which should have been made or if the order is passed allowing any relief without enquiring into the claim. This condition is not found fulfilled in this case as the AO had made detailed inquiries on the issue of accommodation entry which was denied by the assessee and no further evidence was brought on record to establish the said alleged transaction. It was held by the Hon’ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. - (2011) 332 ITR 167 (Delhi) that one has to see from the records as to whether there was application of mind before allowing the expenditure and one has to keep in mind the distinction between ‘lack of inquiry’ and ‘inadequate inquiry’. If there was any enquiry, even inadequate, that would not by itself give occasion to the Commissioner to pass order under Section 263 of the Act merely because he has a different opinion in the matter. It is only in cases of ‘lack of inquiry’ that such a course of action would be open. The present case cannot be treated as a case of ‘lack of inquiry’ as the AO had examined the issue in the course of assessment proceeding. The scope of Commissioner’s power under Section 263 of the Act would be available when the AO conducts no enquiry or no proper enquiry or doesn’t apply his mind to the legal issues arising out of the material on record; only then the revisional power is available. In the present case, the AO did conduct proper inquiries based on which the case was reopened and had accepted the explanation of the assessee. Therefore, the Ld. PCIT was not justified in invoking the revisional jurisdiction u/s 263 of the Act and directing further inquiries or taking different view in the matter without bringing anything on record to establish that the view as taken by the AO was not correct. 9. In view of the above facts, we are of the considered opinion that the present order of the ld. PCIT is not tenable in law as the foundation to exercise the revisionary jurisdiction u/s 263 of the Act is missing in the present case. Therefore, the order of the ld. PCIT passed u/s 263 of the Act is quashed and set aside. 10. In the result, the appeal of the assessee is allowed. 14. Before concluding, it is to be mentioned that the PCIT at para 11 & 16 of the impugned order had stated that assessee had totally - 18 - ITA No.936/CHNY/2024 denied the loan transaction with M/s. Wellman Tradelinks Pvt. Ltd., as well as Shri Jignesh Shah and the AO at the time of passing the order u/s.147 r.w.s. 144B of the Act had made addition only in respect of Wellman Tradelinks Pvt. Ltd. In this context, the ld.AR had reiterated the submissions before the AO, that there was no loan transaction from both entities. However, in the case of Wellman Tradelinks Pvt. Ltd, it was stated that assessee company had advanced loan to it in the previous year and the same was returned in the current year. The ld.AR submitted that the addition made by the AO in the reassessment order for Rs.13,00,000/- (alleged loan transaction with M/s. Wellman Tradelinks Pvt. Ltd.,) was subject to challenge and is pending adjudication before the First Appellate Authority. 15. We have also perused the insight portal information furnished by the ld.DR in his paper-book which had resulted in initiation of reassessment proceedings u/s.147 of the Act. On perusal of the same, there is no relevant details about the date of payment of loan by Shri Jignesh Shah to the assessee company, how was it paid, etc. As mentioned earlier, when the books of accounts were audited and same has been placed on record before the AO as well as before the PCIT, the AO or PCIT ought to have brought on record - 19 - ITA No.936/CHNY/2024 some tangible material to show that assessee company had actually received the amount from Shri Jignesh Shah. In other words, the assessee cannot be expected to prove negative. Therefore, in light of the aforesaid reasoning and the judicial pronouncement cited supra, we quash the order of PCIT passed u/s.263 of the Act. It is ordered accordingly. 16. In the result, the appeal filed by the assessee is partly- allowed. Order pronounced in the open court on 1st January, 2025 at Chennai. Sd/- Sd/- (जगदȣश) (JAGADISH) लेखा सदèय/ACCOUNTANT MEMBER (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चेÛनई/Chennai, Ǒदनांक/Dated, the 1st January, 2025 RSR आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Chennai 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. "