SYSTEMS TEK INDIA PRIVATE LIMITED,NEW DELHI V. PCIT - 7, NEW DELHI

SA 1/DEL/2025

AI Insights

The case involves Systems Tek India Private Limited, which appealed against the order of the Principal Commissioner of Income Tax-7, Delhi, under section 263 of the Income Tax Act, 1961. The original reassessment was based on a transaction of Rs.80,50,000 with M/s Jar Metal Industries Private Limited, which the Assessing Officer later found to be a loan of Rs.17,50,000, with proper documentation and repayments. The PCIT, however, deemed the reassessment order as erroneous and prejudicial to the interest of the Revenue, leading to the appeal. The Tribunal's decision hinged on the proper inquiries made by the AO and the lack of any new material or adverse findings against the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471507 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Other Referred Cases: Union of India vs Ashish Agarwal, Priya Blue Industries (P.) Ltd. vs ACIT, Fena (P.) Ltd. v. ACIT, Digil Electronics (P) Ltd v. Asstt. CIT, Paramount Probuild (P.) Ltd. vs. PCIT, Majestic Properties Pvt. Ltd. vs. Pr. CIT, Shri Raj Kumar Karanwal Vs. PCIT, PCIT vs NYA International, Pr. CIT vs Shreeji Prints (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: VIVEK AGGARWAL
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Unexplained investment; Reopening of assessment; Accommodation entries; Audit objection; Assessment record; Competent authority; Reason to believe; Revision of order; Application of stay; Prejudicial to interest
• Section: 147; 148; 143(3); 142(1); 143(2); 263; 132; 131; 133(6); 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘G’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1539/Del/2024 [Assessment Year: 2016-17] Systems Tek India Private Limited, C-63/4, Phase-II, Okhla Industrial Area, New Delhi-110020 Vs The Principal Commissioner of income Tax-7, C.R. Building, ITO, I.P. Estate, New Delhi-110002 PAN-AAECS2623L Assessee Revenue SA No.01/DEL/2025 (Arising out of ITA No.1539/Del/2024) [Assessment Year: 2016-17] Systems Tek India Private Limited, C-63/4, Phase-II, Okhla Industrial Area, New Delhi-110020 Vs The Principal Commissioner of income Tax-7, C.R. Building, ITO, I.P. Estate, New Delhi-110002 PAN-AAECS2623L Assessee Revenue Assessee by Shri Vivek Aggarwal, CA Revenue by Ms. Jaya Chaudhary, CIT(DR) Date of Hearing 12.02.2025 Date of Pronouncement 07.03.2025 ORDER PER MANISH AGARWAL, AM, This appeal by the assessee is directed against the order of the Pr. Commissioner of Income Tax-7, Delhi, having DIN No. ITBA/REV/F/REV5/2023-24/1063240826(1), dated 23.03.2024 for Assessment Year 2016-17, passed under section 263 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’). 2 ITA No.1539/Del/2024 SA NO.01/DEL/2025 2. Brief facts of the case are that the assessee is a private limited company and filed its return of income for impugned year on 17.10.2016 declaring loss of Rs.70,32,610/-. The case was reopened by way of issue of notice u/s 148 of the Act dated 31.03.2021, which was allegedly served upon the assessee on 01.04.2021. In the reasons recorded, it was observed by the Assessing Officer that the assessee had made transaction of Rs.80,50,000/- during Financial Year 2015-16 with one Shri Pradeep Kumar Jindal and the assessee is one of the ultimate beneficiaries. This allegation of the Assessing Officer is based on the information available with the Department which are flagged by the Directorate of Income-tax (systems) as per risk profiling. During the course of reassessment proceedings, the Assessing Officer vide letter dated 15.03.2022 along with notice u/s 142(1) of the Act asked the assessee to explain the transaction of Rs.80,50,000/- made with M/s Jar Metal Industries Private Limited a company controlled by Shri Pradeep Kumar Jindal with proper supporting documents. In reply, the assessee vide letter dated 21.03.2022 stated that the transaction of Rs.80,50,000/- during financial year 2015- 16 is misleading as the assessee has made no such huge transaction with M/s Jar Metal Industries Private Limited. In fact, the assessee was having transaction of Rs.17,50,000/- as a loan taken from that company out of which Rs.7 lakhs was repaid within few day and left over amount of Rs.10,50,000/- remained outstanding at the end of the previous year relevant to year under appeal. The assessee has also filed the copy of confirmation and bank statement showing receipt of such loan and repayment thereon. After considering the submissions made by the 3 ITA No.1539/Del/2024 SA NO.01/DEL/2025 assessee, the Assessing Officer vide order dated 31.03.2022 passed u/s 147 r.w.s. 144B of the Act has accepted the contention of the assessee and assessed the income as declared by the assessee. Thereafter, the ld. PCIT, vide notice dated 27.12.2023 show caused the assessee as to why the order passed u/s 147 r.w.s. 144B of the Act be held as erroneous as well as prejudicial to the interest of the Revenue and after considering the replies of the assessee, vide impugned order dated 23.03.2024, the Ld. PCIT held the order passed u/s 147 r.w.s 144B of the Act as erroneous and prejudicial to the interest of the Revenue and direct the Assessing Officer to pass a fresh order as per the provisions of the Act and modify the assessment order after making proper enquiry and verification. 3. Against the said order of the Ld. PCIT, the assessee is in appeal before the Tribunal. 4. The assessee challenged the order of the Ld. PCIT passed u/s 263 of the Act on the strength of following grounds of appeal:- 1. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 of Income Tax Act, 1961 and has erred in holding the reassessment order dated 31-03-2022 as erroneous as well as prejudicial to the interest of revenue and that too by recording incorrect facts and 2. That having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in setting aside the reassessment order dated 31-03-2022 and directing the assessing officer to examine the issues involved afresh and that too by recording incorrect facts and findings and more particularly when all the details/information/evidences were available on the record at the time of assessment proceedings. 3. That having regard to the facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 of Income Tax Act, 1961 and has erred in 4 ITA No.1539/Del/2024 SA NO.01/DEL/2025 not accepting order us 148A (d) dated 16/03/2023 wherein the case with all facts were rechecked and dropped by the Ld. AO after approval from CIT. 4. That having regard to the facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction us 263 which is bad in law inter alia for this reason that the reassessment order passed u/s 143(3)/147 dated 31-03-2022 which is sought to be revised u/s 263 itself was invalid inter alia on various grounds as mentioned below and thus proceedings initiated us 263 against the invalid reassessment order is clearly bad in law. (a) That assumption of jurisdiction u/s 147 is itself bad in law as the reason recorded would not have led to the formation of belief of escapement of income. (b) That the notice sent u/s 148 is time barred, as it was sent after 31/3/2021 (c) That no valid satisfaction/approval us 151 was obtained (d) That impugned reassessment order was passed without complying with the mandatory conditions of section 147 to 151. 5. During the course of hearing, the Ld. AR submits that the notice in the present case as issued u/s 148 on 31.03.2021 was served upon the assessee only on 01.04.2021. The law with respect to the reassessment u/s 148 stood amended w.e.f. 01.04.2021, where the section 148A was inserted, according to which, before issue of notice u/s 148, the notice u/s 148A(a) alongwith the information as available with the AO is to be supplied to the assessee in terms of section 148A(b) of the Act and after considering the submission of the assessee as per section 148A(c), a speaking order has to be passed u/s 148A(d) of the Act. Then, thereafter only the AO could issue the notice u/s 148 of the Act for reassessment of the case for a particular year. Admittedly, in the instant case, when the notice was issued and served upon the assessee only on 01.04.2021, the AO should have taken the procedure as per amended provisions u/s 148A 5 ITA No.1539/Del/2024 SA NO.01/DEL/2025 of the Act. However, instead of doing so, the AO has proceeded to complete the reassessment as initiated by way of notice issued u/s 148 of the Act dated 31.03.2021 and served upon the assessee on 01.04.2021. The Ld. AR further submitted that in terms of judgment of Hon’ble Supreme Court in the case of Union of India vs Ashish Agarwal in Civil Appeal No.3005/2002 & ors., dated 04th May, 2022 wherein it was held by the Hon’ble Supreme Court that all the notices issued between period from 01.04.2021 to 30.06.2021 be treated as notice u/s 148A(b) and therefore, even otherwise as per the ratio laid down by Hon’ble Apex Court in case of Ashish Agarwal (supra), the notice so issued on 01.04.2021 u/s 148 of the Act must be treated as notice u/s 148A(b) of the Act which has not been done in the present case. It is thus submitted by the ld. AR that the re-assessment order passed u/s 147 r.w.s. 144B based on which the present 263 proceedings were originated is bad in law and therefore, all such consequent proceedings including order u/s 263 of the Act deserves to be hold is bad in law and be quashed. 6. On merits of the issue, the Ld. AR submits that during the course of reassessment proceedings, the AO has specifically asked the assessee to explain the transaction with M/s Jar Metal Industries Private Limited and assessee has duly explained the transactions alongwith necessary evidences such as confirmation and bank statement etc. The AO after examining the details vis-à-vis the reasons recorded was of the view that assessee has entered into genuine transaction of loan and therefore no adverse inference was called for. The Ld. PCIT solely based on the audit objections raised has initiated the proceedings u/s 263 of the Act. He 6 ITA No.1539/Del/2024 SA NO.01/DEL/2025 further brought to our notice that in the case of the assessee, a notice u/s 148A(a) and (b) were issued on 22.02.2023. In response, the assessee has filed a detailed reply on 04th March, 2023, which is also part of the paper book and thereafter, the AO has passed order u/s 148A(d) on 21.03.2023, whereby the proceedings so initiated were dropped by observing that issue of loan of Rs.80,50,000/- from M/s Jar Metal Industries Private Limited has already been considered and discussed in the assessment proceedings u/s 147 of the Act vide order dated 31.03.2022. He thus prayed that the issue of loan of Rs.80,50,000/- as alleged by the Department has been examined on two occasions, first when the reassessment order was passed by the AO on 31.03.2022 and thereafter when order u/s 148A(d) was passed on 21.03.2023. It is thus prayed that when this issue has already been examined and found that the information available with the Department was not correct and the assessee is having a transaction of Rs.17,50,000/- only with M/s Jar Metal Industries Private Limited and, therefore, the AO has taken a conscious decision, the order of the Ld. PCIT u/s 263 is nothing but mere change of opinion. It is not a case where no enquiry or verification was carried out by the AO rather all the necessary enquiries were made and based on which, a conscious decision was taken by the AO, therefore, the order passed u/s 263 of the Act deserves to be quashed even on merits also. 7. On the other hand, the ld. CIT-DR vehemently supported the orders of the lower authorities and submits that the AO has not made any inquiries u/s 131 or 133(6) of the Act and the AO has merely accepted the 7 ITA No.1539/Del/2024 SA NO.01/DEL/2025 submissions made by the assessee without undertaking any independent inquiry or verification of the facts. This lack of independent inquiry renders the assessment proceedings erroneous and prejudicial to the interest of Revenue and therefore the order passed u/s 263 deserves to be uphold. She further submitted a detailed submission which is as under:- “1) BRIEF FACTS OF THE CASE: The assessee company, M/s System Tek India Pvt. Ltd., filed its return of income for A Y. 2016-17 declaring a loss of Rs. 70.32.610/-. The case was reopened under Section 147 of the Act (hereinafter referred to as \"the Act\") based on information regarding accommodation entries linked to sh. Pradeep Kumar Jindal Following the reopening, the assessee responded to various notices under Sections 143(2) and 142(1) and the AO passed an order on 31.03 2009. assessing the income as NIL. Subsequently, the PCIT invoked revisionary jurisdiction under Section 263 on 27.12.2023, setting aside the assessment order as erroneous and prejudicial to the interest of the revenue. The AO was directed to conduct a fresh assessment after making proper inquiries and verification. The assessee has filed an appeal against the order passed under Section 263 on 29.03.2024. 2) CONTENTIONS OF ASSESSEE & SUBMISSIONS ON BEHALF OF THE DEPARTMENT: 2.1. Contention of Assessee: That the reopening was initiated on the basis of incorrect, vague and erroneous information of financial transaction of Rs. 80,50,000/- Submission of Department: It is most respectfully submitted that in the present case, the reopening of assessment was based on credible and specific information received from the Directorate of Income Tax (System) which flagged the transactions linked to accommodation entries provided by Sh. Pradeep Kumar Jindal. (Refer Reasons of Reopening at Assessee's Paper Book, Pg. No. 16-17). These entries were flagged based on the risk profiling carried out by the Directorate. Further, the reasons for reopening the assessment were duly recorded, and it was found that the Assessee had received accommodation entries which led to reopening of the case. The AO, based on specific details relating to the accommodation entries, was well within his jurisdiction to reopen the case and initiate proceedings under Section 147. Reliance is being placed 8 ITA No.1539/Del/2024 SA NO.01/DEL/2025 upon decision in case of Priya Blue Industries (P.) Ltd. [2022] 138 taxmann.com 69 (SC) wherein SLP of Assessee was dismissed against the High Court ruling that where Assessing officer had reason to believe that income chargeable to tax has escaped assessment as assessee was beneficiary of accommodation entries and basis for formation of such belief were several inquiries and investigation by investigation wing that there had been escarpment of income of assessee from assessment, reopening of assessment was justified. (Copy Enclosed as ANNEXURE-A) It is also humbly submitted that if quantification of escaped income is found or part of it is found not correct at the time of final re-assessment, the same would not render the reopening u/s 148 void ab-initio. In the present case also, since the information read with records of assessee available with AO showed transaction with paper entity M/s Jar Metals Industries Pvt. Ltd., just because the amount was found to be Rs. 17.5 Lakhs for A.Y 2016-17 and balance amount pertaining to A.Y 2013-14 would not make reassessment of A.Y 2016-17 invalid. Reliance is being placed upon decision in case of Arb Hotels Resorts Pvt. Ltd. [2023] 156 taxmann.com 238 (Allahabd) wherein at the stage of assumption of jurisdiction, the AO had taken note of 2 entries and that too after issuing notice to the assessee and thereafter, the AO reconsidered position as per record and reached the conclusion that there existed only 1 accommodation entry of Rs. 27 Lakhs. Hon'ble HC had upheld the issue of notice u/s 148A of the Act. (Copy Enclosed as ANNEXURE-B) 2.2. Contention of Assessee: That the approval u/s 151 is given mechanically and without application of mind and 'Reason to believe' is formulated on the basis of information given by DIT (System) as per risk profiling without any material in hand or any enquiry made by the Ld. AO. Even the Specified Authority for the purpose of granting approval u/s 148 is not JCIT but PCIT. Submission of Department: It is most respectfully submitted that in the present case, the reasons recorded for reopening of assessment were duly considered by the Addl./Joint CIT while granting online approval (Refer to approval u/s 151 & Reasons of Reopening at Assessee's Paper Book, Pg. No. 15-18). Further, the approval of the Addl./Joint CIT was granted after a proper application of mind. Furthermore, it is humbly submitted that in the case of Assessee, no assessment u/s 143(3) or 147 had been conducted prior to this notice and the notice dated 31.03.2021 was issued u/s 148 well within 4 years. As per then existing provisions of Section 151 (2) of the Act, the Range Head was the approving authority. Therefore, it is right to suggest that the reassessment proceedings were duly initiated 9 ITA No.1539/Del/2024 SA NO.01/DEL/2025 in compliance with the conditions laid down under sections 147 to 151 of the Act. The approval for reopening of the assessment was duly obtained from the competent authority, and the reasons for reopening were adequately recorded and communicated, as required by law. Therefore, the contentions raised by the Assessee regarding non-compliance with the mandatory conditions of sections 147 2.3. Contention of Assessee: That the order of Ld. PCIT is due to change of opinion. Submission of Department: It is most respectfully submitted that S. 263 of the Act grants the PCIT the power to revise any order passed by an Assessing Officer (AO) if in the opinion of the Ld. PCIT, such order is found to be erroneous and prejudicial to the interests of the revenue. In the present case, the Ld. PCIT on perusal of the assessment records and assessment orders, was satisfied that the order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue and hence, the Ld. PCIT passed the order u/s 263 of the Act dated 23.03.2024. The Ld. PCIT has categorically brought out his finding at Para 7, Pg. No. 5, of his order u/s 263 of the Act dated 23.03.2024. It is pertinent to mention here that the AO failed to consider statements recorded u/s 132 & 131(1A), where the dummy Directors of front companies revealed that Sh. Pradeep Kumar Jindal was involved in providing accommodation entries for cash to various beneficiaries, which was critical to the assessment. This failure in the assessment process rendered the order both erroneous and prejudicial to the interest of the Revenue. Therefore, the contentions of the assessee are devoid of merits and are liable to be dismissed. Further, perusal of Assessee's Paper Book, Pg. No. 29 shows that during the assessment proceedings, the Assessee had submitted only the confirmation of transaction with M/s Jar Metal Industries Pvt. Ltd., however, the Assessee did not provide any supporting documents, such as bank statements, Income Tax Return etc. pertaining to this entity. Hence, Id. PCIT was correct in holding that the AO failed to investigate the impugned transactions. Hence, revision u/s 263 of the Act is both warranted and justified and it is wrong to suggest that the order passed by the Ld. PCIT is due to change of opinion. Furthermore, it is most respectfully submitted that a review of assessment record passed u/s 147 of the Act dated 31.03.2022, clearly indicates that the AO did not address the issue nor conduct any inquiry u/s 131 or 133(6) of the Act. The AO merely accepted the submissions made by the Assessee 10 ITA No.1539/Del/2024 SA NO.01/DEL/2025 without undertaking any independent inquiry or verification of the facts. This lack of independent inquiry renders the assessment proceeding erroneous and prejudicial to interest of Reliance is being placed upon decision in case of Paramount Probuild (P.) Ltd. [2024| 161 taxmonn.com 85 (Delhi) wherein the commissioner revised the assessment order on the ground that issue of loans advanced to assessee was not. properly examined by AO despite DDIT Investigation report and since there was no discussion about aforesaid aspect in assessment order, it was a fit case to invoke revision powers u/s 263 of the Act. (Copy Enclosed as ANNEXURE-C) 2.4. Contention of Assessee: Notice u/s 148 was time barred as it was served on 01/04/2021. Submission of Department: It is most respectfully submitted that the notice u/s 148 was issued on 31.03.2021, well within the statutory time limits prescribed u/s 149 of the Act and it was digitally signed on 31.03.2021 at 5:47 PM (Reference Assessee's Paper Book, Pg. No.1). In the present case, the notice was validly issued on 31.03.2021, which is within the period allowed under the Act, and its subsequent receipt on 01.04.2021 does not render it time-barred. Reliance is being placed upon decision in case of Subramaniam Rohini [2024] 158 taxmann.com 180 (Madras) wherein the impugned reopening notice was digitally signed on 31-03-2021, before limitation expired, and was delivered to assessee via email on following day on 01-04-2021. It was held that the said notice was not time barred and thus, challenge to the notice was dismissed. (Copy Enclosed as ANNEXURE-D) 2.5. Contention of Assessee: Objection raised by the assessee for reopening was not disposed by the Ld. AO. Submission of Department: It is most respectfully submitted that the objections raised by the assessee for reopening was duly disposed by the Ld. AO vide order dated 18.03.2022 & duly communicated to assessee with DIN (Refer Assessee's Paper Book Pg. No. 24-27). Therefore, the contention of the Assessee in this regard is devoid of merits and liable to be dismissed. 2.6. Contention of Assessee: Revision proceedings were initiated on the basis of Audit objection. Submission of Department: It is most respectfully submitted that there is no bar under the Act for Ld. PCIT on taking action u/s 263 of the Act based upon audit objection, specifically when the ld. PCIT has considered facts and applied his mind, 11 ITA No.1539/Del/2024 SA NO.01/DEL/2025 after considering the submissions of the Assessee, to arrive at a conclusion. Reliance is being placed upon decision in case of Seshasayee Paper & Boards Ltd. (2000) 108 taxman 464 (Madras, Para 12 therein. (Copy Enclosed as ANNEXURE-E) 2.7. Contention of Assessee: Non-Disposal of objections raised by the Assessee by the Submission of Department: It is humbly submitted that order of Ld. PCIT u/s 263 has incorporated the replies/submissions of the Assessee on Para No.3, Pg. No.2 & Para No.5, Pg. No. 3 to 5. One of the main objections of assessee was that it had supplied the information to assessee based upon which AO had framed the assessment dated 31.03.2022. Another objection of the assessee was that the second reopening was also not found fit vide order us 148A (d) dated 16.03.2023. On above objections, kind attention is drawn to Para No.4 (Pg. No.3), Para No.7 (Pg.No. 5-6) of Ld. PCIT's order u/s 263 wherein he has held that order dated 31.03.2022 was erroneous and prejudicial to the interest of Revenue because assessing officer had failed to take cognizance of statement u/s 132 & 131 of the Dummy Directors of the Company M/s Jar Metal Industries Pvt. Ltd. from whom Assessee had taken accommodation entry of Rs. 17,50,000/-. This brings out that there was inadequate enquiry by AO regarding the said transactions. It is also further submitted that even in order u/s 148A, there is no mention that the AO had made any enquiry whatsoever about said transaction. Even otherwise order u/s 148A was not sought to be revised but it was order u/s 147 dated 31.03.2022 r/w 144B which was sought to be revised in the impugned proceedings us 263 of the Act.” 8. In rejoinder, the ld. AR of the assessee has also filed a submission, which is as under:- Sub: Our submission with respect to reply submitted by the Revenue Department on 29/01/2-25 in the case of Systems Tek India Private Limited for A.Y. 2016-17 APPEAL NO. ITA/1539/2024 With respect to the submission given by the Ld. DR, we submit as under: 1. Reply to Para2.1 12 ITA No.1539/Del/2024 SA NO.01/DEL/2025 The case of Priya Blue Ind. (P) Ltd Vs. ACIT, cited by the Ld. DR is misplaced as the case was reopened after due enquires and after gathering relevant material whereas in assessee's case there is no enquiry was conducted by the Ld. AO or obtained any relevant material at the time of reopening. Hence, this case is not applicable. Even the case Arb Hotels Resorts (P) Ltd Vs. PCIT is also misplaced as this case is reopened u/s 148A(d) after due diligence with specific information and complete details of all transactions whereas in the assessee's case there is no enquiry was conducted by the Ld. AO or obtained any relevant material at the time of reopening. In Fena (P.) Ltd. v. ACIT [2022] 445 ITR 434 (Delhi) it was held that a reassessment notice is not valid in law where it was issued relying upon the information of the risk management strategy of the Department but without conducting an independent enquiry. Similar view could be found in Digil Electronics (P) Ltd v. Asstt. CIT [2023] 458 ITR 478 (Bom). 2. Reply to Para2.2 The approval u/s 151 is given mechanically and without application of mind and 'Reason to believe' is formulated on the basis of information given by DIT (System) without any material in hand or any enquiry made by the Ld. AO. Thus, the alleged reopening of assessment is not valid as decided by Delhi ITAT Bench in the case of Sh. Birpal Vs. ITO. ITA No.8849/Del/2019 on 20.11.2024. 3. Reply to Para2.3 During the assessment proceedings, assessee has provided all the information sought by the Ld. AO which includes copy of bank statements of all banks, audited BS and profit & loss account. Ld. AO has verified all the facts related to reopening along with statements recorded u/s 132 & 131(IA). It is incorrect to say that the Ld. AO did not verify the information. Reliance is placed upon the decision in the case of Shri Raj Kumar Karanwal Vs. PCIT ITA 644/Del/2021 (para 16). 4. Reply to Para2.4 The law case \"Subramaniam Rohini 158 taxman.com 180 (Madras)\" cited by the Ld. DR is misplaced as in this case, notice u/s 148 was uploaded on web portal on 31/3/2021 13 ITA No.1539/Del/2024 SA NO.01/DEL/2025 wherein in assessee's case it was uploaded on 1/4/2021 (PB- 3). 5. Reply to Para2.5 Objection raised by the assessee (PB-19) were not disposed off by the Ld. AO and disposal letter (PB-24) given by the Ld. AO is generic and disposed off without any reference to the issue of material, information & recorded statements. Thus, violated Supreme Court guidelines as per GKN Driveshafts 6. Reply to Para2.6 The law case \"Seshasayee Paper & Boards L.td.\" cited by the Ld. DR is misplaced as in this case Ld. CIT has made his enquiry independent of Audit team whereas in assessee's case, it was lifted from Audit objection. We rely on Majestic Properties Pvt. Ltd. vs. Pr. CIT (caselaw PB-156 para8.1) has held that Revisionary power us 263 cannot be initiated on the basis of audit objection. 7. Reply to Para2.7 Ld. PCIT did not dispose off the objection raised by the assessee in respect of jurisdictional issue (PB-357-362). In this respect, we rely on Ashish Dham Vs. PCIT in ITA No.2181/Del/2017 (caselaw PB-81) & M/s Agrani Buildestate Vs. PCIT, ITA 205/JP/2023. (caselaw PB-12-22) In view of the above facts and submissions given earlier on 15/01/2025 & on 29/01/2025, we humbly request to adjudicate the issue.” 9. We have heard the rival submissions and perused the materials available on record. The case was reopened u/s 148 of the Act and the notice was served upon the assessee on 01.04.2021, which fact is not disputed. However, the AO without following the amended provisions of reassessment as provided u/s 148A of the Act, had proceed to complete the reassessment proceedings initiated vide notice issued u/s 148 of the Act dated 31.03.2022 and after examining the details filed by the assessee was of the view that the transactions with M/s Jar Metal Industries Private Limited was genuine transaction and took no adverse view in the 14 ITA No.1539/Del/2024 SA NO.01/DEL/2025 matter. It is also a matter of fact that the proceedings u/s 148A were also initiated at a later stage, where the Revenue after considering the fact that the issue of transaction with M/s Jar Metal Industries Private Limited of Rs.80,50,000/- has already been considered in the order passed u/s 147 r.w.s. 144B of the Act dated 31.03.2022 and therefore, the proceedings were dropped in terms of the order passed u/s 148A(d) of the Act. Now, the Ld. PCIT vide impugned order passed u/s 263 of the Act alleged that the AO has not made proper inquiries and verification with respect to the loan transaction with M/s Jar Metal Industries Private Limited. From the perusal of the details asked for by the AO during the course of reassessment proceedings and the reply submitted by the assessee, we find that the AO has made a specific query with regard to the transaction in terms of notice issued u/s 142(1) dated 15.03.2022. The assessee vide reply dated 21.03.2022 has made the submissions and stated that transaction of Rs.80,50,000/- was misleading and the assessee has taken a loan of Rs.17,50,000/- only from M/s Jar Metal Industries Private Limited on 10th April, 2015 and repaid a sum of Rs.7 lakhs on 15.04.2015 leaving a closing balance of Rs.10,50,000/-. The assessee also filed confirmation duly confirming the transaction by the opposite party and also filed bank statement wherein such transactions were duly appearing. All these documents find placed in the paper book filed by the assessee. We further seen that the assessee also requested the AO to supply material, if any, in addition to the information in support of the allegation the assessee has taken loan of Rs.80,50,000/- and also requested for supply of adverse material and adverse statement and further requested 15 ITA No.1539/Del/2024 SA NO.01/DEL/2025 for cross examination of Shri Pradeep Kumar Jindal who was allegedly involved in providing accommodation entries of loans through various paper companies including M/s Jar Metal Industries Private Limited. However, the AO neither supplied any such information nor brought on record or any contrary material or statement of Shri Pradeep Kumar Jindal, which are against the assessee and no opportunity of cross examination was allowed to the assessee. However, after considering the details filed by assessee, the AO was of the opinion that the transaction with M/s Jar Metal Industries Private Limited of Rs.17,50,000/- was a genuine transaction and no addition was made. Now, ld. PCIT alleged that the AO has not made proper inquiries and verification which in our opinion is not correct. As observed above in the instant case, the assessee has filed all the necessary details in support of the transaction of loan from M/s Jar Metal Industries Private Limited and further specifically asked the AO for supply of any contrary material which was never brought on record by the AO. Under these circumstances in our considered opinion, there is no lack of inquiries on the part of the AO who has taken a conscious decision based on the material available on record and submissions made by the assessee. Our this view is supported by the recent judgment of Hon’ble Supreme Court in the case of PCIT vs NYA International, wherein, the Hon’ble Supreme Court while dismissing the SLP filed by the Revenue in Special Leave Petition (civil) Diary No.1845/2025 vide order dated 17.02.2025 has observed as under:- “Delay condoned. 16 ITA No.1539/Del/2024 SA NO.01/DEL/2025 This special leave petition is misconceived and is completely contrary to the law pertaining to Section 263 of the Income Tax Act, 1961. The notice under Section 148 of the 1961 Act referred to two reasons. The first reason was with regard to non-declaration of the account in ING Vysya Bank with a credit of Rs.70,13,43,319/- (Rupees seventy crores thirteen lakhs forty three thousand three hundred and nineteen only). The second reason was with regard to the claim of deduction under Section 10AA of the 1961 Act. It is accepted that a reassessment order under Section 148 read with Section 143(3) of the 1961 Act was passed. Addition was not made for the first reason. In the given facts, the assertion by the Revenue that inquiry and verification in re the bank account was not made is ex-facie incorrect. This being the position, this is not a case of failure to investigate, but as no addition was made, the Revenue can argue that it is a case of wrong conclusion and decision in the re- assessment proceedings. Therefore, to exercise jurisdiction under Section 263 of the 1961 Act, the Commissioner of Income Tax should have examined the merits and only on reaching a finding that the re-assessment order was erroneous and prejudicial to the interest of the Revenue made an addition. This is not a case of 'no inquiry and verification', but as made out by the Revenue, a case of wrong conclusion. The difference between the two situations is clear and has different consequences. This being the position, the High Court was right in dismissing the appeal preferred by the Revenue. The special leave petition is dismissed in the above terms. Pending application(s), if any, shall stand disposed of.” 10. Further, Hon’ble Apex Court in the case of Pr. CIT vs Shreeji Prints (P.) Ltd. reported in [2021] 130 taxmann.com 294(SC) has also taken the same view and observed as under:- “Section 69, read with section 263, of the Income-tax Act, 1961 - Unexplained investments (Unsecured loans) - Assessment year 2013-14 - Assessee-company had received unsecured loans from two different companies - Commissioner noting that said loans were shown as investment in assessee's name in balance sheet of respective companies exercised hi revisionary powers and passed an order without giving an opportunity to assessee of being heard, invoking Explanation 2 to section 263 - High court by impugned order held that since Assessing Officer has made inquires in details and accepted genuineness of loans receive by assessee, such view of Assessing Officer was a plausible view 17 ITA No.1539/Del/2024 SA NO.01/DEL/2025 and same cannot to l considered erroneous or prejudicial to interest of revenue - Whether SLP against said impugned order was to be dismissed.” 11. In view of the above discussion and by respectfully following the judgment of Hon’ble Supreme Court in the case of PCIT vs NYA International (supra), we are of the view that the AO had made proper inquiry and it is not a case of no inquiry or lack of inquiry. When an opinion is formed as a result of the inquiry, which was in the exclusive domain of the AO, it is not open for revisional authority to arrive at a conclusion merely on the basis of subjective exercise. This being so, we quashed the order passed u/s 263 of the Act. As a result, all the grounds taken by the assessee are allowed. 12. In the result, the appeal of the assessee is allowed. 13. The assessee has also filed a stay petition in SA No.01/Del/2025 requesting for stay on the proceedings initiated by the AO as consequence to the order passed u/s 263 of the Act. Since, we have already decided the appeal of the assessee, the stay application filed by the assessee become in-fructuous and thus dismissed. 14. Finally, the appeal of the assessee is allowed and the Stay Application of the assessee is dismissed. Order pronounced in the open court on 07th March, 2025. Sd/- Sd/- [ANUBHAV SHARMA] [MANISH AGARWAL] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 07.03.2025. f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ 18 ITA No.1539/Del/2024 SA NO.01/DEL/2025 Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, "