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| The Tax Publishers2020 TaxPub(DT) 1297 (Guj-HC) INCOME TAX ACT, 1961
Section 263
Where AO accepted genuineness of loans received by assessee after making inquiries in detail and after applying his mind and such view of the AO was a plausible view; the PCIT was not justified in passing order under section 263 directing the AO to pass fresh assessment order on the aspect of such unsecured loans shown by the assessee and hence, the said order was liable to be quashed.
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Revision under section 263 - Erroneous and prejudicial order - AO made detail enquiries and took a plausible view -
Assessee-company received unsecured loans from two companies and AO allowed those unsecured loans. PCIT invoked section 263 for revising assessed income of the assessee. It was noticed by the PCIT that the said unsecured loans were shown as investment in the name of the assessee in share application as well as in balance sheet of the respective companies. Accordingly, the PCIT passed an order under section 263 directing the AO to pass fresh assessment order on the aspect of unsecured loans shown by the assessee. Held: It was found that in the order passed by PCIT, Explanation 2 of section 263 was made applicable, however, he did not mention in the show cause notice to invoke the Explanation 2 of section 263. Therefore, by invocation of Explanation in the order without confronting the assessee and giving an opportunity of being heard to the assessee was inappropriate and unsustainable in law. Further, it was found that the AO after making inquiries in detail and after applying his mind, accepted genuineness of loans received by the assessee and such view of the AO was a plausible view, and therefore, the same could not be said to be erroneous or prejudicial to the interest of the Revenue. Hence, the order passed under section 263 was quashed.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE GUJARAT HIGH COURT
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