Vikram Sudhir Khurana Vs PCIT (ITAT Ahmedabad)
Revision Fails: PCIT Cannot Invoke 263 Without Making the Very Enquiry He Says AO Missed
Assessee purchased shares of WIRPPL worth ₹2.76 crore. Reassessment was triggered by Insight-P1 flag. AO issued detailed notices, examined source of investments, verified EPF withdrawal of ₹47.33 lakh, scrutinised nine bank credits, obtained PAN & confirmations of five lenders, checked bank statements, demat evidence & ledger accounts. After considering all materials, AO accepted the returned income.
PCIT invoked s.263 alleging AO failed to obtain lenders’ ITRs, financials & bank statements, & invoked Explanation 2(a) to deem the order “erroneous & prejudicial”. Assessee argued AO conducted full enquiry & relied on Gujarat HC in Ranchhod Jivabhai Nakhava.
Tribunal noted from record that AO had made specific, pointed enquiries, obtained PAN + confirmations of all lenders, & verified banking trail. Following Nakhava, once PAN & confirmations are furnished & transactions are through banking channel, primary onus under s.68 stands discharged & further verification must be done by AO of lenders—not by penalising the borrower.
Tribunal also held that PCIT himself undertook no enquiry, though empowered u/s 263; PCIT’s reasoning partly travelled beyond show-cause notice, rendering revision unsustainable. Since AO had taken a plausible view after enquiry, & PCIT failed to show prejudice to Revenue, twin conditions of s.263 were not met. Order u/s 263 was quashed; assessment restored.
