Section 263 Order unsustainable as AO allowed claim after due application of mind

ETA Star Infopark Vs PCIT (ITAT Bangalore)

ITAT Bangalore held that AO allowed the claim of assessee after due application of mind and on proper consideration of the material available on record. Therefore, the order of Ld. CIT passed u/s 263 of the Act cannot be sustained.

Facts- Prior to issuing the aforesaid notice u/s 133C of the Act, the learned Income Tax Officer had telephonically called the appellant to furnish copies of the Joint Development Agreement, relevant Power of Attorneys executed in favour of the Developer and also copies of Partnership Deed for his verification and in response to the same, the appellant had submitted all such documents.

AO, after finding that the appellant has not done any business activity and nor earned any income from business during the A.Y.2015-16, the AO had sought the approval of the Principal Commissioner of Income-tax to convert the limited scrutiny into complete scrutiny for disallowing the general and establishment expenses claimed as deduction by the appellant in the Return.

The learned Pr.CIT, after examining the records of the appellant and found that the appellant had neither carried out any business activities and nor earned any income from business, accorded approval to convert the assessment proceedings into complete scrutiny, for disallowing the general and administrative expenses claimed by the appellant as a deduction in the return.

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