Revision by PCIT was justified as there was no lack of investigation by AO

Hoshiarpur Traders Vs PCIT (ITAT Amritsar)

Conclusion: AO had applied his mind while doing the assessment therefore, the investigation by AO could not be called ‘lack of investigation’ and revision order passed under section 263 was quashed.

Held: Assessee was a partnership firm and the dealer of the liquor. The assessment was completed u/s 143(3). The notice u/s 263 was issued by PCIT and the details submission was filed by assessee against the show cause notice & finally PCIT had set aside two issues for further verification before AO considering the assessment order erroneous & prejudicial to the revenue. Primarily the set aside issues were a) Introduction of capital contributed by the partners; b) amount raised through unsecured loan. The ground for setting aside of the assessment order was that creditworthiness and the genuineness of the transaction was not verified during the assessment proceeding. PCIT has formed opinion that the verification was insufficient in relation to creditworthiness and the genuineness of the transaction. Accordingly, the order passed u/s 143(3) was erroneous and prejudicial to the interest of revenue and liable to be set aside. It was held that though the assessment order did not patently indicate that the issue in question had been considered by AO, the record showed that AO had applied his mind. Once such application of mind was discernible from the record, the proceedings under Section 263 would fall into the area of the Commissioner having a different opinion. Investigation by AO could not be called ‘lack of investigation’. PCIT had not brought any material on record to show that the view taken was contrary to law or the investigation was erroneous. PCIT was not justified in setting aside the order of AO. Accordingly, the directions of the PCIT were quashed.

FULL TEXT OF THE ORDER OF ITAT AMRITSAR

The instant appeal of the assessee is directed against the order of the ld. Pr. Commissioner of Income Tax -1, Jalandhar, [in brevity the PCIT] bearing appeal No. DIN & Order No. ITBA/REV/F/Rev5/2021-22/1042161981(1), date of order 30.03.2022, the order passed u/s 263 of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2017-18.The impugned order was emanated from the order of the ld. Dy. Commissioner of Income Tax, Circle, Hoshiarpur, (in brevity the AO) order passed u/s 143(3) of the Act date of order 24.12.2019. The assessee has raised the following grounds:

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