Nirav Chandrakantbhai Bhalani Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that invocation of section 263 by PCIT unjustified due lack of sufficient evidence to support claim that the order is erroneous and prejudicial to the interest of revenue.
Facts- The assessee is an individual. AO passed the order u/s. 147 r.w.s. 144 of the Act, accepting the return as declared by the assessee. Thereafter, PCIT issued a notice of hearing exercising his powers u/s.263 of the Act relating to assessment order passed by AO u/s 147 read with section 144 of the Act. In the said notice the PCIT stated the assessee has made cash payment of Rs.22,13,735/ against the purchase of immovable property over and above the document value and concluded that the AO should have made addition of this amount as unaccounted. He concluded that since the said issue was not verified the order passed by AO is erroneous in so far as prejudicial to the interest of revenue.
PCIT set aside the order of the AO and directed the AO to pass a fresh assessment order. Being aggrieved, assessee has preferred the present appeal.
Conclusion- Held that for the Ld.PCIT to invoke Section 263 of the Act, it must be conclusively proven that the AO’s order is both erroneous and prejudicial to the interests of the revenue. In this case, the AO made inadequate inquiries, during the proceedings, the AO could not provide any documentary evidence that formed the basis for reopening the assessment. This lack of evidence, supports the conclusion that the Ld.PCIT’s action of setting aside the order of AO and directing him to pass a fresh order is unwarranted. In view of the above, the order passed by the Ld.PCIT under Section 263 is set aside.
