Case Law Details
Rajmoti Road Movers Vs PCIT (ITAT Rajkot)
The case of Rajmoti Road Movers Vs PCIT before the Income Tax Appellate Tribunal (ITAT) Rajkot presents significant insights into the interpretation of ledger accounts by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961.
Background of the Case
Rajmoti Road Movers, a partnership firm engaged in the transportation of goods, initially filed its return of income for the assessment year 2012-13, declaring an income of ₹2,53,12,550. The income underwent scrutiny under Section 143(2) of the Act, and the AO estimated the gross profit at ₹2,86,52,160, resulting in an addition of ₹33,39,612 to the total income. However, this assessment came under review by the PCIT, who raised concerns regarding various discrepancies and deficiencies in the assessment process, particularly in relation to the ledger accounts maintained by the assessee.
PCIT’s Findings
In his review, the PCIT identified several critical points regarding the ledger accounts, which were pivotal in his decision to invoke Section 263 of the Act. These findings included:
- Mismatch in Freight Advances: The PCIT noted a significant discrepancy between the total freight advances recorded in various ledgers and those reported in the financial statements. Specifically, the ledger indicated freight advances of ₹3,03,89,600 as of March 31, 2012, while the financial statements reflected only ₹20,45,967. This contradiction raised concerns about the completeness and accuracy of the reported figures.
- Non-Verification of Cash Payments: The PCIT pointed out that certain cash payments made by the firm violated Section 40A(3) of the Act. The AO had failed to disallow these expenses during the assessment, which could result in an inflated profit figure for the firm.
- Discrepancy in Partner’s Profit Share: The PCIT also highlighted that one of the partners, holding a 16% share in the firm, reported a profit of ₹3,48,14,330, which was inconsistent with the firm’s declared profit of ₹2,57,77,426. This difference suggested that the firm may have understated its profit by ₹19,23,12,137.
- Outstanding Sundry Creditors: Additionally, the PCIT noted that the firm had reported outstanding sundry creditors of ₹2,60,68,710 as doubtful without any verification or independent inquiry into these accounts.
Based on these observations, the PCIT issued a show cause notice under Section 263, concluding that the assessment order passed by the AO was erroneous and prejudicial to the interests of the revenue.
Assessee’s Arguments
In response to the PCIT’s findings, the assessee’s counsel presented several arguments:
- Verification of Ledger Accounts: The assessee maintained that the discrepancies highlighted by the PCIT were a result of an improper interpretation of the ledger entries. The counsel argued that the entries made in the freight advances ledger were accurate and that adjustments were made against actual freight expenses, thus justifying the lower balance reflected in the financial statements.
- Limited Scope of Reopening: The counsel contended that the reassessment initiated under Section 147 was based solely on the alleged mismatch in the freight advances ledger. The AO had conducted a detailed examination during the reopening process and found no further discrepancies that warranted adjustments beyond those already made.
- Application of Mind by AO: The defense argued that the AO had exercised due diligence and applied his mind to the issues raised during the assessment process. Therefore, the claim that the assessment order was erroneous due to non-verification lacked merit, as the AO had already considered the relevant financial details.
Tribunal’s Observations
The ITAT considered both the PCIT’s interpretations and the arguments presented by the assessee. The Tribunal’s observations included:
- Assessment Order Not Erroneous: The Tribunal found that the AO had indeed verified the details of the ledger accounts during the assessment process. The assessment order was deemed not erroneous or prejudicial to the revenue, as the AO had conducted inquiries and arrived at a plausible conclusion.
- PCIT’s Misinterpretation: The Tribunal noted that the PCIT had misinterpreted the ledger accounts by focusing solely on the debit side while ignoring the credit entries. This selective examination led to incorrect conclusions about the firm’s financial position.
- No Mismatch in Freight Advances: The Tribunal emphasized that the AO’s findings regarding the freight advances were correct, and the adjustments made in the ledger were consistent with the actual freight expenses incurred by the firm.
- Jurisdictional Limitations: The Tribunal reiterated that the PCIT cannot expand the scope of assessment beyond the reasons recorded by the AO during the reassessment process. Thus, any claims regarding non-verification of the other issues raised by the PCIT could not justify overturning the AO’s assessment.
Conclusion
The case of Rajmoti Road Movers Vs PCIT serves as an important reference for understanding the delicate balance between the roles of the assessing officer and the Principal Commissioner in income tax assessments. The Tribunal’s ruling reinforces the necessity for a thorough and fair assessment process, highlighting that any actions taken by the PCIT must be based on a comprehensive examination of the facts and circumstances surrounding the case.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
The captioned appeal has been filed at the instance of the assessee against the order of the Ld. Principal Commissioner of Income Tax-1, Rajkot arising in the matter of assessment order passed under Section 263 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2012-13.
2. The only grievance raised by the assessee is that the Ld. PCIT u/s 263 of the Act has held the assessment order passed by the AO as erroneous in so far prejudicial to the interest of revenue u/s 263 of the Act.
3. The necessary facts are that the assessee in the present case, a partnership firm, is engaged in the business of transportation of goods. The assessee filed its original return of income dated 22/12/2012, declaring an income at Rs. 2,53,12,550/- only which was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was selected for scrutiny and therefore a notice vide letter dated 10/12/2013, was issued upon the assessee u/s 143(2) of the Act. During the assessment, the gross profit was estimated at Rs. 2,86,52,160/- being 3.40% of the net receipt Rs. 1,39,15,04,986/- only which resulted in an addition of Rs. 33,39,612/- to the total income of the assessee vide order dated 23/02/2015 passed u/s 143(3) of the Act.
3.1 Subsequently, the proceedings u/s 147 of the Act were initiated on account of escapement of income by issuing notice u/s 148 of the Act, dated 27/03/2019. The proceedings u/s 147 of the Act were initiated on account of mismatch in the advance freight charges paid by the assessee vis-a-vis such advance freight charges shown under the balance sheet. However, the AO after necessary verification accepted the income of the assessee computed by the AO in the assessment framed u/s 143(3) of the Act at Rs.2,86,52,160/- vide order dated 18/12/2019. Later, the Ld. PCIT on verification of the assessment records observed certain defects in the income escaping assessment order dated 18/12/2019 which are enumerated as under:
I. Based on the different ledgers of freight advances, it was noticed that the total freight advances stand at Rs. 3,03,89,600/- as on 31/03/2012, whereas in the financial statement as on 31/03/2012, such advances were shown at Rs. 20,45,967/- only. However, such a mismatch in the amount of freight advances was not examined by the AO during the assessment proceedings.
II. There were certain payments made in cash in contravention to the provision of section 40A(3) of the Act, which were required to disallowed but the AO failed to do so in the assessment framed u/s 147 r.w.s 143(3) of the Act.
III. One of the partners, namely Shri Ravibhai Dipsinh Solanki holding 16% shares in the profit has shown his share of profit in the assessee firm of Rs. 3,48,14,330/- as evident from the letter of the ADIT. Accordingly, the profit of the firm was worked out at Rs. 21,75,89,563/- being the Rs. 3,48,14,330/- X 100 divided by 16, whereas the assessee has shown profit at Rs. 2,57,77,426/- only in the income tax return for the year under consideration. Thus, the Ld. PCIT was of the view that the assessee has shown less profit by the amount Rs. 19,23,12,137/- (217589563 – 25277426). However, this fact has not been verified by the AO during the assessment proceedings. The ld. PCIT further observed that it might be possible that this issue has been omitted to be included in the reason of reopening of assessment u/s 147 of the Act.
IV. There were certain outstanding sundry creditors of Rs. 2,60,68,710/-shown as on 31.03.2012 as doubtful. But the same has not been verified by making any independent inquiries.
3.2 In view of the above, the ld. PCIT proposed to hold the assessment order framed u/s 147 r.w.s 143(3) of the Act vide show cause notice dated 05/01/2022 issued u/s 263 of the Act. However, there was no response from the side of the assessee. Accordingly, the Ld. PCIT held the assessment order as erroneous in so far prejudicial to the interest of the revenue by observing as under:
11. I have gone through the records in the case. It is noticed that the AO has not examined all the above issues in the reassessment proceedings which resulted into lack of enquiry due to non application of mind on the application of the provisions of law. The AO has not examined the difference of the cement freight in advance and flyash silica, lignite, CFL advance inspite the fact that there was huge difference in the ledger account. Similarly, the AO has not examined the transactions shown by the assessee in the books of accounts towards cash payments above Rs. 35,000/- in respect of various freight accounts violating the provisions of section 40A(3) of IT Act as discussed in the preceding paras. Further, the AO has also failed to consider the enquiry report received in the case that the assessee has shown less profit to the tune of Rs. 19,23,12,137/- based upon the information of 16% share of one of the partners namely Shri Ravinbhai D Solanki in the firm. This shows that the assessee firm had the total profits of Rs. 21, 75 ,89,563/- while it has declared the profit of Rs. 2,52,77,426/- in the return of income. Similarly, the AO has also not examined the genuineness of the sundry creditors shown outstanding as on 31-03-2012 which appeared to be doubtful.
12. In view of the above discussion, it is apparent that AO has not properly examined the facts of the case and ignored the verifications as desired on the facts of the case in view of the aforesaid issues. This has rendered the order erroneous as well as prejudicial to the interest of the revenue. It may be mentioned that two essentials condition for invoking the provisions of section 263 of I.T. Act are that the order passed by the AO is erroneous and prejudicial to the interest of revenue.
13. In view of the above discussion it is apparent that such cases where the assessment has been completed without conducting any inquiries/ verification or incorrect application of law tantamount to erroneous orders as also order prejudicial to the interest of Revenue.
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17. It is the bounden duty of the Assessing Officer to collect and appreciate the facts collected and proper application of law is to be made while making the assessment. There is incorrect application of law by allowing deduction contrary to the provisions of Income Tax Act. In the interest of justice and since the twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous and (ii) it is prejudicial to the interests of the revenue, are satisfied, the assessment order passed u/s.143(3) needs to be set aside for the discussion made above.
18. It may be mentioned that with effect from 01.06.2016, Explanation 2 to the section 263(1) has been inserted which reads as under:
“Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, it, in the opinion of the Principal Commissioner or Commissioner-
(a) The order is passed without making inquiries or verification which should have been made;
(b) The order is passed allowing any relief without inquiring into the claim;
(c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or
(d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.
19. As per the Explanation 2, the order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue if the order is passed allowing any relief without Inquiring into the claim. However, the AO did not conduct any such inquiries or verification as outlined above and simply accepted the assessee’s submission. In this manner the assessee’s case is also covered under para ‘a’ of Explanation 2, of section 263(1) of I. T. Act Therefore the order passed by the AO is erroneous and prejudicial to the interest of revenue to that extent.
20. Keeping in view these facts, I am of the considered view that this is a fit case for invoking section 263 of I.T. Act as the twin conditions namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (li) it is prejudicial to the interests of the revenue are satisfied. The AO is directed to make fresh assessment keeping in view the observations made above, after conducting necessary verifications and inquiries and after providing proper opportunity of being heard.
4. Being aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us.
5. The Ld. AR before us filed a paper book running from pages 1 to 269 and submitted that all the ledger copies representing the advance freight charges paid were furnished during the assessment proceedings which are place on pages 19 to 226. As per the Ld. AR the advances given under the head freight advances were adjusted by making accounting entries which can be verified from the ledger account placed on record and therefore the only balance amount left as on the balance sheet date i.e. 31/12/2012, was only reflected in the balance sheet which was matching with the corresponding ledger. However, the Ld. PCIT without referring to the credit entries appearing in the freight advances ledger has drawn conclusion that the assessee has shown freight advance at the lower in the balance sheet as on 31/03/2012. As per the AR these advances shown under the head freight advance cannot match with the financial statement as on 31.03.2012, for the reason that such advance has been adjusted against the actual freight expenses.
6. Besides, the above the Ld. AR also contended that the re-opening was made u/s 147 of the Act, on the reason of being mismatch in the ledger of freight advances vis-a-vis the balance shown in the financial statement, but no addition was made by the AO after due necessary verification. Therefore, the assessment order cannot be revised on account of non-verification u/s 263 of the Act, otherwise it will lead to a change of opinion.
7. For the remaining defects as pointed out by the Ld. PCIT, the Ld. AR submitted the reopening u/s 147 of the Act, was done for the limited purpose i.e. mismatch in the freight advance accounts and the AO during the income escaping proceedings did not notice any other income chargeable to tax which has escaped assessment. As such, the AO was satisfied with the income assessed u/s 143(3) of the Act, vide order dated 23-02-2015 and therefore, he did not extend the scope of re-assessment proceedings beyond the reasons recorded. Thus, the Ld. PCIT cannot expand the scope of the assessment under section 147 of the Act by exercising jurisdiction u/s 263 of the Act.
8. Without prejudice to the above the ld. AR also submitted that during the original assessment proceedings, the AO has verified the provisions of section 40A(3) of the Act, and therefore it cannot be said that there was no application of mind on the part of the AO.
9. On the other hand, the Ld. DR contended that the Ld. PCIT has issued several notices during the proceeding’s u/s 263 of the Act, but there was no compliance made by the assessee. Therefore, he requested us to restore the issue to the file of the Ld. PCIT for further necessary verification as per the provisions of law. The Ld. DR further submitted that there is no damage/harm to the assessee to explain the facts of the case as pointed out by him before the ITAT. The Ld. DR vehemently supported the order of the authorities below.
10. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessment framed by the AO u/s 147 r.w.s. 143(3) of the Act has been held as erroneous in so far prejudicial to the interest of Revenue on account of various counts but to the extent of non-verification/non-application of mind by the AO. All the necessary details have been elaborated in the preceding paragraph and therefore we are not inclined to repeat the same for the sake of convenience and brevity.
10.1 As regards to the non-verification/ mismatching in the amount of freight advances vis-a-vis freight charges shown in the balance sheet as on 31/03/2012, we note that the AO has verified the necessary details during the income escaping proceedings and reached to the conclusion that there is no mismatch in the amount of freight advances shown in the ledger vis-a-vis shown in the balance sheet requiring any addition. The relevant extract of the assessment order framed u/s.147 r.w.s. 143(3) of the Act, dated 18/12/2019 which read as under:
Later on, department came to notice that during the relevant previous year that cement Freight Paid and Advances and Flyas Silika Lignight CFL advance are not reflected in assessee’s balance sheet/books of accounts and hence the same is unexplained. In view of these facts, the case was reopened u/s. 147 of the I.T Act after recording the reasons and obtaining the requisite approval of the Pr. Commissioner of Income-tax-3, Rajkot.
2. E-Notice u/s.148 of the I.T Act dated 27.03.2019 was issued and duly served upon the assessee. In response thereto the assessee E-filed its return of income on 18.04.2019 declaring therein total income of Rs.2,53,12,550/- Notice u/s.143(2) of the I. Tax was issued on 14.05.2019 which was duly served upon the assessee. Reason for re-opening the assessment was also supplied to the assessee. E-notice u/s.142(1) of the I Tax Act was issued on 04.11.2019 which was duly served upon the assessee. Another E-notice u/s.142(10 of the I. Tax Act was issued on 04.11.2019 on 04.11.2019 which was duly served upon the assesee. In response thereto, assessee filed E-submissions/details.
10.2 From the above, there remains no ambiguity to the fact that the AO has applied his mind during the assessment proceedings and therefore assessment order cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-verification. In holding so, we draw support and guidance from the judgment of Hon’ble Gujarat High Court in the case of Designmate India (P.) Ltd. v. Commissioner of Income-tax reported in 85 taxmann.com 204 wherein it was held as under:
9. It is undoubtedly true that the Commissioner’s suo motu power of revision flowing from section 263 of the Act are hedged by the satisfaction of twin conditions of the order of the Assessing Officer being erroneous and prejudicial to the interest of the Revenue and in that scene, the same cannot be equated with the appellate jurisdiction. It is true that the judicial trends suggest that when the Assessing Officer has conducted proper inquiries and come to conclusion which is a plausible one, the Commissioner would not be justified in substituting such a view of the Assessing Officer by his view as if he were acting as an appellate authority.
10.3 On merit of the case, we have perused the copy of the ledger under the head Cement Freight paid advance placed on pages 58 to 65 of the paper book and note that the entire amount of such advance was adjusted against the cement freight expenses and therefore, no closing balance shown against such cement freight paid advance in the balance sheet. As such, what we find is this that the Ld. PCIT has referred to the cement freight paid advances ledger showing under the debit column after ignoring credit shown under such advance ledger. As such, the Ld. PCIT after ignoring the credit entries in such ledger has wrongly assumed that the advances shown under the debit column should match with the advances shown in the balance sheet as on 31/03/2012. However, we find that the approach adopted by the Ld. PCIT was erroneous as he cannot pick and choose only debit side of ledger after ignoring credit entries shown in such ledger account. In view of the above, we dis-agree with the findings of the Ld. PCIT.
10.4 Coming to the remaining defects as pointed out by the Ld. PCIT, in this regard we observe that the provision of section 147 of the Act provides, as applicable to the year under consideration, that the proceedings u/s 147 of the Act, can be initiated if the AO has reason to believe that any income chargeable to tax has escaped assessment and he may also take into consideration any other income chargeable to tax but escaped assessment during the proceedings. This can be better understood through an example, assuming the AO has reason to believe that the assessee has claimed bogus purchases in the return of income, thus he can reopen the case limited to the extent of bogus purchase. However, if during the course of assessment proceedings, he comes to know about other expenses for example travelling expenses i.e. the assessee has claimed travelling expenses which were not for the purpose of the business, he (the AO) can also make the dis-allowance of travelling expenses as well. However, in a situation, where the AO does not make the addition of bogus purchase, then he could not make any other addition. This aspect has been settled by the series of judgments. The Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Pvt. Ltd. reported in 331 ITR 296 has held as under:
The Shorter Oxford Dictionary defines the expression “also” to mean ‘further, in addition, besides, too’. The word has been treated as being relative and conjunctive. Evidently, therefore, what Parliament intends by use of the words “and also” is that the Assessing Officer, upon the formation of a reason to believe under section 147 and the issuance of a notice under section 148(2) must assess or reassess: (i) ‘such income’; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. The words ‘such income’ refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the season to believe is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of section 147 with effect from 1-4-1989 clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment of the former, he cannot independently assess the latter.
10.5 At this juncture, we are inclined to refer the provision of section 147 of the Act, which reads as under:
147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year):
10.6 An analysis of the above provision reveals that the AO certainly can touch other issues/income chargeable to tax which has escaped assessment other than those income/ issues based on which proceedings u/s 147 of the Act, were initiated. The controversy arises who will acquire the satisfaction as provided under the provision of 147 of the Act. To our understanding, it is the satisfaction of the AO who can touch the issues which came to his/her notice during the proceeding under section 147 of the Act but same was not subject matter of reopening of the assessment u/s 147 of the Act. In other words, the Ld. PCIT cannot go to touch those issues with respect to which the AO was satisfied in the proceeding’s u/s 147 of the Act, and therefore he chooses not to touch those other issues. In holding so, we also draw support and guidance from the order of Coordinate bench of Mumbai Tribunal in case of Royal Western India Turf Club Vs. PCIT in ITA No. 640/MUM/2021 wherein the bench vide order dated 12-10-2021 held as under:
9. A reading of section 147 of the Act makes it clear that the assessing officer, in course of proceedings under the said provision can not only assess/reassess the escaped income based on which the assessment was reopened, but can also assess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under the aforesaid provision. Explanation 3 to section 147 of the Act further clarifies the substantive provision by saying that the assessing office, in course of proceedings under the said provision can not only assess/re-assess the escaped income based on which the assessment was reopened, but can also assess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under the aforesaid provision, notwithstanding that such issue does not form part of reasons recorded for reopening of assessment. Thus, on a holistic reading of section 147 of the Act it becomes very much clear that along with escaped income for which the assessment was reopened, the assessing officer can assess other escaped income which subsequently comes to his notice in course of re-assessment proceedings. In the facts of the present case, undisputedly, the issues raised by learned PCIT neither were the subject matter of reopening as per reasons recorded, nor did such matter come to the notice of the assessing officer in course of re-assessment proceedings.
10. The reopening of assessment as contemplated under section 147 of the Act is for the specific purpose of assessing the escaped income. Therefore, in a reassessment proceeding, the assessing officer can only assess that income which has escaped assessment. The income which is subject matter of assessment in the original assessment proceedings or which was in the domain of the assessing officer in course of original assessment proceedings certainly cannot be considered in the re-assessment proceedings. In our view, if at all, any order which can be considered to be erroneous and prejudicial to the interest of revenue for non consideration of the issues raised by learned PCIT, certainly, it has to be the original assessment order passed under section 143(3) of the Act and not the re-assessment order passed under section 143(3) r.w.s. 147 of the Act. Therefore, learned PCIT could have exercised her powers under section 263 of the Act only in respect of the original assessment order passed under section 143(3) of the Act. At this stage, we may refer to the following observations of the Hon’ble Supreme Court in case of CIT vs Alagendran Finance Ltd (supra):
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12. The other decisions cited by learned counsel for the assessee also propound similar legal principle. Thus, in our view, the original assessment order having been passed on 06-02-2014, the impugned order passed under section 263 of the Act is barred by limitation in view of section 263(2) of the Act. At this stage, we consider it our duty to deal with the submissions of learned departmental representative that the assessee did not represent its case before learned PCIT and did not raise the issue of limitation. On perusal of records, it is seen that learned PCIT issued the show cause notice under section 263 of the Act on 08-03- 2021 and passed the impugned order on 19-03-2021 with undue haste. In fact, the assessee has raised specific grounds before us, being grounds 8 and 9, to the effect that neither hearing notice was issued to the assessee nor any opportunity of being heard was provided. Thus, we do not find merit in the submissions of learned departmental representative.
10.7 Accordingly, we are of the view that the Ld. PCIT in the given case has exceeded his jurisdiction by directing the AO to make the addition/ disallowance of the other items as discussed above.
10.8 Admittedly, the assessee did not appear before the ld. PCIT, yet the ld. PCIT has to pass the order within the framework of the law. In the present case the ld. PCIT has picked up part of the information from the ledger copy discussed above to hold the order of the AO as erroneous in so far prejudicial to the interest of the revenue. In our considered view, such basis is not permissible under the provision of law. Thus, we hold that the order of the Ld. PCIT, is not sustainable and accordingly we quash the same. Hence, the ground of appeal of the assessee is hereby allowed.
11. In the result the appeal of the assessee is allowed.
Order pronounced in the Court on 07/02/2024 at Ahmedabad.
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