Bhandari Associates Vs PCIT (ITAT Pune)
Revision u/s 263 invalid when AO conducts Enquiry; Audit Objections alone cannot justify Revisionary action; Tribunal distinguishes Inadequate Inquiry from ‘No Inquiry’
Assessee, a partnership firm engaged in real estate development, filed its return for AY 2018-19 declaring a loss of ₹1.05 crore. The case was picked for complete scrutiny on issues including investments, contract receipts, & unsecured loans. The AO, after issuing detailed notices u/s 143(2)/142(1) & examining submissions, completed assessment u/s 143(3) on 07.04.2021, accepting returned income.
On examination of records, PCIT noted unsecured loans of ₹36.44 crore & alleged that Incomplete details of creditors were furnished, that ITRs & confirmations missing for many lenders, that AO failed to verify creditworthiness & genuineness & that No third-party inquiries were made. Holding the AO’s order as erroneous & prejudicial to Revenue, PCIT set aside the assessment for fresh examination of unsecured loans.
Assessee contested the 263 action, submitting that complete details (names, PAN, addresses, confirmations, ledgers, bank statements, ITRs) of creditors were filed during assessment. AO raised specific queries, examined replies, & applied his mind before completing assessment. Additional details were again furnished in response to audit objections & notices u/s 133(6). PCIT cannot reopen on the basis of mere difference of opinion or audit objections. Law is settled that inadequate inquiry is not the same as lack of inquiry.
