Cholamandalam MS General Insurance Company Limited Vs PCIT (ITAT Chennai)
ITAT Chennai held once the AO has conducted inquiry, examined replies and adopted a legally sustainable view, the same cannot be treated as erroneous. Accordingly, invocation of revisionary jurisdiction under section 263 of the Income Tax Act is not sustainable in law.
Facts- PCIT invoked the provisions u/s. 263 of the Act and issued show cause notice dated 27.09.2024 and sought to set aside the Assessment order regarding the issue of ‘Provision for IBNR/IBNER’, ‘Deduction u/s. 80G of the Act’ and ‘Write-off of Investments’ on the ground that the assessment was completed without proper verification.
PCIT passed an order u/s. 263 of the Act by stating that the AO has erred in allowing the deduction of provision for IBNR/IBNER and held that the assessment order passed u/s. 143(3) read with section 144B of the Act dated 19.09.2022 was erroneous and prejudicial to the interest of the revenue. With respect to the other two issues (Claim related to deduction u/s. 80G and write off of investment), the PCIT directed the AO to verify and decide the issue on merits. Being aggrieved, the present appeal is filed.
Conclusion- Held once the AO has conducted inquiry, examined replies and adopted a legally sustainable view, the same cannot be treated as erroneous. At best, it represents a possible alternative view. Therefore, invocation of Section 263 on this issue is unsustainable.
