PCIT Vs Anjali Singhal (Allahabad High Court)
The Revenue filed an appeal under Section 260A challenging the Tribunal’s order that had set aside the Principal Commissioner’s revisional order under Section 263 for Assessment Year 2018-19. The Tribunal had allowed the assessee’s appeal, holding that the Assessing Officer (AO) had made necessary inquiries during scrutiny assessment, where low income in comparison to large commission receipts was the trigger for examination. The AO had raised queries, examined expenses, and ultimately disallowed 25% of certain expenses, resulting in an addition of Rs. 5.89 lakhs.
The Principal Commissioner, on revision, held that salary of Rs. 26.91 lakhs was paid in cash to nine employees without TDS and that business promotion expenses of Rs. 8.90 lakhs were also paid in cash. He considered the assessment order erroneous and prejudicial to the Revenue, stating that proper inquiries were not conducted.
The Tribunal, however, found that the AO had specifically examined salary and business promotion expenses, reviewed ledger extracts, and issued notices. Since two views were possible and the AO had adopted one after inquiry, the Tribunal held that Section 263 could not be invoked. The High Court concluded that the appeal lacked merit and dismissed it.
