PCIT Vs Shreeji Prints Pvt. Ltd. (Gujarat High Court)
In the case of PCIT vs Shreeji Prints Pvt. Ltd., the Gujarat High Court dismissed an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961. The Revenue had challenged the order of the Income Tax Appellate Tribunal (ITAT), Surat Bench, which had set aside a revision order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 for the Assessment Year 2013–14. The PCIT had directed the Assessing Officer (AO) to re-examine the assessment, citing that the AO had accepted unsecured loans amounting to ₹2.49 crore from M/s Georgette Tradecom Pvt. Ltd. and M/s Purba Agro Food Pvt. Ltd. without adequate inquiry, thus rendering the original order erroneous and prejudicial to the interest of the Revenue.
However, the ITAT found that the AO had indeed conducted detailed inquiries into the unsecured loans. The assessee had provided full documentation, including ledger accounts, ITR acknowledgments, audited financial statements, and bank records of the lending companies. The Tribunal noted that the AO had verified the identity, creditworthiness of the lenders, and the genuineness of the transactions before accepting the loans. Additionally, the ITAT pointed out that the PCIT invoked Explanation 2 of Section 263 in the final order but did not mention or confront the assessee with this basis during the show-cause stage, thereby breaching procedural fairness.
