ARIZONA GLOBAL SERVICES PRIVATE LIMITED,NEW DELHI vs. ITO WARD 3(1), NEW DELHI

This appeal is filed by the Assessee against the order of the Ld. PCIT, Delhi dated 20.12.2023 passed u/s 263 of the Act for the AY 2013-14.

Ld. Counsel for the assessee, at the outset, submitted that the Ld. PCIT directed the Assessing Officer to consider unsecured loan received from Starpoint Suppliers Pvt. Ltd. at Rs.2 crores as against Rs.1 crore adopted by the AO in the original assessment which was completed u/s 147 r.w.s. 144B of the Act. Ld. Counsel for the assessee submitted that the addition made u/s 68 in respect of unsecured loans was already subject matter of appeal before the Ld. CIT(Appeals) and therefore the Ld. PCIT could not have invoked the provisions of section 263 of the Act and revise the assessment order directing the AO to consider the unsecured loan amount from Starpoint Suppliers Pvt. Ltd. at Rs.2 crores.

On the other hand, the Ld. DR strongly supported the orders of the Ld. PCIT.

Heard rival contentions and perused the materials placed before us. In this case assessment was reopened u/s 147 and reassessment was completed on 29.03.2022 u/s 144B r.w.s. 147 of the Act determining the total income at Rs.30,90,00,000/-. The AO while completing the assessment added an amount of Rs.30,90,00,000/- as an unexplained cash credit u/s 68 in respect of unsecured loans from 7 parties as referred to at page 2 of the assessment order.

The Ld. PCIT issued show-cause notice to the assessee requiring the Assessee to explanation as to why the assessment order passed u/s 144B r.w.s. 147 of the Act could not be held as erroneous and prejudicial to the interest of the Revenue for the following:

In response to the show-cause notice the assessee submitted that the AO while completing the original assessment u/s 143(3) examined the unsecured loans received from Starpoint Supplier Pvt. Ltd. Further the AO even while completing the reassessment u/s 144B r.w.s. 147 the transaction between the assessee and the Starpoint Supplier Pvt. Ltd. has already been examined in detail by the AO and therefore the same transaction cannot be re-visited at third time in the revision proceedings u/s 263 of the Act. Before us the contention of the Ld. Counsel for the assessee was that since the assessee is in appeal before the Ld. CIT(A) in respect of unsecured loans which was treated as unexplained cash credit u/s 68 including the unsecured loan from Starpoint Supplier Pvt. Ltd. 3 the Ld. PCIT could not have invoked the provisions of section 263 of the Act to revise the assessment order.

We have perused the appeal filed by the assessee on 18.04.2022 before the Ld. CIT(Appeals) for the AY 2013-14 against the assessment order passed u/s 144B r.w.s. 147 of the Act, wherein the assessee contested the addition of Rs.30,90,00,000/- u/s 68 of the Act/- made by the AO. We observe that the said amount of Rs.30,90,00,000/- which was treated as unexplained cash credit u/s 68 by the AO includes the unsecured loan from Starpoint Supplier Pvt. Ltd. Thus, since the transaction of loan between the assessee and Starpoint Supplier Pvt. Ltd. for the AY 2013-14 was subject matter of appeal before the Ld. CIT(Appeals) the Ld. PCIT could not have exercised the jurisdiction u/s 263 of the Act. The Ld. CIT(Appeals) having coterminous powers as that of the AO has all the powers to correct the mistakes, if any, made by the AO and also enhance the income. Therefore, since the transaction between the assessee and Starpoint Supplier Pvt. Ltd. in respect of unsecured loan during the FY 2012-13 relevant to the AY 2013-14 was already subject matter before the Ld. CIT(Appeals), we hold that invoking the provisions u/s 263 of the Act by the Ld. PCIT is against the law.

In respect of other two issues on which the revision order was passed by the Ld. PCIT is concerned, the assessee has neither raised any ground nor there was any argument advanced by the Ld. Counsel in the course of hearing. Therefore, we are not expressing our opinion on these issues.

In the result, appeal of the assessee is partly allowed as indicated above.