INDRANIL SANJAYBHAI RAJGURU,RAJOT vs. PR. CIT, RAJKOT-1, RAJKOT, RAJKOT

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before Dr. BRR Kumar, Vice President And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 354/RJT/2025 [ �नधा�रण वष�/Assessment Year: 2020-21 ] Shri Indranil Sanjaybhai Rajguru The Pr. Commissioner of Rajguru's Haveli, Neel City Income- tax, Vs. Astral, Nr. Saurashtra University Aayakar Bhavan, Race Course Gate, Kalawad Road, Ring Road, Rajkot-360005, Gujarat Rajkot-360001, Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ADBPR0508G (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri Mehul Ranpura, Ld. AR Respondent by : Shri R. V. Arun Prashad, Ld. CIT(DR) Date of Hearing : 28/07/2026 Date of Pronouncement : 31/07/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: This appeal has been preferred by the assessee against the revisionary order passed u/s 263 of the Act dated 23.03.2025 by the Ld. Principal Commissioner of Income Tax, Rajkot-1 [hereinafter referred to as “Ld. PCIT” ] under section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” ]. 02. The brief facts of the case are that the assessment under section 143(3) read with section 144B of the Act was completed by the Assessing Officer vide order dated 26.08.2022. Subsequently, on examination of the assessment records, the Ld.

ITA No. 354/RJT/2025 Indranil Sanjaybhai Rajguru PCIT observed that the assessment had been completed without making proper enquiries on certain material issues. According to the PCIT, the assessment order was erroneous insofar as it was prejudicial to the interests of the Revenue. Accordingly, a show-cause notice dated 26.01.2025, under section 263 of the Act was issued. The Ld. PCIT noticed, inter alia, that there was a significant difference between the closing stock of the preceding year and the opening stock of the year under consideration. It was further observed that the assessee had claimed deduction under Chapter VI-A and had also claimed substantial deduction under section 57 of the Act against income from other sources, but no proper enquiry or verification had been carried out by the Assessing Officer regarding the correctness and admissibility of such claims. In response to the notice issued under section 263 of the Act, the assessee submitted that the proprietary concern, namely M/s. Sanjayraj & Co., had been converted into a partnership firm with effect from 01.04.2019. It was explained that, prior to such conversion, certain stock and assets had been transferred from the proprietary concern to the assessee’s personal account and, therefore, the apparent difference between the opening stock and the closing stock and it was merely on account of the change in presentation and transfer of assets. It was further contended that there was, in fact, no real discrepancy. The Ld. PCIT, however, was not satisfied with the explanation furnished by the assessee. It was observed that no reconciliation statement or documentary evidence had been furnished to substantiate the alleged transfer of stock to the personal account of the assessee. The PCIT further noticed that for Assessment Year 2019-20 the assessee had declared closing stock of finished goods, whereas in the return of income for Assessment Year 2020-21 the opening stock was shown under the heads “Raw Material” and “Work-in-Progress”, indicating a substantial variation requiring verification. According to the PCIT, the Assessing Officer had accepted the return without conducting any enquiry on this aspect. The PCIT, therefore, held that the assessment order had been passed without

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ITA No. 354/RJT/2025 Indranil Sanjaybhai Rajguru making proper enquiries on material issues and consequently the order was erroneous insofar as it was prejudicial to the interests of the Revenue. The assessment order passed under section 143(3) read with section 144B of the Act was accordingly set aside with a direction to the Assessing Officer to frame a fresh assessment after making proper enquiries and after affording adequate opportunity of hearing to the assessee.

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ITA No. 354/RJT/2025 Indranil Sanjaybhai Rajguru documentary evidence is available on record to substantiate the said explanation. The records further reveal that in the return of income for the earlier assessment year the closing stock was reflected as finished goods, whereas in the return for the year under consideration the opening stock was shown under different heads such as raw material and work-in-progress. Such discrepancy undoubtedly required proper examination by the Assessing Officer during the assessment proceedings. However, no discussion or verification on this issue is discernible from the assessment order. It is well settled that where the Assessing Officer fails to conduct enquiries which are called for on the facts of the case, the assessment order becomes erroneous insofar as it is prejudicial to the interests of the Revenue within the meaning of section 263 of the Act. The Ld. PCIT has merely directed the Assessing Officer to conduct proper verification and pass a fresh assessment order after granting adequate opportunity to the assessee. Therefore, we do not find any infirmity in the exercise of revisional jurisdiction by the Ld. PCIT. Accordingly, we uphold the order passed under section 263 of the Act and dismiss the appeal filed by the assessee.

Order pronounced in the open court on this 31st day of July, 2026.

Sd/- Sd/- [ Dr. BRR Kumar] [ Shri Sonjoy Sarma ] Vice President Judicial Member राजकोट/Rajkot िदनांक/ Date:31/07/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order //True Copy// Sr. Private Secretary ITAT, Rajkot

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