SURESH CHANDRA AGARWAL,PILIBHIT vs. PR. CIT. BAREILLY, BAREILLY

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW ‘B’ BENCH, LUCKNOW BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal, vs. The Principal Commissioner Moh.-Habibulla Kha, Bisalpur, of Income Tax, Bareilly Pilibhit-262201 PAN: AGAPA6999A (Appellant) (Respondent) Assessee by: Sh. K.R. Rastogi, C.A. Revenue by: Sh. Neeraj Kumar, CIT DR Date of hearing: 22.01.2026 Date of pronouncement: 22.04.2026 O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the orders of the ld. PCIT, Bareilly passed under section 263 of the Income Tax Act, 1961, wherein the ld. PCIT has set aside the order of the ld. AO passed under section 143(3) for the A.Y. 2017-18 on 20.12.2019. The grounds of appeal are as under:- “1. The Ld. PCIT-I, Bareilly, erred on facts and in law in set aside the assessment order passed u/s 143(3) of I. T. Act as denovo without appreciating that in the notice u/s 263 dated 27.01.2021 there is no mention in this regard. Thus Ld. PCIT, could not have not treated the assessment order as denovo without giving the assessee an opportunity of being heard hence the present order is invalid. 2. The Ld. PCIT-I, Bareilly erred on facts and in law in holding that "Assessing Officer has not examined / enquired into the details of facts of the case" without appreciating that Ld. A. O. had issued Notice dated 24.09.2019, 03.12.2019 and 18.12.2019 requiring the assessee to submit the details on all issues stated in the notice u/s 263 of the Act and only after due compliance and verification, assessment has been made. Therefore, the issues as stated in the order u/s 263 of the Act are not erroneous in so far as prejudicial to the Interest of Revenue as per Explanation (2) of Section 263 of I. T. Act. 2.1. That Ld. PCIT-1, failed to appreciate that during assessment proceeding, due compliance to notice u/s 142(1) dated 24.09.2019, 03.12.2019 and 18.12.2019

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal have been made through e- submissions in Profile. Further, Assessee produce books of accounts, relevant details, bills and vouchers, Bank statements and copy of account submitted which were duly examined and after due verification, no adverse finding has been given in the Assessment Order on the issues as stated in Order u/s 263 of the I.T. Act. 3. The Ld. PCIT failed to appreciate that Cash Deposited during demonetization period Rs. 2,19,79,181/- which includes Rs. 23,91,587/- as Opening Cash in hand of Business as per Cash book as on 09.11.2016 and remaining Rs. 1,95,87,594/- being the Cash Collected as per Government G. O. in old denomination during 03.12.2016 to 30.12.2016 at Three Toll Plaza namely (i) Vanana Toll (ii) Gadoi Toll Plaza and (iii) Chiddan Toll Plaza, allotted to Assessee by M/s NHAI for which relevant details were submitted and verified by Ld. A. O. during Assessment Proceeding. 4. The Ld. PCIT failed to appreciate that Rs. 25,87,261/- paid to M/s NHAI is not in penal nature but paid as per Agreement as the Contract for Toll Plaza has been surrendered before Agreed period due to unavoidable reason and same is duly verified by Ld. A. O. as per details produced and explained and then treated it as allowable expenses. 5. That Ld. PCIT failed to appreciate that the Software Expenses Rs. 1,08,841/ is solely incurred for business purpose which after due examination by Ld. A. O. treated as allowable expenses on the basis of books of accounts and vouchers produced during assessment proceeding. 6. The Ld. PCIT failed to appreciate that Rs. 1,22,248/- debited as "Repairs and Maintenance Expenses of Godai Plaza" is solely for business purpose which were is incurred as per Terms of Agreement with NHAI w. r. t. contract of Toll Plaza duly verified and accepted as Business Expenditure by Ld. A. O. as per details produced during assessment proceeding. 7. The Ld. PCIT failed to appreciate that w. r. t. "Loans and Advances specific queries were raised by Ld. A. O. as per Sr. No. 8 and 10 of the Notice dated 24.09.2019. Due compliance has been made and details were furnished / produced being books of accounts, copy of ledger account, bank statement, confirmation, id and PAN of the lender. Thus, the ingredients as specified u/s 68 has been duly discharged which were examined and accepted by Ld. A. O. during the course of assessment proceeding. 8. The Ld. PCIT failed to appreciate that Agriculture Income Rs. 3,78,907/-. The Ld. A. O. issued specific query in notice dated 24.09.2016 at Sr. No. 16. The relevant details being Khasra, Khatauni and Paddy Crops has been submitted and it is explained that Agriculture Income has been estimated as no details of Agriculture expenses were kept, further the Agriculture Income Tax has been duly shown and accepted in A. Y. 2015-16 Rs. 10,40,560/- in A. Y. 2016-17 Rs. 4,25,700/- and in A. Y. 2018-19 Rs. 3,82,450/-. Accordingly, the Ld. A. Ο. accepted the same after due examination. 9. That Ld. PCIT failed to appreciate that it is settled Law that where another view is possible, revision is not permissible. Further, where inquiry had been made

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal by the Assessing Officer and the conclusion drawn by him was consistent with the information provided by the Assessee and Ld PCIT had not doubted the correctness of the approach for the findings reached by the Assessing Officer. The jurisdiction under section 263 could not be invoked. 10. The Ld. PCIT failed to appreciate that Directions given to treat the Assessment Order to be treated as set aside to be framed as denovo is contrary to the facts as not stated in the notice u/s 263 of the I. T. Act.” 2. The facts of the case are that a return of income was filed by the assessee declaring total income of Rs. 84,29,090/- and agricultural income of Rs. 3,78,960/-. The case was selected for scrutiny to look into the following points inter alia; i. High value receipt in cash shown from third parties in response data. ii. Undisclosed income reported by PCIT on ITBA AIMS Portal after online verification of cash deposit during demonetization. The AO issued notices to the assessee and obtained copies of voucher of expenses under various heads, copies of Khatauni of agricultural land, comparative chart of GP/NP, details of unsecured loans and squared up unsecured loans during the period, bank statements and also produced the books of accounts and after taking necessary extracts from them, he placed them on record. He also obtained month-wise details of cash sales for the year under consideration and comparative figures of cash sales for the F.Y. 2015- 16. Month-wise details of cash deposit for the F.Y. 2015-16 and F.Y. 2016-17 were also furnished. Thereafter, ld. AO made a total disallowance of Rs. 1 Lakh on account of his belief that expenses were not verifiable. 3. The assessment records were called for and looked into by the ld. PCIT. The ld. PCIT observed that the assessee, who was registered with NHAI as Toll Collection Agency and collecting toll from three plazas, had shown gross receipts for Rs. 14.26 Crores with a net profit of Rs. 71.08 Lacs and

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal deposited Rs. 2,19,79,881/- in cash during the demonization period. He held that the main issue before the AO was to examine the genuineness of the source deposits in old SBNs in accordance with the internal guidance note circulated by the CBDT for framing of assessments in demonetization cases dated 13.06.2019. He noticed that the AO had obtained details specific to demonetization issue in various tabular forms, but not obtained the details of old SBNs deposited from 3.12.2016 to 30.12.2016. He held that the AO should have obtained the details and made a detailed examination thereof. He had not conducted any enquiries whether the cash deposits made by the assessee and actually accrued from cash sales of the assessee. On the issue of agricultural income of Rs. 3,78,960/-, the ld. PCIT held that the onus was on the assessee to substantiate that any income claimed as agricultural income was actually derived from agricultural activities. He noted that that the agricultural income had to be computed as business income and profit and loss had to be prepared by the assessee but in this case, the assessee had merely disclosed the cash amount deposited in the bank account and claimed its source to be agricultural income. He had failed to disclose the gross receipts from agricultural produce and the details of expenditures incurred by him. The ld. AO had failed to ask these questions as he should have. The ld. PCIT also observed that the NHAI had levied a penalty of Rs. 25,87,261/- upon the assessee. Since in his opinion, the same was of a penal nature, he held that the same appeared to not be allowable and the AO had not done any enquiries in this regard. He also held that the AO had not done any enquiries with regard to software expenses of Rs. 1,08,841/- in the P&L account. With regard to expenditure on repair and maintenance of Gadoi Toll Plaza he held that the amount debited of Rs. 1,24,248/- appeared to be in the nature of capital expenses, which could not be claimed. The ld. PCIT also observed that the assessee had taken loans amounting to Rs. 42,00,000/- from three persons 4

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal and the AO had not examined the creditworthiness of these lenders but simply accepted the confirmations provided by the assessee. On these accounts, he held that the order was erroneous inasmuch as it was prejudicial to Revenue, within the meaning of Explanation 2 of section 263 of the Income Tax Act, 1961. He accordingly asked the assessee to show cause as to why its assessment be not revised as above. 4. The assessee filed a reply in which it was submitted that he had a total cash balance of Rs. 4,43,90,283/- available from collections from the Toll Plaza during 9.11.2016 to 30.12.2016, of which he had only deposited Rs. 2,19,79,181/- in the bank. With regard to the agricultural income of Rs. 2,78,960/-, he provided the details to the ld. PCIT of sales of Paddy Crops, sales of Wheat Crop and the expenses incurred by him. With regard to the penalty of Rs. 25,87,261/-, it was submitted that the same was recovered by the NHAI on account of the premature surrender of Vanana Toll Plaza before the agreed period. There was a specific clause in the agreement that if the contractor surrendered the plaza before the agreed period, then 25% of its bank guarantee and performance security would have to be paid as surrendered money and accordingly after adjustment and credit, the net amount of Rs. 25,58,760/- had to be paid to NHAI by the assessee. With regard to the expenses paid on account of software charges, it was submitted that the same was paid to a recognized dealer and with regard to the repair charges of Rs. 1,22,248/-, it was submitted that as per the agreement with the NHAI, the Toll Plaza had to be handed over back to the NHAI in the same condition as it was received and since the Gadoi Toll Plaza had been damaged by a truck accident, it was required to get it repaired. Since it was Revenue in nature, it was to be allowed as business expenditure. Regarding deposits received from Ajit Vaish, Harish Chandra and Vinay Kumar Singh, it was

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal submitted that the amounts had been received through bank transfers from the above persons and the repayment of the same had also been made through a bank transfer. All three persons were income tax assessees’ and their PAN numbers were provided. All the facts had been disclosed before the assessing authority during the assessment proceedings and hence there was no need to take any action under section 263. 5. However, the ld. PCIT was not in agreement with the assessee. He noted that the AO had held that since the assessee had not furnished the monthly details of cash balance, it was not possible to determine how much cash was available on 8.11.2016 but subsequently he accepted the contention of the assessee that it had deposited Rs. 6.40 Crores (on average of Rs. 86 Lacs per month) in the period from 1.04.2016 to 8.11.2016, whereas it had deposited Rs. 2.9 Crores in only 28 days during the period 3.12.2016 to 31.12.2016, even though this was far beyond the previous monthly average. The ld. AO had not investigated the fact regarding the exponential growth in toll collection in December, 2016 to justify these huge tax deposits. With regard to agricultural income, the ld. PCIT held that the AO asked the assessee to file details regarding land holding, gross receipts and expenses, khata- khatauni, Jotrahi etc,. However, the agricultural income had subsequently been accepted, without any details with respect to gross receipts and expenses being brought on record. On the issue of penalty, the ld. PCIT held that the AO had not made any enquiry to determine whether the penalty paid was an allowable expense and on the issue of software, it was pointed out that the AO had not examined this and other expenses to determine whether they were allowable. On the issue of loans amounting to Rs. 42 Lacs, he held that the AO had not examined the source, creditworthiness and genuineness of the persons who had advanced unsecured loans to the assessee. Thus, he held

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal that the AO had passed an order which was erroneous inasmuch as it was prejudicial to Revenue, as per the provisions of Explanation 2(a) to section 263 of the Income Tax Act and accordingly, he set aside the assessment made by the AO on this account. 6. The assessee is aggrieved at this setting aside of the assessment order by the ld. PCIT in exercise of his revisional powers and has accordingly come in appeal before us. Sh. K.R. Rastogi, C.A. (hereinafter referred to as the ld. A.R.) arguing on behalf of the assessee invited our attention to a written submission that had been furnished earlier and forming part of paper book filed on 28.07.2025, in which it was submitted that subsequent to the order under section 263 of the Income Tax Act, a fresh assessment had been made by ld. AO, NFAC under section 143(3)/263 of the Income Tax Act and vide his order dated 27.03.2023, the assessment had been completed wherein addition had been made by the ld. AO, NFAC only on the issues of penalty of Rs. 25,87,261/- paid to NHAI w.r.t. M/s Vanana Toll Plaza and loan of Rs. 5 Lacs received from Ajit Vaish. All other issues had been accepted by the ld. AO, NFAC and no adverse inference was drawn. A copy of the consequential order was also filed as part of this paper book and it was prayed that since all other issues have been accepted by the ld. AO in the consequential assessment order therefore, grounds of appeal nos. 3, 5, 6 and 8 on those issues were not being pressed. Accordingly, submissions were only being offered with regard to the two issues under appeal i.e. ground of appeal nos. 2, 2.1, 4, 7 and 9. It was submitted that the ld. PCIT had overlooked the fact that in the notice under section 142(1) dated 24.09.2019, the ld. AO had asked the assessee to furnish a brief note regarding the nature of business activities carried out by him during the year and to explain the modus operandi of the business / contract. Further at point no. 15 of the said notice, the assessee had

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal been asked to submit the ledger account, bills and vouchers relating to major head expenses debited to their trading and profit and loss account. In response to the said enquiries, the assessee had furnished a reply on 9.12.2019 (which was placed at page no. 41 of the paper book) submitting the details of contracts for collection of Toll Plaza entered into with NHAI during the relevant assessment year. It had been submitted that with respect to Vanana Toll Plaza (Porbandar – Bhiladi section, Gujarat), the period of contract was from 18.11.2016 to 10.01.2017 and this contract was prematurely surrendered to NHAI by paying penal/compensation charges of 25% of performance security to NHAI and as a result NHAI had recovered a compensation of Rs.25,87,261/-. Copies of work orders and LOA of these contracts had also been submitted. Vide his reply dated 16.12.2019, the assessee had also furnished a copy of ledger account of all expenses debited in the profit and loss account, produced the books of accounts and vouchers of expenses and this fact was mentioned in the body of the assessment order. Thus, it was submitted that the AO had enquired into the matter and the assessee had responded and submitted a reply. These matters had been brought on record and therefore, the ld. PCIT was incorrect in stating that the matter had not been enquired into. Furthermore, it was submitted that the matter had been set aside only because the PCIT had a doubt / suspicion which was evidenced by his use of the word, “appears to be penal in nature”. It was submitted that he was himself not clear and no attempt was made by him to come to the complete finding as to how the expenditure was penal in nature. The assessee submitted that the Hon’ble Delhi High Court in the case of CIT vs. Vikas Polymers 341 ITR 537, had observed that if a query had been raised during the course of scrutiny proceedings that had been answered to the satisfaction of the AO, simply the fact that the query and answers were not reflected in the assessment order would not lead itself to a conclusion that 8

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal the order of the AO called for interference and revision. It was further submitted that the Hon’ble Allahabad High Court had similarly held in CIT vs. Krishna Capbox Pvt. Ltd. (2015) 60 taxman.com 243 and in the case of Sunil Kumar Rastogi vs. CIT 406 ITR 306 (All). It was submitted that all the facts have been examined by the AO who had come to the conclusion that the expenditure was in the nature of a Revenue expenditure incurred in the business of Toll Plaza collection work and the same could not be interfered by the ld. PCIT on the basis of a mere suspicion. The ld. AR drew our attention to the written submission where he had quoted from decisions of the Hon’ble Bombay High Court in the case of CIT vs. Fine Jewellery (India) Limited 372 ITR 303 (Bom) and the Hon’ble Delhi High Court in the case of CIT vs. Sunbeam Auto Limited 332 ITR 167 (Del) to show that the Commissioner could not initiate a revision proceeding under section 263 only because of difference in opinion. On the issue of unsecured loan, the ld. AR challenged the decision of the PCIT-2 to set aside the matter on account of the fact that the source, creditworthiness and genuineness of the persons who had advanced an unsecured loan of Rs. 42 Lacs during the year had not been examined. It was pointed out that in the notice under section 142(1) dated 24.09.2019, the AO had called for the details. In response to the same, the assessee had filed a reply on 9.12.2019 in which he had submitted the details of person from whom loan was taken alongwith copies of ID, address proof, confirmatory letter and PAN card. The assessee had also filed a copy of the bank statement of the lenders before the ld. AO. With regard to Ajit Kumar Vaish in particular, it was submitted that the assessee had explained that the loan of Rs. 5 Lacs taken from him was received on 30.11.2016 through RTGS from Urban Cooperative Bank Limited, Badaun of Ajit Kumar Vaish, A/c No. 011000195101 and that he was assessed to tax vide PAN number AAJPV7345E. The ld. AO had brought these evidences on record and after 9

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal applying his mind and being satisfied, come to a conclusion that the unsecured loan taken from Ajit Kumar Vaish was proper. Thus, it was prayed that the PCIT had erroneously exercised his jurisdiction under section 263 on this matter because section 263 was only applicable to cases of lack of enquiry and not cases of inadequate enquiry. Our attention was invited to the decisions of the Hon’ble Delhi High Court in the case of CIT vs. Vikas Polymers (supra) and CIT vs. Sunbeam Auto Limited (supra) which pointed this out. Our attention was also invited to the decision of the Hon’ble Allahabad High Court in the case of CIT vs. Krishna Capbox Pvt. Ltd. (supra) and submitted that the case of the assessee was squarely covered by the judgment of the Hon’ble Allahabad High Court. Accordingly, he prayed that the order of the Commissioner may be quashed on these points. 7. On the other hand, Sh. Neeraj Kumar, CIT DR (hereinafter referred to as the CIT DR) drew our attention to Explanation 2 to section 263 which had been inserted w.e.f. 1.06.2015. He pointed out that the only dispute in the present proceeding was whether the order under 263 was proper or not by virtue of this explanation. The ld. AR pointed out that whether the AO had looked into the nature of the penalty was not evident from the assessment order. The ld. PCIT had also pointed out that the AO had not examined the source, creditworthiness and genuineness of the persons giving loan to the assessee, which was an enquiry that was required to be done before the same could be held to explained in the hands of the assessee. The ld. PCIT had pointed out that the AO had not conducted any enquiry on how there had been an exponential growth in toll collections during the month of December, 2016 as compared to previous norms to determine whether the cash deposited was out of toll collections or otherwise. He had also not examined whether the expenses claimed by the assessee for software or for Toll Plaza

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal repair were allowable expenses. The ld. AO had simply accepted the agricultural income offered by the assessee as an explanation for deposits without collecting any details, after asking for those details. Therefore, looking to Explanation 2(a) to section 263, the PCIT was perfectly justified in sending the matter back to the AO on these accounts. The fact that the AO may subsequently not have made any addition on some of the issues which the PCIT had held to be inadequately enquired into, could not be a ground to quash the order of the PCIT because the only thing to be looked into was whether the order was correct in view of Explanation 2(a) to section 263. Accordingly, he also pointed out that the CIT had been proven to be correct on the issue of penalty and an unsecured loan from Ajit Kumar Vaish and therefore, also the order of the ld. PCIT deserved to be confirmed. 8. We have duly considered the arguments of both parties and the facts of the case. At the very outset, we note that the assessee has withdrawn ground no. 3, 5, 6 and 8. Therefore, these grounds of appeal are dismissed. With regard to the issue of penalty of Rs. 25, 87,261/- paid to NHAI, we note that during the course of proceedings under section 263, the assessee had furnished a detailed reply to the PCIT pointing out the circumstances under which the penalty was collected from the assessee by the NHAI and how the same was for premature surrender of toll plaza rather than for any infraction of law, thereby being compensatory payments rather than penal in nature. The ld. PCIT has not rebutted the contentions of the assessee in this regard. He had merely voiced his belief that the same was penal in nature and restored the matter back to the file of the AO for examination. The ITAT Delhi Bench in the case of M/s Arun Kumar Garg (HUF) vs. Pr. CIT, New Delhi (ITA No. 3391/DEL/2018) in dealing with a similar issue, held that where the assessee had made detailed submission before the ld. PCIT in response to the

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal notice under section 263 of the Act stating that all the issues raised by the ld. PCIT have been duly examined by the AO in the course of assessment and the ld. PCIT had ignored the replies of the assessee and not discussed as to why he did not agree with the contentions of the assessee, remitting the matter back to the AO without making any enquiry into the matter before concluding that the order of the AO was erroneous and prejudicial to the Revenue, was not in accordance with the provisions of section 263. The Bench had relied upon the decision of the Hon’ble Delhi High Court in the case of PCIT vs. Delhi Airport Metro Express Pvt. Ltd., where the Hon’ble High Court has said that for the purposes of exercising jurisdiction under section 263 of the Act and reaching a conclusion that the order is erroneous, the CIT has to make some minimal enquiry and where he is of the view that he had not undertaken any enquiry, it becomes incumbent upon him to conduct such enquiry. The Bench had also held that the Hon’ble Delhi High Court in the case of Pr. CIT vs. Modicare Limited in ITA No. 759/2015 had held that the exercise of jurisdiction under section 263 could not be outsourced by the ld. PCIT to the AO and therefore, the ld. PCIT could not direct the AO to provide details of the facts on the basis of which proceedings under section 263 would have been initiated. The Bench finally held that in that case, the ld. PCIT unmindful of the enquiries conducted by the AO during the course of assessment proceedings and the submissions made by the assessee in response to notice under section 263 of the Act, had merely observed that the assessment order was passed without making proper enquiries and the same was not in accordance with the provisions of section 263. In our opinion, the facts of this case are somewhat similar. Having obtained a reply from the assessee, if the ld. PCIT was of the view that a reply was not in order, the same had to be disputed by a conduct of enquiry even if minimal in nature. The explanation submitted by the assessee could not be rejected out of hand and the order could not be 12

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal revised by sending it back to the AO to conduct the enquiry which may or may not show that the penalty paid to NHAI was for infraction of law and not infraction of contract. Thus, we hold that the ld. PCIT was not justified in exercising his jurisdiction under section 263 with regard to penal expenses claimed by the assessee on account of surrender of toll plaza. Ground no. 4 is accordingly allowed. On the issue of disallowance of loan of Rs. 5 Lacs received from Sh. Ajit Vaish, we note that the AO had specifically asked the assessee to explain the sources of said loans and while the assessee had submitted the details of persons from whom the loan was taken alongwith copies of their ID, address proof, confirmatory letter and PAN card alongwith the bank statement, he had not filed any information with the AO with regard to the creditworthiness of the creditors. Thus, we cannot fault the ld. PCIT in exercising his revision jurisdiction in the matter by holding that the AO had simply accepted what was filed before him and not done the necessary enquiries that he was required to make. It must be remembered that after the insertion of Explanation 2(a) of section 263, cases where orders are passed without making enquiries or verifications which should have been made in the opinion of the Pr. Commissioner, are themselves deemed to be erroneous in so far as they are prejudicial to Revenue. Of course, the satisfaction of the Pr. CIT has to be on the basis of objective facts, but in this particular case, it is quite clear that the ld. AO did not seek to satisfy himself regarding the creditworthiness of the concerned persons. That the AO in a consequent order subsequently accepted the creditworthiness of two of the parties concerned, would not undermine the order of the ld. PCIT because the jurisdiction under section 263 was exercised with regard to what was available before the AO and him at the point when the order was passed. In the circumstances, we cannot fault with the order of the ld. PCIT in exercising his revisional jurisdiction to direct the AO to conduct necessary enquiries 13

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal with regard to the source, creditworthiness and genuineness of the persons who had advanced unsecured loans to the assessee. Ground no. 7 is accordingly dismissed. Ground no. 1 & 10 are with regard to questioning the decision of the ld. PCIT to set aside the case despite the fact that no mention had been made of the same in the notice under section 263. We note that the notice under question was for treating the assessment as erroneous in so far as it was prejudicial to Revenue in terms of the Explanation 2 to section 263 of the Income Tax Act and for obtaining a response of the assessee in this regard. It is not necessary, in our opinion, for the PCIT to list the consequences of an unsatisfactory response in a notice being issued to the assessee, even before the reply is received. The assessee has been given due opportunity to represent his case before the ld. PCIT and therefore, we see no infirmity in the order of the ld. PCIT on this account. Ground no. 1 and 10 are accordingly dismissed. Ground no. 2 is with regard to the PCIT being erroneous in holding that the ld. AO had not examined / enquired into the facts of the case. In view of our own findings with regard to the loan received from Sh. Ajit Vaish juxtaposed with our finding with regard to the penalty levied on account of surrender of toll plaza, we hold this ground to be partly allowed. Ground no. 2.1 and 9 do not require a decision in view of the facts of the case. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 22.04.2026. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22/04/2026 Sh

ITA No.152/LKW/2022 A.Y. 2017-18 Suresh Chandra Agarwal