ANIL KUMAR BATAR,SIKAR vs. PCIT-JAIPUR-2, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR

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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 418/JPR/2025
fu/kZkj.k o"kZ@Assessment Years : 2018-19

Sh. Anil Kumar Batar
Piprali Road, Near Sadar Thana,
Sikar.

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Vs.
The PCIT-Jaipur-2. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AEXPB7456A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Shrawan Kumar Gupta, Adv. &

Shri S.L. Jain, Adv.
jktLo dh vksj ls@ Revenue by : Shri Gorav Avasthi, JCIT-DR a lquokbZ dh rkjh[k@ Date of Hearing : 21/07/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 09/09/2025

vkns'k@ ORDER

PER DR. S. SEETHALAKSHMI, J.M.

This appeal by the assessee is directed against the revision order dated 10.03.2025 passed by the ld. Principal CIT-2, Jaipur under section 263 of the IT Act for the assessment year 2018-19. 2. The assessee has raised the following grounds of appeal :-

“1. That the impugned order u/s 263 of the Act dated 10.03.2025 and notice u/s 263 are bad in law and on facts of the case and hence the same may kindly be quashed.

“GOA : 1-3: Invalid juri iction and Action u/s 263

FACTS: 1. The brief facts of the case are that the assessee is a regular IT assessee and filling his ITR regularly. He is having the income from house property, interest or other sources. For the year he has filed his
ITR declaring the total income of Rs.19,89,250/- on dt.27.08.2018(1-
6) . In this case the ld. AO JAO had issued the notice u/s 148A(b) on dt.12.03.2022 on the reason that As per information available in this office, you have received advance of Rs.75,00,000/- from M/s Metrix
JEE, Sikar. This cash receipt of Rs. 75,00,000/- stand unexplained cash receipts in your hands and does not commensurate with the details whatsoever have been shown in the return of income for the F.Y. 2017-
18 relevant to A.Y. 2018-19. Copy of notice is enclosed (PB 7-8).

In response thereto assessee has filed the stating that “With reference to your above notice wherein your good self has alleged that assessee has received advance of Rs. 75,00,000/- form M/s Matrix JEE, Sikar.
This cash receipt of Rs. 75,00,000/- stand unexplained cash receipts in the hands of the assessee. In this regard it is submitted the assessee has given his premises to M/s Matrix JEE, Sikar on rent against which he has received the Rs. 19,60,875.00 as rental income and has shown in his return of income filed during the year vide copy of ITR of total income enclosed. But the assessee has not received such advance cash receipts of Rs. 75,00,000/- from M/s Matrix JEE, Sikar during the year.(PB9).However despite the ld. AO issued the notice u/s 148A(d)/
Sh. Anil Kumar Batar, Sikar.
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148 on dt.30.03.2022(PB10-14). In response thereto the assessee filed the ITR u/s 148 on dt.23.04.2022(PB15).

Thereafter, the assessee filled return declaring the same income and issued the notice u/s 142(1) time to time (PB16-27), in response thereto the assessee filed the details and reply(PB 28-38).

In the replies which is also reproduced in the assessment order has explained all the things and details. Thereafter the ld. AO completed assessment on 18.03.2023 u/s 143(3) r.w.s. 147/144B of the Income
Tax Act in the “FACELESS MANNER” by NFACafter carried out through a teamwork of assessment unit, technical unit, review unit, verification unit etc.Where the ld. accepted the contentions i.e. the ld.
AO considered, examined and verified the same and also examined.
Thereafter the assessment was completed u/s 147/144B on dt.18.03.2023
after examination all the details. During the course of assessment proceedings the assessee had filed various details as required by the ld.
AO.

Subject to the above discussion, total Income of the assessee is assessed at Rs.19,89,250/-. Vide assessment order u/s 147/143(3) dt.18.03.2023 by taking a reasonable and possible view.

The AO has failed to determine proper tax liability attributable to the cash transactions made by you during the FY – 2017-18 relevant to AY
– 2018-19. Since, the AO vide order dated 18/03/2023 has failed to compute total taxable income in respect of the above cash transactions made by you duringFY – 2017-18, therefore, the said assessment order
Sh. Anil Kumar Batar, Sikar.
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is found to be erroneous in so far as it isprejudicial to the interest of Revenue.

“In view of the above the assessment order prima facia is found to be erroneous as theassessing officer has erred in correctly computing the total income u/s 143(3) r.w.s 147/144Bof the Act.

Hence the ld. Pr. CIT has issued notice u/s 263 to the assessee on dt.28.01.2025. 5. In response thereto the assessee has prepared the detailed reply explanation with details explaining all the facts, details on 10.02.2025 by stating all the details/informations (PB43-54).

A perusal of records clearly shows that the AO had not verified the cash transaction of Rs. 75,00,000/-. Thus, the reply of the assesseis found not tenable. The same reply was again furnished by theassesse on 05/03/2025. 4. In view of above, the undersigned hereby proposes to revisethe assessment order dated 18/03/2023 passed by the AO, which isfound to be erroneous.

Explanation 2 to section 263 explicitly deems an ordererroneous if it is passed without making inquiries or verificationwhich should have been made or by allowing any relief withoutinquiring into the claim. This provision, introduced by theFinance Act, 2015, clarifies that the lack of due inquiry orverification by the Assessing Officer constitutes valid groundsfor invoking juri iction under section 263. 6. Applying these judicial principles to the present case, it isevident that the Assessing Officer failed to verify the financialtransactions of Rs. 75,00,000/- made by the assesse during the FY– 2017-18 relevant to AY- 2018-19. Therefore, by virtue of powersconferred to under the provisions of section 263 of the Income TaxAct 1961, I hold that the order passed on 18/03/2023 for A.Y. 2018-19 by the Assessing Officer is erroneous and prejudicial to theinterest of revenue.
Sh. Anil Kumar Batar, Sikar.
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7. Accordingly, the AO is directed to make a fresh assessmentafter making a proper verification of the transaction of Rs.75,00,000/- made with Matrix JEE Academy, Sikar and afterfollowing the due process of law.

Thus the ld. Pr. CIT has setaside the assessment to be made afresh.
Hence this appeal:

SUBMISSIONS:
1. Wrong order and action u/s 263:
1.1 Action of the Pr. CIT is invalid and without juri iction: It is submitted the action and direction of the ld. Pr. CIT is without juri iction and invalid on the facts and legal position because the ld. Pr.
CIT has right or juri iction of revision u/s 263 only when the order of the AO (i) is erroneous in so far as (ii) it is prejudicial to the interests of the revenue. S. 263 provides as under “263. (1) The Pr. Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.”
[Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,—
(a) the order is passed without making inquiries or verification which should have been made;
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the juri ictional High
Court or Supreme Court in the case of the assessee or any other person.]

We would like to submit that the assessment order shall be erroneous in so far as it is prejudicial to the interests of the revenue, if the four
Sh. Anil Kumar Batar, Sikar.
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conditions laid down in explanation-2 of 263 is fulfilled but in the present case the same is not applicable because of following reasons
(a) the order is passed without making inquiries or verification which should have been made:- In the present case the ld. AO passed the assessment order after making all the in inquiries or verification which is very clear from the record itself that is why the ld. Pr. CIT has used the word proper verification which is not given u/s 263. (b) the order is passed allowing any relief without inquiring into the claim :-In the present case the ld. AO passed the assessment after examining the details after making the inquiring on the issue on the basis of which the case was reopened u/s 148 which is very clear from the record itself that is why the ld. Pr. CIT has used the word failed to verify which is wrong and which is not given u/s 263. (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119:- There is no any direction in the present case admittedly
(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the juri ictional High
Court or Supreme Court in the case of the assessee or any other person.]:- there is no such decision.
If so then how the action can be taken u/s 263, hence liable to be quashed.
1.2. Notice u/s 263 itself illegal invalid void-ab-initio: Firstlythe notice u/s 263 itself invalid and not as per sec. 263, because the notice u/s 263 can be given only if in the view of the ld. PCIT the assessment order passed by the ld. AO are “erroneous in so far as it is prejudicial to the interests of the revenue”. However in the notice u/s 263 in concluding parai.epara 2 page 2 of the SCN u/s 263 (PB42) the ld.
CIT(A) has stated only that “In view of the above the assessment order prima facia is found to be erroneous as theassessing officer has erred in correctly computing the total income u/s 143(3) r.w.s 147/144Bof the Act.”

Thus in the notice u/s 263 by the ld. PCIT held only one condition
“erroneous” not held second condition “in so far as it is prejudicial to the interests of the revenue” when there is no proper satisfaction of the ld.PCIT as per sec. 263 and not fulfilled both the condition and primary condition in the SCN, hence when the Notice u/s 263 itself illegal invalid void-ab-initio, then all the consequent proceedings and order is illegal and bad in law and liable to be quashed.

Here we want to say that if the ld. AO has not examined the issues he could have not made the assessment. When the assessee has filed reply on the same (PB28-38) with all the details and income and verified the same.

(3.1) In the case of CIT vs. Software Consultant elHC (2012) 341
ITR 0240 it has been held that Revision—Revision by Commissioner of orders prejudicial to Revenue—Erroneous and prejudicial order—
Lack of enquiries—AO reopened the assessment on ground that assessee had made investment in form of FDR of Rs.20 lakhs but in the assessment order passed under s. 147/143(3), AO accepted that assessee had established and proved the source and their capacity to invest Rs.20 lakhs and accordingly no addition was made on this account—The return filed by assessee showing loss was accepted—
CIT viewed that AO had earned in determining loss after issue of notice under s. 148 as no necessary enquiries conducted by AO in respect of share application money—Tribunal held that the order of AO could not be regarded as erroneous even if AO had failed to carry out necessary verification and required enquiries in respect of share application money, as no addition had been made on account of the reasons for reopening, which were recoded before issue of notice under s. 148—Thus, AO had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition had been made on account of the reasons for reopening, which were recorded before issue of notice under s. 148 of the Act—It has been held that the AO could not have made an addition on account of share application money as no addition has been made on account of Sh. Anil Kumar Batar, Sikar.
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FDRs of Rs.20 lakhs—Held, AO did not make any addition for the reasons recorded at the time of issue of notice under s. 148—That position was not disputed and disturbed by CIT(A) in his order under s.
263 of the Act—Hence, AO could not have made an addition on account of share application money in the assessment proceeding under s. 147/148—Accordingly, assessment order was not erroneous—Thus,
CIT could not have exercised juri iction under s. 263

(3.2) Also covered by the decision of this Honble ITAT in the case of Palsana Gram SevaSahakariSamiti Ltd. V/S PCIT-3 Jaipur in ITA No.
35 to 37/Jp/2021 dt. 02.11.2021 Where it has been held that ”we found that for the year under consideration, the A.O. on the basis of information from DDIT(System) issued notice U/s 148 of the Act on 30/03/2017 after recording the reasons, as the reason was cash deposits of Rs.50,55,800/- in the bank account. In response of which the assessee filed its return of income on 28/04//2017 declaring total income of Rs.1,08,464/- and claimed the deduction u/s 80P. Thereafter,
Scrutiny assessment was started by the A.O., who had issued statutory notice U/s 143(2) and also 142(1) of the Act dated 06/06/2017 thereby raising query and in his query letter which has been responded by the assessee vide filing reply which has already been placed on record at page No. 3-4 and 6-11 of the paper book. The A.O. thereafter considered, examined and verified the same and also examined the books of account which have been placed on record by the assessee.
Thereafter, the assessment was completed U/s 148 r.w.s 143(3) of the Act by the A.O. vide his order dated 30.06.2017 after examining all the details. 12. We observed that the ld. PT.CIT or the Commissioner may call for and examine the record of any proceeding U/s 263 if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interests of the revenue. However, on perusal of the order passed by the A.O. as well as order passed by the ld. Pr.CIT, we found that it is clearly manifest that in the present case, the case of the assessee was reopened U/s 148 of the Act on the ground that the A.O. had got information from the DDIT(System) that there was cash deposits of Rs.50,55,800/- in the assessee's bank account maintained with Punjab national Bank of India during F.Y. 2009-10
relevant to A.Y. 2010-11 and the assessee has not filed return of income. Thereafter, the A.O. issued statutory notices and seeking queries from the assessee and in reply thereof, as discussed above, the assessee had produced all the details, copies of all the sources of income, submitted details of all the bank accounts, details of cash deposits in the bank accounts, cash book and bank book and relevant books of account for verification. In response thereto, the assessee had also furnished all the details admittedly vide replies to the A.O. which is at page No. 3 to 4 and 6 to 11of the paper book and this fact has also not been disputed by the ld. PT.CIT in its order which goes to show that after examining all the documents, verifying all the details, the A.O. had taken a plausible view being a quasi judicial authority i.e. on Sh. Anil Kumar Batar, Sikar.
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the reason the A.O. in his order of assessment had categorically mentioned that "the assessee attended and submitted the requisite details, information and clarifications sought for as per notices and order sheet entries. The above specific finding recorded by the AO goes to show that the AO had taken a reasonable and plausible view after examining all the details as were required for surviving the A.O.
in respect of the issue of cash deposits, which was under consideration before the A.O.
13. If so then how the ld. Pr.CIT can assume the juri iction u/s 263 on the issue of deduction u/s 80P(2)(d) which were not at all in the reasons recorded u/s 148 for the re-assessment u/s 148 and when the case of the assessee was reopened u/s 147/148 on the limited issue of cash deposit on which the ld. AO has made the inquiry and examined and passed the assessment order which has not at all the disputed even by the ld. Pr. CIT. When the case was reopened u/s 148 for limited and on specific issue, then how the AO can go beyond to that issues, when the scope of inquiry by the AO is limited to that issue and the ld. Pr.
CIT also cannot go beyond that issue while exercising juri iction u/s 263 of the Act our view. The case of the assessee was more specific to the limited scrutiny or it is not case of the assessee for complete scrutiny u/s 143(3) for regular assessment and the very basis of reopening of the case under section 148 was on account of cash deposits in the bank, then how the ld. Pr. CIT can hold that the AO has failed to make the inquiry, where the scope of inquiry is limited only to the extent of that issue and in the action u/s 148 the issue of deduction u/s 80P was not there. Thus in the proceedings u/s 263 the ld. Pr. CIT cannot assume or except or direct to the ld. AO to examining the issue which was not subject matter of the reasons recorded u/s 148 and under the 148/147 assessment. Our this view found strength from the decision of Coordinate Bench of this Tribunal in the case of Mahendra
Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun 30, 2021
(2021) 62 CCH 0271 Jaipur Trib
The present case of the assessee is more strong footing here being the assessment u/s 147/148. Therefore, in light of the above facts and position, the ld. PT.CIT could not be said to be justified in holding that the assessment order was passed without examining the issue of deduction u/s 80P(2)(d)”
Copy of order is enclosed.
(3.3) Latest decision of this Honble Bench in the In the case of Mahendra Singh Dhankhar HUF vs. ACIT ITA No. 265/JP/2020 Jun
30, 2021 (2021) 62 CCH 0271 JaipurTribwhere It has been held that “Revision—Ordering revision where case is selected for limited scrutiny—Assessee firm is a real estate firm engaged in colonizing and developing residential projects—Case of assessee was selected for limited scrutiny through CASS on account of mismatch of AIR and CIB data, and mismatch in sale turnover reported in audit report and ITR—An addition for wrong calculation of LTCG was made by A.O.
Sh. Anil Kumar Batar, Sikar.
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which was not challenged by assessee—Subsequently, on basis of certain audit objections, PCIT issued notice u/s 263—Assessee submitted that it is a case outside juri iction of Commissioner of Income tax to raise objections outside scope of limited scrutiny—PCIT ordered for 'Denovo' assessment without considering reply filed by assessee—Held, there is no dispute that scope of enquiry in case of limited scrutiny is only to extent of issues for which case was selected for scrutiny under CASS—CBDT has issued instructions from time to time in this respect and has specifically instructed taxing authorities that scope of enquiry should be limited to verification of all particulars for which limited scrutiny was taken up under CASS—However, in case during assessment proceeding if AO is of view that substantial verification of other issue is also required then case may be taken up for comprehensive scrutiny with approval of Pr.CIT/DIT concerned—
It is also instructed that such an approval shall be accorded by Pr.CIT/DIT in writing after being satisfied about merits of issue(s) necessitating wider and detailed scrutiny in case—AO is duty bound to follow instructions in case limited scrutiny assessment proceeding are proposed to be converted into complete scrutiny and without following said procedure and necessary approval of competent authority conducting an enquiry on issue which is outside limited scrutiny would be beyond juri iction of AO—As a necessary corollary, Pr. CIT u/s 263 cannot be permitted to traverse beyond juri iction that was vested with A.O while framing assessment as what cannot be done directly cannot be done indirectly—Therefore, where matter was selected for limited scrutiny, revisional juri iction cannot be exercised for broadening scope of juri iction that was originally vested with A.O while framing assessment—As per PCIT, reason for which matter was selected for limited scrutiny i.e, mis-match of sales turnover vis-à- vis ITR, CIB & AIR has a direct bearing on opening and closing stock of cost of construction and W.I.P and in turn, on taxable income, therefore, AO was duty bound to examine these issues and AO having failed to examine these issues, AO has effectively failed to examine issues for which matter was selected for limited scrutiny—As far as matters for which case was selected for limited scrutiny in terms of mis-match of sales turnover, same has been duly examined by AO and even PCIT has not recorded any adverse findings in terms of lack of enquiry or inadequate enquiry on part of AO—Order passed by PCIT u/s 263 is set aside—Assessee’s appeal allowed.”
(2.4)In the case of Paul Bharwaj vs. Pr.CIT in ITA No.
463/Chd/2019May 13, 2021 (2021) 62 CCH 0120 ChdTribRevision—
Order erroneous or prejudicial to revenue—Overexercise of power—
Assessee an individual filed his return declaring income and agricultural income—Case was selected for limited scrutiny for reason that there was a substantial increase in capital during year relevant to assessment year under consideration—AO accepted return filed by assessee—Pr. CIT issued notice to assessee u/s 263 and directed AO to Sh. Anil Kumar Batar, Sikar.
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make assessment afresh on issues mentioned in notice—Held, Tribunal in case of M/s Su-Raj Diamond Dealers Pvt. Ltd. CIT ITA No 3098/
Mum has quashed order passed u/s 263 in case of limited scrutiny assessment, holding that Pr. CIT under garb of section 263, cannot exceed his juri iction holding that when case of assessee was selected for limited scrutiny for reasons viz. (i) Large other expenses claimed in P&L A/c; and (ii) Low income in comparison to High Loans/advance
/Investment in shares, therefore, no infirmity could be attributed to assessment framed by A.O on ground that he had failed to deal with other issues which though did not fall within realm of limited reasons for which case was selected for scrutiny assessment—In other words,
Pr. CIT in garb of his revisionaljuri iction u/s 263 cannot be permitted to traverse beyond juri iction that was vested with A.O while framing assessment—As A.O had aptly confined himself to issues for which case of assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for reason, that he had failed to dwell upon certain other issues which did not form part of reasons for which case was selected for limited scrutiny under CASS—
Case of assessee was selected for limited scrutiny under CASS for reason that there is substantial increase in capital in relevant year and AO passed assessment order and accepted return filed by assessee after examining issue regarding increase in capital account as assessee had credited his capital account with agricultural income and capital gain from sale of flat—Assessee has reflected that same in its capital account—Further in response to letter issued by AO during assessment proceedings, assessee submitted his reply explaining reason for increase in capital—However, Pr. CIT exercising juri iction under section 263, directed AO to make fresh assessment on issues which were not subject matter of limited scrutiny—Since, issue raised by assessee in this case has already been decided in favour of assessee Pr.
CIT(A) has exceeded juri iction u/s 263 by directing AO to make fresh assessment on issues which were not subject matter of assessment framed on basis of limited scrutiny—Assessee’s appeal allowed.
Thus in the present case the position are same and the principal of the above judgments are also applicable in the present case.

Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification when firstly the case of reopened for the limited purpose secondary despite the same assessee has produced all the details which examined and deduction allowed

“ Regarding advance amount in cash Rs.75,00,000/-: In this regards it is humbly submitted that your humble assessee has not received any advance amount in cash from M/s Matrix Jee Academy, Sikar. The amount paid in cash as shown in the table was never received by the assessee as Advance against for building construction. In this context it is worth to mention here that any advance amount cannot be commensurate as for part of income and cannot be taxed.

It is further submitted that the impugned reason are merely based upon a third party information that are too unreliable and misinterpreted.
Third party information only an information and does not constitute
“reason to believe” until and unless the third party information is subjected to further investigation i.e. in our case where and how this handsome amount reflect in the books of accounts of Matrix Jee
Academy and why paid in cash by M/s Matrix Jee Academy. Finally it is again humbly submitted that we have not taken any advance payment for building construction from M/s Matrix Jee Academy.
Following are some other facts of the para which are also replied as under for your kind consideration.

i. During the year under consideration the assessee received Rental
Income 53,40,603.00 (Including from M/s Matrix Jee Academy, Sikar
Rs.19,60,875/-) which has already been shown under the head of Income from House Property. Hence all the Rental Receipts under the heads of Income from House Property has been properly shown in the head of Income from House Property has been properly shown in the return of income for the year under consideration.

ii. As it has already been stated in Para1 as above that assessee earned rental income and interest income, therefore not liable for maintain any cash book and bank book. Hence such cash book and bank book is not available with the assessee.

iii. The same fact has already been submitted with the hon’ble assessing officer in response on notice u/s 147 that assessee has never any cash amount in advance from Matrix Jee. The said reply has been uploaded at ITD Portal on 21.03.2022. 5. The copy of bank statements (3 nos.) are also enclosed herewith for your kind consideration.”

Also refer the decision of VimalChatur v/s ITO Ward 2(2), Udaipur
351/Jodh/2023 dt. 26.04.2024 where the it has been held that We have heard the rival contention and perused the material placed on record. We observed that the assessee and his wife namely Smt.
KanakLatChajed both are Senior Citizen, Retired Govt. Employee and pensioner. The assessee has filed the cash flow statements of last five years available at page 16 of the CIT(A) order and at page 18 of the paper book alongwith cash flow statements. The assessee has also filed the day wise cash withdrawals and deposit which are available at Page
19 to 30 of paper book. The lower authorities have only doubted the Sh. Anil Kumar Batar, Sikar.
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cash flow statements but could not disproved with any contrary evidences about the withdrawal of cash and its source. The assessee has also filed a family settlement of her wife family vide PB31-32, where she got Rs.3,61,000/- which is also available with the assessee and the lower authorities has discarded or disbelieved without examining and without bringing any adverse evidence. The assessee has also filed the affidavit of his wife namely Smt. KanakLataChhajed before CIT(A), which is produced before us at page 16-17of paper book. We note in the affidavit she clearly stated that the bank accounts were jointly owned and she had deposited the cash of Rs.15,59,000/- in these bank accounts, this affidavit has also been remained uncontroverted. It is settled law that the contents of an affidavit should be read correct and full unless not controverted.
8.1 To support his arguments the Ld. AR for the assessee has also drawn our attention to the judgments of Hon'ble Supreme Court in the case of Mehta Parikh & Co. v. Commissioner of Income-tax, [1956] 30
ITR 181 (SC) wherein Court has held as that:-
" It has to be noted, however, that beyond these calculations of figures, no further scrutiny was made by the Income-tax Officer or the Appellate
Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant
Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits.
This being the position, the state of affairs, as it obtained on 12th January,
1946, had got to be appreciated, having regard to those entries in the cash books and the affidavits filed before the Appellate Assistant Commissioner, taking them at their face value. The entries in the cash books disclosed that, taking the number of high denomination notes at 18 on 2nd January, 1946, there came in the custody or possession of the appellants after 2nd January,
1946, and up to 12th January, 1946, 49
further notes of that high denomination, making 67 such notes in the aggregate, out ofwhich 61 such notes could be encashed by the appellants on 18th January, 1946, through the Eastern Bank. A mere calculation of the nature indulged in by the Income-tax Officer or the Appellate Assistant
Commissioner was not enough, without any further scrutiny, to dislodge the position taken up by the appellants, supported as it was, by the entries in the cash book and the affidavits put in by the appellants before the Appellate
Assistant Commissioner.”
Considering the reconciliation and cash flow statement filed by the assessee along with family settlement deed and affidavit of assessee’s wife, wherein she owned responded of having deposited of cash out of her owned source and saving., Therefore, without controverting the Sh. Anil Kumar Batar, Sikar.
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fact stated of affidavit by the wife of the assessee, the addition made by the lower authorities even for an amount of Rs. 12,87,100/-is also not sustainable in the hands of the assessee and therefore, the same is directed to be deleted.”

Here also the same position
Same view has been expressed in the case of Kamal Kumar Gupta v/s Pr. CIT
142 TTJ 9(Jp) wherein it has been held that “assessee was asked by the AO to file the details of trade creditors which are shown in the name of agriculturalist.
In the reply, assessee filed written submission enclosing the list of creditors.
Thus, the AO made the inquiry and it is not a case of lack of inquiry but can be case of insufficient enquiry. Pr. CIT was not justified in passing the order u/s 263.” In the present case also is the same position. And also followed in the case of Sh. Gyan Chand Jain v/s Pr.CIT 50 TW 109(Jp).
Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification. The ld. Pr. CIT has presented himself that there is a big scams in the case of the assessee.

The above findings are also fully applicable in the present case.

In case ofChorma Business Ltd v/s DPR. CIT 82 TTJ 540(Cal) it has been held that “AO before making the assessment, having called for details and having discussed the matter with the A/R of the assessee, such an order cannot be called erroneous and prejudicial to the interest of the Revenue only because the AO made a brief assessment order without discussing such details therein. Further, the Pr. CIT also did not give any finding as to whether the share transaction loss claimed by the assessee was bogus or not genuine but merely stated that the transaction could have been verified by the contract notes from the brokers, challan etc. Revision order of the PR. CIT Set Aside. Also refer Subrata Kumar
Nag v/s PR. CIT 127 TTJ 238(Kol), Rajiv Arora v/s PR. CIT (Supra).

We would like to refer the case of Kartik Financial Services Ltd V/s CIT 55
CCH170 (Mum. Tribunal)(2019). The principal of the case is also applicable here in the present case.

In the case of Nalco Company vs CIT 200 DTR 275(Pune-C) ITA
No.1217/Kol/2017 dt. 05.02.2021 it has been held that if the AO makes inquiry, examines the issue which is born out from the record of the assessment proceedings, then reaches a conclusion in favour of the assessee which is legally possible, the assessment order cannot be characterized as erroneous and prejudicial to the interest of the Revenue. Since none of the four clauses of the Expln.2 to s. 263(1) appies to the case under consideration, revisionary power, even under the enlarged scope of the Expl. 2, was not legally exercisable.
9.1 No requirement of deep investigation: Thus, on the perusal of the order of the Pr. CIT it is very clear that he was of the view that the AO must have made deep investigation or inquiry and in the case of ArvindBhartiyaVidhyalayaSamiti v/s
ITO 94 TTJ 614(Jp). Where in held that Deep investigation is outside of the preview of assessment procedure”. And also held there is no case laws which say for deep investigations Because there is no limit of deep investigation. In the Act also no reference of the Deep inquiry or investigation.Alsorefer Gaberial India
Ltd. 203 ITR 108 (Bom). That is why Hon’ble SC held in Malabar Fisheries
Industries Ltd. 243 ITR 82 (SC) that in each and every type of mistake/ error cannot be made a basis to invoke Sec.263. The case laws available on the subject on this aspect, are distinguishable in as much as those were the cases where no inquiries at all (or very minor reflecting from a short assessment order), which is not at all a case here. Also refer Gyan Chand Gupta V/s PR. CIT 135 TTJ 01(Jp),
M/s. Om RudraPriya Holiday Resort Pvt. Ltd. vs. Pr. CIT(2018) 54 CCH 0597
JaipurTrib
In CIT v/s Jain Construction 257 CTR 336(Raj.) It has been held that Revision u/s 263—Order erroneous and prejudicial to interest of revenue—CIT issued a Sh. Anil Kumar Batar, Sikar.
24
notice u/s 263 to assessee on ground that assessment order of AO passed u/s 143 (3) was an order erroneous and prejudicial to interest of revenue—
Tribunal allowed appeal of assessee—Held, safeguard provided to assessee in section 263 is that mere erroneous orders are not revisable but revisional authority has to further establish with material on record that such erroneous order is also prejudicial to interest of revenue—Twin conditions of assessment order being erroneous and it also being prejudicial to interest of revenue,keeps initial burden on Commissioner, who invokes such juri iction—Premise for invoking revisional juri iction on the ground that the Assessing Authority made insufficient enquiry or improper enquiry and failed to verify closing stocks in record of assessee, before passing assessment order, falls flat by a bare perusal of assessment order itself—Thus, Tribunal was justified in holding that Commissioner was in error in invoking revisional juri iction u/s 263—Mere alleged insufficiency of enquiry in opinion of Commissioner by Assessing Authority, could not permit him to invoke revisional juri iction u/s 263—Therefore, essential twin conditions for invoking revisional juri iction, were not satisfied.
KolTrib held that Revision—Erroneous and prejudicial order—Lack of proper enquiry—There was a time of two years for investigation, the AO had issued questionnaire, the assessee had produced books of account, bills, etc. and replied to various issues raised by AO—Thus, it could not be said that order was passed in haste without making any inquiry on the issues—AO had taken one view where two views are plausible and such view cannot make the order erroneous and prejudicial to the interest of the Revenue—CIT’s view cannot be invoked to substitute the view of the AO—Assessment also does not become erroneous where queries raised during the assessment proceedings are not recorded in the final assessment order.
9.2. On perusal of the order in the present case the ld. CIT has taken action u/s 263 only on the assumption and presumption that the no inquiry has been made by the AO on the issues and not verified. Kindly refer CIT v/s Paras Cotton Co.
288 ITR 211(Raj.) where held that CIT could not have acted on mere assumption. Mere suspicion cannot take place of proof and the order of CIT u/s 263 cannot be sustained.
9.1In CIT V/s GirdhariLal 258 ITR 331(Raj.) it has been held,“When the Assessing Officer after going through the material on record and after considering the explanation of the assessee, made some additions and rejected the books of accounts, it could not be said that he had not applied his mind. It is not always necessary that every assessee in the line of business should have the same rate of profit. The tribunal was correct in cancelling the order under sec 263 of Income Tax Act.”
When the assessing officer had considered all the relevant material on record, it was basically a question of facts and it could not be interfered with unless
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the finding of the Tribunal was found perverse. Considering the material on record, it could be said that finding of the Tribunal was perverse. Therefore, the Tribunal was correct in cancelling the order under section 263.”
9.2 Also refer CIT v/s Ganpat Ram Bishnoi 296 ITR 292(Raj.)The record of proceedings clearly shows that the AO has framed his assessment after due application of mind and holding enquiries into all areas, which, according to the CIT have not been at all enquired into and the AO has acted merely on furnishing evidence on one single date. The Tribunal noticed that as per the record of the proceedings, the AO required the assessee to produce documents or material in relation to 10 different items, which included the details of capital contributed by partners, details of purchases made in excess of Rs.
20,000 with evidence, confirmation of unsecured loans, amongst other matters, which the AO desired to enquire into. The assessee has produced desired information. The AO studied the sundry creditors, unsecured loans and desired to furnish affidavits of unsecured loans and details of interest paid. The AO again required the assessee to furnish the details of partners capital accounts and also to produce voucher for expenses and the matter was adjourned. After that, assessment was completed by passing assessment order. These matters clearly indicate that the AO particularly made reference to the matters, which the CIT has opined were not inquired. Thus, according to the Tribunal, the foundation to exercise power under s. 263 was not existing. In the aforesaid circumstances on the finding reached by the AO, no question of law really arises for consideration in this appeal. From the record of the proceedings, no presumption can be drawn that the AO had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the AO was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking juri iction under s. 263. When enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, but the same is apparent from the record of the proceedings the invocation of juri iction by the CIT was unsustainable. As the exercise of juri iction by the PR. CIT is founded on no material, it was liable to be set aside.
Juri iction under s. 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. The finding of the Tribunal that the ITO had passed assessment order after relevant enquiries and considering the aspects of the matter required by the CIT to be considered by him is a finding of fact.
Although in the present case the ld. AO has made the detailed inquiry on the very same issue being the reason of reopening the case u/s 148. 9.3 In the case of CIT V/s Anil Kumar Sharma 335 ITR 83(Del), held that “
Revision- Erroneous and Prejudicial order- lack of proper enquiry- Pr. CIT came to the conclusion that the issue relating to taxability of compensation
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received by the assessee was not examined by the AO and held that the order of AO is erroneous and prejudicial to the interest of the revenue- Tribunal has arrived at a conclusive finding that through the assessment order does not patently indicate that issue of the taxability of the compensation has been considered by the AO, the record shows that the AO has applied his mind-
Thus, it is not a case of lack of enquiry even if the enquiry was inadequate and the CIT was not justified in passing the order under section 263- findings of the Tribunal quashing the order of the PR. CIT passed under Section 263 do not warrant any inference- CIT V/s Sunbeam Auto Ltd. (2009) 227 CTR (Del)
133: (2009) 31 DTR (Del) 1 followed”.
9.4. In the case of The Lake Palace Hotels & Motels Pvt Ltd v/s The PR. CIT
Udaipur 48 TW 181(Jd). It has been concluded that :
The fundamental principles which emergefrom thecatena of judicial pronouncementsmay besummarized asunder :

(i) The PR. CIT must record satisfaction that the order of the Assessing
Officer is erroneous and prejudicial to the interest of the revenue. Both the conditionsmust be fulfilled:
(ii) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted.
iii) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement or order being erroneous.
iv) If the order is passed without application of mind, such order will fall under the category of erroneous order.
(v) Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view under with which the PR. CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the law.
(vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the PR. CIT, while exercising his power under section 263, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer.
(vii) The Assessing Officer exercise quasi-judicial power vested in him and if he exercise such power in accordance with law and arrives as a conclusion, such conclusion cannot be termed to be erroneous simply because the PR. CIT does not feel satisfied with the conclusion.
(viii) The PR. CIT, before exercising his juri iction under section 263 , must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation be a letter in writing and Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision
Sh. Anil Kumar Batar, Sikar.
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of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard.

It is submitted that department can assume juri iction under section 263 of Income tax Act if twin conditions of the order being erroneous and prejudicial to the interest of the revenue are satisfied. If the view taken by the A.O. is one of the possible views then learned CIT cannot assume juri iction. For this purpose reliance has been placed on the followings decisions:

It is further submitted that proceedings under s. 263 cannot be taken on the ground that the AO has not made sufficient enquiry. The learned PR. CIT can assume juri iction if there has been lack of enquiry. In the instant case, the enquiry has been made, though the enquiry may not be sufficient in the opinion of the learned PR. CIT. The reliance is placed upon the decision of Hon’ble Delhi High Court in the case of CIT v. Hindustan Marketing &
Advertising Co. Ltd. [2010] 46 DTR (Del.) 109. The attention is drawn towards the decision of Hon’ble juri ictional High Court in the case of PR.
CIT v. Trustees Anupam Charitable Trust [1987] 65 CTR (Raj.) 30 : [1987]
167 ITR 129 (Raj.)

Thus it is clear that Assessing Officer has made enquiry but sufficiency of enquirycan be depend upon from person to person. The AO cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is the duty of the AO to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an enquiry.
The word ‘erroneous’ includes the failure to make enquiry. It is submitted that the AO made the enquiry and it is not a case of lack of enquiry. The Hon’ble
Delhi High Court in the case of CIT v. Vikas Polymers [2010] 236 CTR (Del.)
476 had an occasion to consider the passing of order under s. 263 of the Act by the learned CIT when the AO made an enquiry and the assessee filed the reply.
The Hon’ble Delhi High Court held that assumption of juri iction under s.
263 of the Act by learned CIT is not warranted. It will be useful to reproduce the head note from this decision:
"Provisions of s. 263 when read as a composite whole make it incumbent upon the PR. CIT before exercising revisional powers to : (i) call for and examine
Sh. Anil Kumar Batar, Sikar.
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the record, and (ii) give the assessee and opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is only on fulfillment of these twin conditions that the PR. CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the PR. CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the PR. CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interest of the Revenue will not suffice. The assessee must be called, his explanation sought for and examined by the CIT and thereafter if the CIT still feels that the order is erroneous and prejudicial to the interest of the Revenue, the CIT may pass revisional orders. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to the interest of the Revenue, he may choose not to exercise his power of revision. This is for the reason that if a query is raised during the course of scrutiny by the AO, which was answered to the satisfaction of the AO, but neither the query nor the answer was reflected in the assessment order, this would not by itself lead to the conclusion that the order of the AO called for interference and revision. In the instant case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment, assuming it to be so, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assesseeexplained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were income-tax assessee and the unsecured loan taken from SC
(P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. Merely on the basis that the AO has not examined the cash credits of the partners or deposits from SC (P) Ltd., PR. CIT was not justified in invoking his suomotu powers, especially where the assessee had explained that the capital investment made by the partners, which had been called into question by the PR. CIT was duly reflected in the respective assessments of the partners and the unsecured loan taken from the SC (P) Ltd.
was duly reflected in the assessment order of the said person."

The reliance is also placed in the order of the Hon’ble High Court of Bombay in the case of PR. CIT v. Gabrial India Ltd. [1993] 71 TAXMAN 585 (BOM.).
It will be useful to reproduce the held portion of the case:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1973-74 - Assessee claimed a sum of Rs. 99,326 described 'as plant relay out expenses' as revenue expenditure and ITO, after making enquiries in regard to nature of said expenditure and considering explanation furnished by assessee in that regard, allowed
Sh. Anil Kumar Batar, Sikar.
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assessee's claim-Subsequently, Commissioner, exercising powers under section 263, cancelled order of the ITO observing that order of ITO did not contain discussion in regard to allow ability of claim for deduction which indicated non-application of mind and that claim of assessee required examination as to whether expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him - Whether under section 263 substitution of the judgment of the Commissioner for that of the ITO is permissible - Held, no - Whether ITO's conclusion can be termed as erroneous simply because Commissioner does not agree with his conclusion - Held, no - Whether ITO's order could be held to be 'erroneous' simply because in his order he did not make an elaborate discussion - Held, no - Whether provisions of section 263 were applicable to instant case and Commissioner was justified in setting aside assessment order -
367 ITR 0377 (Raj) It has been held that Revision—Revision by commissioner of orders prejudicial to revenue—AO observed that return submitted by Assessee was duly supported by necessary evidence and accepted Assessee’s return—CIT in exercise of his power u/s 263, issued notice to Assessee being of opinion that assessment of AO was erroneous and prejudicial to interest of Revenue—ITAT viewed that CIT could not have formed any opinion that assessment order was erroneous and no reasons had been recorded to demonstrate that assessment order was prejudicial to interest of revenue—Held, perusal of Order of ITAT would testify that AO had consciously examined all relevant records in accepting return submitted by Assessee—CIT did not find fault with any findings of AO, culminating in ultimate conclusion that return of Assessee was acceptable—Decision of CIT authenticates that Assessee furnished all relevant records and documents in support of its return accepted by AO—
CIT did not reject documents to be irrelevant—CIT only remanded matter to AO observing that documents ought to have been laid before him and examined at time of assessment—Revisional juri iction available to Commissioner u/s 263 subject to condition that Order of AO was erroneous and prejudicial to interest of Revenue—Any exercise of revisional juri iction, bereft of such satisfaction was impermissible rendering resultant order void—No interference with impugned order of ITAT was warranted—Appeal dismissed

In the case ofBaberwadShikshaSamiti v/s PR. CIT 134 DTR 65(Jp) It has been held that the AO accepted the returned income of the assessee. AO issued the query letter on both the issue which was replied by the assessee. Thus the AO made detailed enquiry and no adverse inference has been drawn by him.
Hence the order u/s 263 is not sustainable.
0041 (UO) held Revision—Erroneous and prejudicial order—Lack of proper
Sh. Anil Kumar Batar, Sikar.
30
enquiry— CIT set aside the assessment order on the ground that the AO has not verified as to whether the provision for development expenses claimed as deduction by the assessee-developer was made on scientific basis having regard to the accrued liability incurred by the assessee—Not justified—
Assessee had filed relevant details before the AO in a letter stating that such deductions was also allowed in earlier years—Hence, this is not a case where there was no enquiry—Action under s. 263 cannot be taken on account of inadequate enquiry—Therefore, CIT was not justified in setting aside the assessment order by exercising power under s. 263—SwapanSakar Insurance
Consultant & Marketing Services (P) Ltd. (ITA No. 117/JP/2010, dt. 6th Jan.,
2011)followed.
In the cae of CIT vs. AshishRajpal320 ITR 0674 (Del) it has been held that Revision—Erroneous and prejudicial order—Lack of proper enquiry—After issue of notice under s. 143(2), several communications were addressed by the assessee to the AO whereby the information, details and documents sought for were adverted to and filed—If upon a perusal of the record filed by the assessee with the AO the Tribunal formed a view that there had been an enquiry which had not been conducted with ‘undue haste’ surely one would be slow to hold otherwise—While the supervisory power of CIT is wide, it cannot be invoked to substitute the view of the AO—Fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee.
10. On Merit our submissions are as under:
10.1 kindly refer our Submissions which has also been filed before the ld. CIT vide PB 43-54 also above para4””as part of our WS before your honor.
10.2Contradictory approach of the Revenue: Further it is very admitted facts that the assessee had not received any cash amount from M/s Matrix Jee Academy,
Sikar. If the ld. PCIT was of having any doubt or documents which proves that the assessee had received cash advance receipts, then he must have bring the same before on record and out to have confronted to the assessee, but he has failed to do so rather taken action u/s 263 on assumption, presumption and suspicion. And it is the settled legal position of law that the observation based on assumption, presumption and suspicion and his own guess workand it is the settled legal position of law that suspicion may be strong however cannot take the place of reality, are the settled principleskindly refer Dhakeshwari Cotton
Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag),
Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).Also refer CIT v/s KulwantRai
291 ITR 36( Del). In CIT v/s Shalimar BuildwellPvt Ltd 86 CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law.
Sh. Anil Kumar Batar, Sikar.
31
Alternatively and without prejudice the ld. PCIT has also ignored that if any person received any advance the same will not be the income the same is liability as held as under In ‘K.K. Khullar V. Deputy Commissioner of Income Tax’ – 2008 (1) TMI
447 - ITAT DELHI-I the assessee received certain amount for services to be performed over a period of time. The amount relatable to the services rendered in the year under consideration was shown as income, the reason being that the assessee became entitled to receive that amount from the client in respect of the services rendered. In other words, the High Court held that debt to the extent of the amount pertaining to services rendered only got vested in the assessee. The rest of the amount was taken as liability to be adjusted in subsequent years as and when the service was rendered. It is but clear that the excess amount would have to be returned in case the service was not performed in subsequent year and therefore in respect of such amount no debt came into existence in favor of the assessee. Therefore this amount did not become the income. The High Court was of the view that the Commissioner
(Appeals) erred in finding that the assessee was following the hybrid system of accounting on the ground that the whole of the amount received from the clients was not declared as income in the year of the receipt of the amount.
In ‘R.S. Suriya V. Deputy Commissioner of Income Tax’ – 2010 (1) TMI 969
- ITAT CHENNAI the Commissioner (Appeals) has confirmed the advance professional fee of ₹ 55 lakhs as income for the impugned assessment year
2006 – 07 relying on his own decision for the assessment years 2004 – 05 and 2005 – 06. The Tribunal found that it is clear from the assessment order itself that the amounts received by the assessee from M/s Photon Factory and M/s
Studio Green were not against any particular films. The assessee contended that the income could not be recognized till the artist had acted in the film, for which the advances were received. Story line was not fixed, neither was the name, not even the co-artists were known. Just because the assessee was following the cash system, it was not obliged to consider all sums received by it as income unless such receipt could be categorized as income. The Tribunal had held in the assessee’s own case for the earlier years that it would not be proper and appropriate to treat professional advance received as income, unless and until proposed assignments had materialized. The Tribunal held that the amount of ₹ 55 lakhs received by the assessee as advance could not have been treated as his income for the impugned assessment year. Such addition stands deleted.
In ‘R.S. Suriya V. Assistant Commissioner of Income Tax’ – 2015 (11) TMI
339 - ITAT CHENNAI the appellant is a cine artist. There was a search in the premises of the appellant on 19.01.2010. The appellant filed returns for the assessment years 2004-05 to 2006-07 in response to the notice under Section 153A. The assessments were completed and the Assessing Officer brought to tax advances received from various producers as income of the assessee. The appellant contended that these amounts received by the appellants are only advances and since the films were not commenced these advances cannot be treated as income of the appellant and it should be taxed in the year in which film shooting/production commenced as income of the assessee. The Sh. Anil Kumar Batar, Sikar.
32
Commissioner (Appeals) upheld the additions treating the said amount as income of the appellant for the reason that the appellant is following cash system of accounting and therefore they have to be considered as income of the assessee.
The Hon’ble Delhi High Court in the case of Uttam Singh Duggal& Co. (P)
11.However, we want to place on record our legal objection for initiating proceedings u/s 263 for revision of assessment as the original assessment made by the A.O. is neither erroneous nor prejudicial to the interest of revenue. At the time of Original Assessment, the A.O. has enquired all the issues discussed herein above and after being satisfied with the submissions and explanations has made the assessment.
12. Hence in view of the above facts, submission and legal positions of laws the order of the Pr. CIT u/s 263 may kindly may kindly be quashed and oblige.”
4.1
In support of the contentions so raised by the ld. A/R in the written submission, reliance was also placed on the following evidences / records
/ orders :-
S. No.
Particulars
Page No.
1. Copy of ITR with Computation of total income A.Y.
2018-19 u/s 139
1-6
2. Copy of notice u/s 148 Dated 12.03.2022
7-8
3. Copy of Reply to notice u/s 148
9
4. Copy of Order passed u/s 148A(d) Dated 30.03.2022
10-13
5. Notice u/s 148 dated 30.03.2022
14
6. Copy of ITR filed in response of Notice u/s 148
15
7. Copies of various Notices issued u/s 142/143 issued by NFAC during the Faceless Assessment proceedings.
16-27
8. Copies of various Replies made with NFAC during the Faceless Assessment proceedings
28-38
9. Affidavit of the Assessee
39-40
10. Copy of notice u/s 263
41-42
11. Copy of reply to PCIT in response to notice u/s 263
43-54
Sh. Anil Kumar Batar, Sikar.
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5. On the other hand, the ld. DR supported the order of the ld. PCIT.
The ld. D/R submitted that the case of the assessee was reopened under section 147 to examine the issue of transaction of Rs. 75,00,000/- received by the assessee from M/s. Matrix JEE Academy, Sikar, but the AO has failed to make enquiry in respect of the aforesaid transaction of Rs. 75,00,000/- and also failed to determine total income of the assessee for AY 2018-19 properly, the very basis on which the case was reopened.
Therefore, the order of the AO being prejudicial to the interest of the revenue has been rightly quashed.
6. We have heard the rival contentions and perused the material placed on record. The assessee has challenged the action of the ld. PCIT as per provision of section 263 of the IT Act, 1961. As narrated hereinabove, the brief facts related to the case of the assessee are that the assessee derives income from house property, interest and other sources, and filed his return of income declaring income of Rs. 19,89,250/- under section 139 of the IT Act, 1961, for the year under consideration. As per the information available with the Revenue Authorities, the assessee has received an advance of Rs. 75,00,000/- from M/s. Matrix JEE Academy,
Sikar for building construction and the said income of Rs. 75,00,000/- has escaped assessment for the year under consideration in the hands of the assessee. Based on these set of facts/information, the AO decided to Sh. Anil Kumar Batar, Sikar.
34
make scrutiny under section 147 of the IT Act, 1961 and accordingly issued notice under section 148 of the IT Act, 1961 to the assessee. The AO further issued notices under section 142(1) and 143(2) of the IT Act,
1961. In compliance to the above notices issued by the AO, the assessee has explained that the assessee has given his premises to M/s. Matrix JEE
Academy, Sikar on rent against which he has received Rs. 19,60,875/- as rental income and has shown in his return of income filed during the year vide copy of ITR of total income enclosed. The assessee vehemently submitted that the assessee has not received any advance of Rs.
75,00,000/- from M/s. Martrix JEE Academy, Sikar. In response to the notice under section 148, the assessee filed the ITR on 23.04.2022
declaring the same income as declared vide ITR dated 27.08.2018 filed under section 139 of the IT Act, 1961. In compliance to the notices issued under section 142(1) and 143(2), we find that the assessee submitted detailed reply vide paper book pages 28-38. In the replies, which has been reproduced in the assessment order has explained the issue in details. Thereafter, the AO completed the assessment on 18.03.2023
under section 143(3) r.w.s. 147 read with section 144B of the Income Tax
Act, 1961after carefully examining the detailed documents furnished by the assessee, in the Faceless Manner by NFAC through Assessment Unit,
Income Tax Department. We find from the assessment order thatqueries
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raised by way of notice under section 147 in respect of alleged transaction of Rs. 75,00,000/-, the assessee has explained that the assessee has not received any advance of Rs. 75,00,000/- and in support furnished relevant documents viz. computation of income, income-tax return, affidavit of the assessee, bank statement etc. The reply of the assessee has been uploaded at ITD Portal on 21.03.2022. The assessee has filed the return of income under section 139 and again under section 148 of the IT Act, 1961 and participated in the assessment proceedings by filing the reply of the notices so issued, and the same is not under dispute. We also take note that the case of the assessee was reopened for verification of alleged receipt of advance of Rs. 75,00,000/- from M/s. Matrix JEE Academy,
Sikar.
The said issue was examined on the basis of information/documents sought by the AO and furnished by the assessee.
All the details related to alleged transaction were examined as is evident from the findings recorded in the body of the assessment order. The ld.
PCIT being not satisfied with the order of the AO, held that the AO had failed to make enquiry in respect of the aforesaid transaction made by the assessee during the F.Y. 2017-18 and also failed to determine total income of the assessment for AY 2018-19 properly. Accordingly, the ld.
PCIT issued notice under section 263 on 28.01.2025 fixing the case for hearing on 05.02.2025. In compliance to the notice, the assessee
Sh. Anil Kumar Batar, Sikar.
36
submitted the written submissions on 12.02.2025, relevant part of which has been reproduced by the ld. PCIT in his order are as under :
“4. Thereafter the ld. FAO started the assessment proceedings.
During the course of assessment proceedings the ld. AO has issued the notices u/s 142(1)/143(2) by raising the various queries vide notices dt.
26.08.2022, 19.10.2022, 07.03.2023 etc. (PB 16-27). In response to these notices assessee filed the detailed reply with details. In the notices the ld. AO had already asked about the alleged cash received in advance from Matrix JEE Academy, Sikar of Rs. 75,00,000/-. In response thereto the assessee filed all the details as the assessee has not received any advance in cash from Matrix JEE Academy, Sikar of Rs.
75,00,000/- vide our replies dt. 01.11.2022/08.03.2023 copies are enclosed. (PB 28-30).

The ld. PCIT considered the reply of the assessee but found it not tenable.
The ld. PCIT relying on some judgments as cited in his order, held that “
Applying these judicial principles to the present case, it is evident that the Assessing Officer failed to verify the financial transactions of Rs.
75,00,000/- made by the assessee during the FY 2017-18 relevant to AY
2018-19. Therefore, by virtue of powers conferred to under the Sh. Anil Kumar Batar, Sikar.
37
provisions of section 263 of the IT Act, 1961, I hold that the order passed on 18/03/2023 for AY 2018-19 by the Assessing Officer is erroneous and prejudicial to the interest of revenue”. Accordingly, the ld. PCIT directed the AO to make a fresh assessment after making a proper verification of the transaction in question. We may note here that ld. PCIT evidently did not place on record any apparent error on the part of the AO to substantiate that order passed by AO is prejudicial to the interest of revenue. The ld. PCIT has not pinpointed as to on which aspect enquiry required to be made was not made by the AO. No defect was found from the record collected by the AO. Since, in this case, AO has clearly incorporated the extract of enquiry conducted in the body of the assessment order and revenue did not pinpoint any error on the part of the AO, the order passed after due application of mind could not be subjected to proceeding under section 263 of the IT Act, 1961. 6.1
The prerequisite for exercising the juri iction by the learned PCIT under section 263 of the Act is that the order of the AO is established to be erroneous in so far as it is prejudicial to the interest of the Revenue.
The ld. PCIT has to satisfy by an order in writing that the twin conditions, namely (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If any one of them is absent i.e., if the assessment order is not erroneous, but it is prejudicial to Sh. Anil Kumar Batar, Sikar.
38
the Revenue, provision of section 263 cannot be invoked. This provision cannot be invoked to correct each, and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to Revenue's interest, then the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase
'prejudicial to the interest of the Revenue’ must be read in conjunction with an erroneous order passed by the AO. Every loss of revenue, because of the order of the AO, cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the ld. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. In this process, even the AO had no power to review his own order. Hon'ble
Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000)
243 ITR 83 (SC) held:
“Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an Sh. Anil Kumar Batar, Sikar.
39
erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law.”

Thus, considering the aforesaid discussion and respectfully following the judicial precedents as cited hereinabove, we hold that the order of the ld.
PCIT is not in accordance with the provisions of section 263 of the Act as the twin conditions have not been fulfilled in this case. Thus, we set-aside the order of the ld. CIT and restore the order passed by the A.O dated
18.03.2023. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 09/09/2025. ¼ jkBkSM+ deys'k t;UrHkkbZ ½

¼MkWa-,l-lhrky{eh½
(RATHOD KAMLESH JAYANTBHAI)

(Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 09/09/2025
*Santosh
आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
1. vihykFkhZ@The Appellant- Sh. Anil Kumar Batar, Sikar.
2. izR;FkhZ@ The Respondent- PCIT-Jaipur-2. 2. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत.
6. xkMZ QkbZy@ Guard File { ITA No. 418/JPR/2025 }

vkns'kkuqlkj@ By order

सहायक पंजीकार@Aेेज.