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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI RAMIT KOCHAR
आदेश / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the revisionary order dated 03.01.2019 passed by learned Principal Commissioner of Income Tax, Chennai-1, Chennai (hereinafter called as ‘the PCIT’) u/s 263 of the Income-tax Act, 1961( hereinafter called “ the Act”) in C.No. 218/ 263/ PCIT-1/2018-19 for assessment year(ay) 2014-15.
The brief facts of the case are that the assessee filed its return of income with Revenue on 31.10.2015 declaring income of ` 25,83,290/-.
The assessee’s case was selected for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act by CASS for the impugned assessment year. The assessee has admitted income under the heads Salary (Salary from Avanti Leathers Ltd.), Income from Business (Trading in Securities) and other sources. The case was selected as ‘Limited’ scrutiny case by Revenue. The reasons for selection in limited scrutiny were two-fold:– i. Substantial increase in capital in a year ii. Sale consideration of the property in ITR is less than the sale consideration of property reported in AIR.
The issue of substantial increase in capital in the year under consideration is main bone of contention by learned PCIT which led to issue of notice u/s 263 of the 1961 Act for framing revisionary assessment, as we will see later in this order, while the other issue which led to selection for limited scrutiny by CASS viz. sale consideration of property in ITR being less than the sale consideration of property reported in AIR is not raised by learned PCIT while invoking his revisionary powers u/s 263 of the 1961 Act and hence we will confine our discussions to the issues now been invoked by learned PCIT u/s 263 of the 1961 Act.
2.2 Coming back , the AO after making inquiry as was deemed fit by him, accepted increase in capital of the assessee in the year under consideration , vide assessment order dated 23.12.2016 passed u/s. 143(3) of the 1961 Act, by holding as under:
“4. SUBSTANTIAL INCREASE IN CAPITAL IN A YEAR: On verification of the Balance sheet as on 31/3/2014, it was found that the assessee has shown an amount of Rs.5,26,72,289/- as Proprietor's Capital, whereas in the A.Y.2013-14 the Capital a/c was shown at Rs.2,23,80,395/-. Thus there was an substantial increase in the Capital a/c i.e. Rs.3,02,91,894/- during the F.Y.2013-14. Hence, the assessee was asked to furnish the details of Capital a/c and the sources of the increased Capital.
The A.R. vide his letter dated 22/11/2016 has submitted that the increase in Capital a/c of Mr. Vijaykumar is book entry of earlier investment in the shares of Avanti Leathers Ltd over a period of time and source for the investment in Avanti Leathers is mainly agriculture income, Salary savings and gift of Rs. 1,30,75,000/- received during the year 2007-08 from Uncle Narayana Rao.K. Further, the A.R. has submitted a letter on 19/12/2016 stating that the assessee was having Current account with Avanti Leathers Ltd with credit balance of Rs.2,40,64,672/- as on 31.03.2009 and Preference Share Capital of Rs.1,79,00,000/- as on 31.03.2009. On 12.02.2011 Rs.2,08,14,670/- has been transfer from the assessee's Current account to his investment in Share Capital of Avanti Leathers Ltd as per Boards resolution and on 12.02.2011 Preference Share capital of Rs.1,79,00,000/- has been transfer to his investment in Share Capital of Avanti Leathers Ltd. The increase in Capital a/c of the assessee is the book entry only to show these earlier investments in the share capital of Avanti Leathers Ltd. The A.R. has submitted the copy of Boards Resolution, Copy of Equity Share capital, Preference Share Capital & K.Vijaykumar's (the assessee) Ledger a/cs in Avanti Leathers Ltd for the F.Y.2010-11 & 2008-09.
The above explanation and the supporting documents were verified. In order to get the confirmation a letter was issued to M/s.Avanti Leathers Limited requiring them to furnish the Ledger a/c of the assessee in their books. In response to the letter M/s.Avanti Leathers Limited has furnished the Ledger of Mr.Vijaykumar Koganti in their books. Further, the Annual Report of M/s.Avanti Leathers Limited for the F.Y.2009-10 to 2011-12 were obtained and verified. On verification of the above, it was found that during the F.Y.2011- 12, the assessee has been allotted 20,81,467 shares to the Value of Rs.2,08,14,670/- in the company and the sources are from the Current a/c balance held by him from the F.Y.2008-09 (Current a/c balance as on 31/3/2009 was Rs.2,40,64,672/-) onwards. Further the Preference Share Capital to the value of Rs.1,79,00,000/- of the assessee has been converted in to Equity Share Capital during the F.Y.2011-12. In order to show the increased investment in the Avanti Leathers Limited, (which was omitted to shown in the earlier years), the assessee has shown the corresponding increase in Capital a/c in this year.
In view of the above, the increase in Capital a/c is found to be properly explained.”
3. The ld.PCIT was of the view that the aforesaid assessment order dated 23.12.2016 passed by the AO u/s 143(3) of the 1961 Act was erroneous in so far as it is prejudicial to the interest of the Revenue which led ld.PCIT to issue notice dated 13.11.2018 u/s.263 asking assessee to submit its explanations, by stating in the said notice as under:-
“The assessee is an Individual assessed with the Income Tax Officer , Non Corporate Ward- 2(2), Chennai. The assessee had filed his Return of Income for Assessment Year 2014-15 on 31.10.2015 declaring a total income of ` 25,83,290/-. The case was selected for scrutiny by CASS for limited purposes for examination of LTCG and Large Investments. The assessee had also incorrectly claimed opening balance of ` 15,01,144/- for the F.Y. 2013- 14 as against ` 26,25,504/- in FY 2012-13. A notice u/s 143(2) dated 27.07.2016 was issued on the assessee and assessment was completed u/s. 143(3) of the I.T.Act, 1961 on 23.12.2016 assessing the total taxable capital gain at ` 25,83,290/- accepting the returned income.
2. On perusal of the Assessment Record for the Assessment Year 2014-15, the following facts have emerged:-
2.1 A scrutiny of the return filed by the assessee for the AY 2014-15 reveals that the assessee had admitted a capital of Rs.5,26,72,289/- and for the AY 2013-14 has admitted Rs.2,23,18,395/- with a difference of Rs.302,91,894/-.
2.2 It is also seen in the return of income that investment for the AY 2014-15 is shown as Rs.5,26,72,289/- and for the AY 2013-14 Rs.2,23,18,395/-. The assessee had brought in an additional capital of Rs.2,84,10,229/-. The total increase in capital amounts to Rs.8,51,83,443/-.
2.3 It is seen that the assessee has many preference shares which were converted to capital during the AYs 2009-10 to 2011-12.
2.4 The assessee is a Managing Director in M/s. Avanti Leathers Limited which is listed at Hyderabad Stock Exchange. Since the assessee is a Managing Director in the listed company in which the public are also interested the assessee's representative's claim that the book adjustment is done by them for the AY 2014-15 is not acceptable. The entire amount of Rs.85183443/- stands unexplained camouflaged under a coloured transaction.
An overall examination of the records reveals that no proper examination/ verification was done by the Assessing Officer while passing the order u/s.143(3) of the IT Act on the above issue and AO has accepted as it is the above submissions of the assessee without application of mind and passed the asst. order accepting the total income returned by the assessee,
I am of the view that the order passed u/s.143(3) on 23.12.2016, without considering the above issues, is erroneous in so far as it is prejudicial to the interest of the Revenue within the meaning of Section 263 of the I.T. Act, 1961. Therefore, the order of the assessment u/s.143(3) passed by the Assessing Officer, Non-Corporate Ward-2(2), Chennai is proposed to be taken up u/s.263 of the IT. Act, 1961 to pass appropriate revision orders, after giving opportunity to the assessee.”
3.2. The assessee in response to aforesaid notice issued by learned PCIT u/s 263 of the 1961 Act, filed detailed reply (vide letter dated 02.01.2019 which is placed in file) as to all the contentions raised by ld.PCIT as to increase in capital and investments in its Balance Sheet as at 31.03.2014 as also transfer of credit balance standing in the name of Standard Chartered Capital Markets and transfer of credit balance in Vento Car to capital account, thus explaining all the differences in the books of accounts as were required to be explained by learned PCIT in his notice issued u/s 263 of the 1961 Act. The detailed reply was submitted by the assessee on 02.01.2019 which is reproduced as under:
“I wish to submit here below matters raised in notice u/s 263 in respect of which assessment is stated to have been made erroneously by the learned assessing officer(AO):
Matters raised: 1) The aggregate of increase in capital a/c and investment a/c is Rs.8,51,83,443 as mentioned in captioned notice. The break up for the increase of Rs.8,51,83,443 as mentioned in captioned notice is given below:
Rs. Rs. Rs. Rs. 1.1 Net increase in capital a/c 3,02,91,894 1.2 Net increase in investment a/c 3,02,91,894 1.3 Additional capital Introduced 2,84,10,229 ---------------- 8,89,94,017 ----------------
The increase in capital of Rs.8,51,83,443 stands unexplained camouflaged under a coloured transaction as mentioned in captioned notice.
2) The opening balance in the a/c of stock of shares has been brought forward less by Rs.11,24,360.
3) Reply in seriatim to matters raised in captioned notice:
I submit here below reply in seriatim for matters raised in captioned notice to establish that there is neither erroneous assessment nor the assessment is prejudicial to revenue:
3.1 Reply to Para 1.1
Net increase in capital a/c
Rs. Capital a/c balance as on 01.04.2013 2,23,80,378 Capital a/c balance as on 31.03.2014 5,26,72,289 ---------------- Net Increase in capital a/c 3,02,91,911 ----------------
Copies of capital a/c, balance sheet and Profit and loss a/c are enclosed in Annexure-1
Analyzing the sum of Rs.3,02,91,911 under para 1.1,1 would like to submit that the major component is Rs. 2,84,10,229 which alone needs explanation and the other components appearing in capital a/c are self explanatory and need no explanation. Regarding the sum of Rs.2,84,10,229 I give here below the breakup for the same as appearing in capital a/c:
Rs. 3.1.1 Investment in Avanthi Leathers Limited 2,77,87,470 3.1.2 Transfer of credit balance in the a/c of 4,26,759 Standard Chartered Capital Market 3.1.3 Transfer of credit balance in the a/c of 1,96,000 Vento car (old)
Total 2,84,10,229 -----------------
3.1.1) Increase in investment in Avanthi Leathers Limited Rs.2,77,87,470:
This increase in capital represents corresponding increase in investment in equity shares in Avanthi Leathers Limited. This investment is a part of total investment of Rs.4,23,93,670 in Avanthi Leathers Limited as disclosed in the balance sheet of the assessee as on 31.03.2014.The total investment of Rs. 4,23,93,670 is corroborated by annual return in Form 20B for F Y 2013- 14 filed with Registrar of Companies by M/s Avanthi Leathers Limited. The copy of above annual return for the financial year 2013-14 is enclosed in Annexure-2 where in the company has confirmed that the assessee is a share holder in the company to the extent of Rs.4,23,93,670.
Year wise allotment of above equity shares of Rs.4,23,93,670 is given below:
Rs. 1 Before 1,4.2002 36,79,000 2 12.02.2011-Conversion of preference share 1,79,00,000 capital into equity shares 3 12.02.2011-Conversion of credit balance in current a/c of 2,08,14,670 assessee into equity shares
Total equity shares of assessee as on 31.03.2014 as per books 4,23,93,670 of a/c of Avanthi Leathers Limited
For s.no.1 for Rs. 36,79,000, the origin goes back to financial year 2002-03. For s.no.2 for Rs.1,79,00,000 copy of return of allotment in Form 2 filed with Registrar of Companies is enclosed in Annexure-3.
The origin of preference share capital goes back to financial year 2002-03. Copy of annual report of M/s Avanthi Leathers Limited for financial year 2002-03 is enclosed as proof for the same in Annexure-4
For s.no.3 for Rs.2,08,14,670, copy of return of allotment in Form 2 filed with Registrar of Companies is enclosed in Annexure-5.
The origin of current a/c credit balance in the books of M/s.Avanthi Leathers Limited goes back to financial year 2007-08. Copies of assessee's a/c in the books of M/s Avanthi Leathers Limited for financial year 2008-09 and 2010-11 are enclosed as proof for the same in Annexure-6.
It may be observed that the origin of entire investment of equity shares of Rs.4,23,93,670 in M/s.Avanthi Leathers Limited, goes back to period ranging from financial year 2001-02 to 2007- 08. However, the assessee has not accounted the above investment in the same year in which the shares were allotted to him. He had accounted a sum of Rs.1,46,06,200 only in his books as on 31.03.2013. In order to bring the balance in investment a/c in line with that in the books, of Avanthi Leathers Limited, the assessee passed only rectification entry for Rs.2,77,87,470 and thus brought the balance to Rs.4,23,93,670 in his books too. It is submitted that the addition of Rs.2,77,87,470 in investment a/c in the financial year 2013-14 represents only rectification whereas transaction of actual investment took place before financial year 2007-08. The principle of law is that assessment is to to be made for the assessment year in which transaction takes place and not for the assessment year in which rectification entry is passed in books of accounts. Considering the above principle of law, the sum of Rs.2,77,87,470, being rectification entry in financial year 2013-14 ought not to be treated as unexplained investment for financial year 2013-14.
Moreover the above explanation for investment in Avanthi Leathers Limited was submitted exhaustively before learned AO too during assessment proceedings u/s.143(3) and the same was accepted by him. Copy of assessment order under sec 143(3) is enclosed in Annexure-7 for your kind perusal. I draw your kind attention to para no.4 in page no.2 and 3 of enclosed assessment order wherein the learned AO has dealt with this matter elaborately. In view of the above facts, I submit that the assessment is not erroneous and therefore reopening u/s.263 is not justified.
3.1.2) Transfer of credit balance in the a/c of the Standard Chartered Capital Market - Rs.4,26,759:
The assessee was carrying on share trading, the income of which has been considered by assessee in his return of income also. Standard Chartered Capital Market were the share trading agents for the assessee. The credit balance in their a/cs in the books of assessee relating to earlier years was transferred to capital account in the financial year 2013-14. Here also, transaction does not relate to financial year 2013-14 and therefore does not attract assessment for assessment year 2014-15.
3.1.3) Transfer of credit balance in the Vento car a/c - Rs.1,96,000:
One Vento car of the assessee had been sold in earlier year and the credit balance of Rs.1,96,000 lying in that a/c has been transferred to capital a/c during the financial year 2013- 14. Here also, the transaction does not relate to financial year 2013-14 and does not attract assessment for assessment year 2014-15.
3.2) Reply to para 1.2
Increase in investment a/c:
Investment represents investment in Avanthi Leathers Limited, a company registered with Hyderabad Stock Exchange. The opening and closing balances of investment a/c shown in notice are not correct. I enclose copy of investment a/c for your kind perusal in Annexure-8. Based on enclosed investment a/c, I give here below the details of investment a/c:
Rs. Opening balance as on 01.04.2013 1,46,06,200 Investment debited in F Y 2013-14 by credit to capital 2.77.87.470 a/c Closing balance as on 31.03.2014 4,23,93,670
The increase in investment a/c of Rs.2,77,87,470 is represented by corresponding credit in capital a/c for similar amount. Please refer to para 3.1.1 for credit in capital a/c. The increase of Rs.2,77,87,470 in investment a/c and corresponding increase of similar amount in capital a/c are not two different additions to capital as conceived in the notice. Therefore the above increase cannot be considered twice while arriving at increase in capital i.e one in the name of increase in capital and another in the name of increase in investment. In view of the above fact, increase in investment under para 1.2 is a duplication and is not to be considered as addition to capital a/c.
3.3) Reply to para 1.3 Additional capital Introduced:
It may be observed from capital a/c that one of the components of the increase in capital of Rs.3,02,91,911 is Rs.2,84,10,229 where as the aforesaid sum of Rs.2,84,10,229 has been stated in the notice, as increase in capital in addition to increase in capital of Rs.3,02,91,911 mentioned in para no. 1.1. Thus the sum of Rs.2,84,10,229 has been taken twice while arriving at the figure of increase in capital. Therefore the sum at para 1.3 is a duplication and not to be considered as addition to capital at all.
4. Reply to para no.2: Reduction in opening stock of shares a/c to the tune of Rs.11,24,360 while bringing forward opening balance:
Rs. Closing stock of shares as on 31.03.2013 26,25,504 Opening Stock of shares brought forward on 15,01,144 01.04.2013 Reduction in opening stock 11,24,360
By showing lesser figure for opening stock in profit and loss a/c for financial year 2013-14, either the profit goes up or loss comes down which is not prejudicial to revenue. Though there is justification for reduction in opening stock, the matter is not taken up now due to the fact that the reduction is not prejudicial to revenue and rather favorable to department. In view of the above facts the assessee prays for following reliefs and to render justice:
Rs. 1 Deletion of the matter of increase in capital stated in notice 8,51,83,443 2 Deletion of the matter of reduction in opening stock of shares while bringing 11,24,360 forward opening balance”
4. The ld.PCIT was not satisfied with the aforesaid reply filed by the assessee and was of the view that the AO has not made proper inquiry and there is complete lack of application of mind on the part of the AO.
The assessment order dated 23.12.2016 passed by the AO u/s 143(3) of the 1961 Act was set aside by learned PCIT by holding the same to be erroneous in so far as prejudicial to the interest of the Revenue, vide revisionary order dated 03.01.2019 passed by learned PCIT u/s 263 of the 1961 Act.
The assessee is aggrieved by invocation of provision of Sec.263 by learned PCIT and has filed this appeal with the tribunal.
The learned counsel for the assessee at the outset submitted that the assessee had died and the wife of the assessee was impleaded as legal heir of the assessee. It was submitted that she was not aware that the revisionary order passed by ld.PCIT u/s.263 of the 1961 Act is challengeable before tribunal , but later she was advised that the revisionary order passed by learned PCIT u/s 263 is required to be challenged before the tribunal by filing an appeal u/s 253(1) of the 1961 Act.It is explained by learned counsel for the assessee that the assessee has filed this appeal late with the tribunal by 84 days beyond the time stipulated u/s 253(3) of the 1961 Act. It is submitted that an affidavit is filed by wife of the assessee Mrs.Brundavani Koganti, who is legal heir of the assessee explaining dealy in filing this appeal late by 84 days and requesting for condonation of delay of 84 days in filing this appeal late with the tribunal beyond statutory time provided u/s 253(3) of the 1961 Act for filing this appeal. The learned CIT-DR fairly did not raise any serious objection to the condonation of delay.
After hearing both the parties and considering the entire material on record, we are of the considered view that this delay in filing of the appeal late by 84 days with tribunal need to be condoned and the appeal filed by the assessee with the tribunal is to be admitted in the interest of substantial justice as the assessee has shown bonafide and sufficient cause for filing this appeal late by 84 days. The assessee has already died and his wife is now being impleaded as legal heirs. As per her affidavit dated 27.05.2019 ( placed in file) filed with tribunal, she was not aware that the revisionary order passed by learned PCIT u/s 263 is to be challenged by filing an appeal with tribunal u/s 253(1) of the 1961 Act but as later when she was advised by her counsel , she took steps to file this appeal. The delay in filing this appeal late with tribunal beyond time stipulated u/s 253(3) of the 1961 Act is only of 84 days and appears to be not willful. When technicalities are pitted against substantial justice, the Courts will lean towards substantial justice unless malafide is shown to be writ large or there is a willful delay on the part of the tax-payer. The tax- payer will not normally gain by filing appeal late with the courts rather non admitting of the appeal due to delay in filing the appeal with Courts will throw out litigant at threshold from the doors of justice , which shall never be the endeavour of the Courts under the normal circumstances. At best when the delay is condoned, the appeal of litigant will be decided on merits in accordance with law and none of the parties can be said to be prejudiced if the appeal is decided on merits in accordance with law. Thus, we accept her explanation as stated in her affidavit filed with tribunal and admit this appeal in the interest of substantial justice by condoning the delay of 84 days in filing this appeal late with the tribunal beyond the time stipulated u/s 253(3) of the 1961 Act. We order accordingly.
On merits, the Ld.Counsel for the assessee submitted that the case of the assessee was selected for framing limited scrutiny by Revenue under CASS and the assessee has duly explained before the AO all the queries raised by the AO. It was submitted that the AO had made proper inquiries and verifications before framing assessment vide orders dated 23.12.2016 passed u/s 143(3) of the 1961 Act. It was stated that even inquiries were made with the said company namely M/s.Avanti Leathers Ltd. in which the assessee had made investments. The learned counsel for the assessee would rely on the decision of Hon’ble Delhi High Court in the case of CIT v.
Sunbeam Auto Limited reported in (2011) 332 ITR 167(Delhi) and submitted that merely because inadequate inquiries were made by the AO as contemplated by learned PCIT will not give power to learned PCIT to invoke revisionary provisions as are enshrined in Section 263 of the 1961 Act.
8.2 The ld.CIT-DR, on the other hand submitted that the assessee has not properly explained before the AO as to increase in capital and investments and other differences as outlined by learned PCIT in his revisionary order and hence revisionary order dated 03.01.2019 passed by learned PCIT u/s.263 is liable to be upheld.
We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee filed its return of income for impugned ay: 2014-15 with Revenue on 31.10.2015. The case of the assessee was selected for framing scrutiny assessment u/s 143(3) of the 1961 Act by CASS for farming limited scrutiny. The reasons for selection of limited scrutiny were two fold namely:
i. Substantial increase in capital in a year ii. Sale consideration of the property in ITR is less than the sale consideration of property reported in AIR.
On perusal of the assessment order dated 23.12.2016 passed by the AO u/s 143(3) of the 1961 Act, we are of the considered view that the AO did made proper inquiries and verifications before passing the said assessment order. The learned PCIT invoked revisionary powers u/s 263 of the 1961 Act mainly because there was substantial increase in capital and investments reflected by assessee in his Balance Sheet as compared to preceding year. In our considered view , the assessee has duly explained all the increase in the capital as well investments during the course of assessment proceedings conducted by the AO. These investments were all made in earlier years and were brought in the books of accounts of the assessee for the impugned assessment year as the same were not reflected by assessee in his balance sheet of the earlier years. The assessee has duly explained the sources of such investments made in the earlier years before the AO which has been duly recorded in Para No.4 of the Assessment Order passed by the AO. The AO also made inquiries with M/s.Avanti Leathers Ltd. which confirmed the transactions and balances and on such inquiries, the AO had found that the same was in order. The relevant portion of assessment order is reproduced in para 2.2 of this order. Thus, it is only after making necessary verifications and inquiries, the AO framed assessment order. The learned PCIT did not invoke provisions of Section 263 of the 1961 Act wrt to the second issue for which case was selected for limited scrutiny viz. sale consideration of property in ITR being less than sale consideration of property reported in AIR and hence we have not dwelt upon the same. Coming back , in any case, these are the investments which were made by the assessee in the earlier years and the Revenue was always empowered to invoke provisions of Section 148 of the 1961 Act by reopening the concluded assessment for those years in which said investments were made in case Revenue was of the view that income has escaped assessment for those years, provided other ingredients of reopening were satisfied. It is fundamental that every assessment year is a self contained year and correct income of the correct assessment year is to be brought to tax in the hands of the correct assessee. The income earned , if any by the assessee cannot be brought to tax in the year under consideration as is sought to be done by learned PCIT. After considering material on record, we are of the view that proper explanations were furnished by the assessee at the time of assessment as well in response to notice u/s 263 of the 1961 Act issued by learned PCIT. In our considered view, the AO accepted the contentions of the assessee only after being satisfied pursuant to detailed inquiries and verifications. The AO even made inquiries with Avanti Leathers Limited who confirmed the transactions with the assessee. The detailed reply dated 02.01.2019 was also filed by the assessee before learned PCIT as is reproduced by us in para 3.2 of this order, which also clearly indicates that proper replies and explanations were filed by the assessee. The learned PCIT has not brought on record anything incriminating which warrant invocation of extra-ordinary revisionary powers as are enshrined u/s 263 of the 1961 Act. On the other hand the learned PCIT is seeking to tax both sides of entries in the Balance Sheet viz. capital introduced on the liability side as well corresponding investments reflected out of said capital introduced which is incompressible and further all these capital introduced and investments made were of the earlier years but the same were not reflected in the Balance Sheet for those years. Merely because the item of investments of earlier years were not added in the Balance Sheet of that years will not give rise to its taxability, unless it is shown that it is out of undisclosed sources . The assessee has explained its sources before the AO as well learned PCIT. There is no allegation as to the investments being made out of undisclosed or undeclared sources. Thus, in our considered view no case is made out by learned PCIT for invoking extra-ordinary revisionary powers as are enshrined in the provisions of Section 263 of the 1961 Act as the assessment order passed by the AO cannot be termed as erroneous so far as prejudicial to the interest of Revenue. In this case, proper inquiries and verifications had been made by the AO and after such inquiries and verifications made, the AO accepted the contentions of the assessee and in our considered view . the revisionary order dated 03.01.2019 passed by ld.PCIT u/s 263 of the 1961 Act is not sustainable in the eyes of law as the assessment order dated 23.12.2016 passed by the AO u/s 143(3) cannot be termed as erroneous in so far as prejudicial to the interest of the Revenue. In these circumstances, we allow the appeal of the assessee and quash the revisionary order passed by ld.PCIT. The assessee succeeds in its appeal. We order accordingly.
In the result, the appeal filed by the assessee in 2014-15 is allowed.
Order pronounced on the 23rd October, 2019, in Chennai.