DHWANI FINSERVE PVT LTD,RAJKOT vs. PRINCIPAL COMMISSONER OF INCOME TAX-1, RAJKOT

Therefore, the Ld.counsel for the assessee submitted that no doubt that the Ld.PCIT made comments on other documents which were not submitted by the assessee before the AO and neither the AO has asked from the assessee during the assessment proceedings. However, the Ld.PCIT, atleast, should make comment on the documents submitted during the course of proceedings u/s263 of the Act by the assessee before him. Therefore, the Ld.counsel for the assessee prayed before the Bench that the matter may be remanded back to the file of Ld.PCIT to examine the relevant documents and evidences submitted by the assessee during the revisionary proceedings before him and should ensure the comment on these documents and if there is any patent error, the Ld.PCIT should let it know to the AO to revise the assessment order. Since not even a single comment has been made by the Ld.PCIT on the documents submitted Dhwani Finserve Pvt.Ltd. vs. Pr.CIT- (AY : 2017-18) before him, during the revisionary proceedings by the assessee, therefore, the matter may be remanded back to the file of ld.PCIT to give findings on the documents submitted by the assessee during revisionary proceedings u/s.263 of the Act.

On the other hand, the Ld.DR appeared for the revenue submitted that in para No.4.2 of the order of the ld.PCIT, the Ld.PCIT has pointed out that during the course of assessment proceedings neither the assessee has submitted some required documents in support of its claim, nor the AO is called for documents, such as, copy of agreement (b) Terms & Conditions, (c) Copies of correspondences in respect of the transactions (Receipt/payments/ reminder etc.), (d) Person who was contacted, how known etc., (e) Due diligence done, (f) copy of application form if any, (g) Security mortgaged against loan, (h) other supporting evidences. Therefore, as per ld.CIT-DR, these documents were also utmost necessary to be submitted by the assessee before the AO to prove its claim. Since neither the assessee submitted these documents before the AO, nor the Assessing Officer has asked the assessee to submit these documents during the course of assessment proceedings to verify the claim of the assessee, therefore, the Ld.PCIT wanted that these documents are essential to be examined by the AO, therefore, the order passed by the AO was erroneous and prejudicial to the interests of the Revenue. The Ld.CIT-DR submitted that these are additional documents required by the Ld.PCIT, which were to be submitted by the assessee during the course of assessment proceedings and the AO should also asked the assessee to submit these documents for verification of the genuineness of the claim. Without verification of the documents highlighted by the Ld.PCIT, as per his order contained at paragraph number 4.2, the AO cannot reach at a conclusion Dhwani Finserve Pvt.Ltd. vs. Pr.CIT- (AY : 2017-18) to verify the claim of the assessee. Therefore, on these additional documents which were asked by the Ld.PCIT in para 4.2 of his order, which also vital important to be submitted by the assessee during the course of assessment proceedings, however, the AO failed to ask the documents during assessment proceedings. However, the Ld.DR did not have objection, if the matter is remitted back to the file of Ld.PCIT to examine the documents already submitted by assessee, before Ld.PCIT.

We have heard both the sides and perused the material available on record as well as the orders of the authorities below. Section 263 of the Act, enables the Commissioner to have a look at the orders or proceedings of the lower authorities and to effect a correction, if so needed, particularly if the order or proceeding is erroneous and prejudicial to the interest of the Revenue. This provision occurs in a taxing statute whose object is to raise revenue for the State and an enabling provision conferring jurisdiction on the Commissioner to revise the order of the lower authorities in certain circumstances particularly when it is erroneous and prejudicial subject to certain exceptions. One can at once realize that the provision is intended to plug leakage to the Revenue by an erroneous order passed by the lower authorities, whether by mistake or in ignorance or even by design. It makes little difference as to for what reasons the order is passed by the lower authority, so long as it becomes erroneous and prejudicial to the interest of the Revenue. Ultimately, the object is to ensure that leakage of the revenue is plugged and some tax due to the State not reaching the coffers of the State is prevented by exercise of revisional jurisdiction of the Commissioner [CIT v. Infosys Technologies Ltd. 2012] 17 taxmann.com 203/205 Taxman 98 (Kar.)]In the instant case, we find that the Ld.PCIT in Dhwani Finserve Pvt.Ltd. vs. Pr.CIT- (AY : 2017-18) his order vide paragraph No.4.2 (reproduced above) has stated that without examining the genuineness of the transactions, the AO ought to have examined the documents which were listed in paragraph No.4.2 of the Ld.PCIT’s order and these documents are essential and neither the AO has asked the assessee during the course of assessment proceedings to submit these documents, nor the assessee has submitted these essential documents before AO and, therefore, on this count also, the order passed by the AO is erroneous and prejudicial to the interests of the revenue.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 11 / 04 /2025 at Rajkot.