SMT. NISHABEN HARENBHAI DOSHI,RAJKOT vs. THE PR. CIT-1, RAJKOT, RAJKOT

PER SIDDHARTHA NAUTIYAL, JM:

“1. The Learned Principal Commissioner of Income Tax erred in holding that the order of the Assessing Officer was erroneous and prejudicial to the interest of revenue. The order of the assessment was neither erroneous nor prejudicial to the interest of revenue.

Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 2 - 2. The Learned Principal Commissioner of Income tax erred in directing the Assessing Officer claim of the Appellant as per law. The Principal Commissioner of Income tax has not pointed out or determined any error in the order of the Assessing Officer.

3. Without prejudice ground no. 1 and 2, the claim of the Appellant is as per the Law prevalent in the year of the determination of the loss.”

“5. In the present proceedings also the assessee has reiterated the same version as earlier before the AO in the assessment proceedings. The assessee has also submitted that the provisions related to carry forward of stipulation losses has been amended w.e.f. 01.04.2006. Since the claim of set off of speculation loss was pertaining to earlier period therefore the AO is directed to factually verify the said claim of losses from the assessment records of A.Y. 2004-05 and then set off of loss against the speculation profit of the subsequent years in view of the amendment took place w.e.f. 01.04.2006. In this regard prima facie the case of the assessee appears to be in order but the AO has not factually verified the claim as per the provisions of law which needs to be done now.

Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 3 - Therefore, due to lack of enquiry and investigation in the matter besides in application of law, the assessment completed by the AO needs to be set-aside for fresh assessment.”

Since the claim of set off of speculation loss was pertaining to earlier period, therefore, the Assessing Officer is directed to factually verify the said claim of losses from the assessment records of A.Y. 2004-05……

Smt. Nisha Haren Doshi vs. PCIT Asst.Year –2012-13 - 4 - impugned revisional order deserved to be set aside. In the case of Shergil Harjit Vs. PCIT (ITAT Pune) ITAT Pune held that initiation of revisionary proceeding under section 263 of the Income Tax Act on a fishing and roving enquiry in the matter without bringing on record any material or evidence is liable to be quashed. In the case of Dhanraj Chhipa Vs PCIT (ITAT Jodhpur) in ITA Number 83/Jodh/2022, ITAT held that PCIT cannot initiate 263 proceedings with a view to start fishing & roving enquiries. Therefore, we observe that on a perusal of the 263 order, Ld. PCIT has set- aside the assessment order with a direction to the Assessing Officer to verify the claim of the assessee. Further, PCIT has also observed that “prima facie the case of the assessee appears to be in order”. Therefore, looking into the contents of the 263 order, in our considered view, PCIT is not permitted to initiate 263 proceedings only to carry out further verification, without pointing out to any infirmity in the order passed by the Ld. Assessing Officer. This is more so when the PCIT has also observed that prima facie the case of the assessee appears to be in order. In our view, 263 proceedings cannot be initiated only with a direction / view to carry out further verification of assessment records, without pointing out to any specific infirmity in the assessment order. Accordingly, looking into the facts of the case, the order passed by PCIT is hereby directed to be set-aside.