1 orders · Page 1 of 1
The Tribunal was correct in allowing the assessee's appeal and quashing the order passed by the PCIT under Section 263. The Tribunal thoroughly examined the record and found that the AO had issued six notices under Section 142(1) along with questionnaires, to which the assessee provided extensive replies (approximately 300 pages) and documentary evidence. The AO discussed each reason for scrutiny, recorded findings based on the evidence, and concluded that no adverse inference could be drawn. The Tribunal itself reviewed the issues of dividend income exemption and unsecured loans, finding that all material was produced before the AO and verified. Therefore, the Tribunal's conclusion that the PCIT's reasons, based on Explanation 2 to Section 263 regarding the AO's failure to make inquiries or verification, were without basis and contrary to the record, was sound. The Tribunal found the PCIT's order to be without jurisdiction. The High Court found no perversity in the Tribunal's findings and no substantial question of law arose.
