JUDGMENT

M. S. Sonak, J. - Heard Ms. Amira Razaq for the Appellant and Mr. Salil Kapoor who appears along with Ms. Priyanka Kamat for the Respondent.

2. This Appeal was admitted on 15.11.2016 on the following substantial questions of law:-

(I) Whether the learned Income Tax Appellate Tribunal (ITAT) is justified in law in allowing the appeal filed by the assessee when the twin conditions for invoking the power under Section 263 had been fully satisfied, there being failure on the part of Assessing Officer in not considering the issue of legality of expenses/expenditure allowable as deduction or whether there was at all any business income after investigating the facts ?

(II) Whether in facts and circumstances of the case tribunal was justified in law, in passing impugned order thereby holding that order passed by the Assessing Officer is not erroneous and prejudicial to the interest of the revenue and accordingly was justified to quash the order passed under Section 263 of the I.T. Act ?

3. The assessee filed return of income in the Assessment Year 2009- 10 declaring a total loss of Rs.1,78,57,950/-. The case was selected for scrutiny under CASS and accordingly, notices were issued to