The court emphasized that the jurisdiction under Section 263 cannot be exercised unless the order of the assessing officer is found clearly erroneous and prejudicial to revenue, requiring objective evidence.

आदेश/ORDER

PER SHRI MAKARAND V. MAHADEOKAR, AM:

This appeal is filed by the Assessee against the order datedc28/03/2024 passed by the Principal Commissioner of Income Tax, Ahmedabad [hereinafter referred to as “the Pr.CIT(A)” in short] arising out of the assessment order dated 27/03/20223 passed by the Assessing Officer (AO) under section 147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relevant to the Assessment Year (AY) 2014-15.

Facts of the case:

2. The assessee-company filed its return of income for the A.Y. 2014-15 on 05-09-2014 declaring the total income of Rs.11,45,820/-. On the basis of information available with the Department due to the search u/s.132 of the Act conducted on 12-04-2019 in case of Sanjay Govindram Agrawal (also known as Sanjay Tibrewal), the case of assessee was reopened by issuing notice u/s.148 of the Act and after recording reasons for reopening the assessment. During the course of reassessment proceedings, the AO issued notices u/s.142(1) of the Act on 03-09-2021, 24-11-2021, 08-12-2021 and 14-12-2021 asking the assessee to provide required details. The assessee also replied to all these notices.

2.1. The National Faceless Assessment Centre also sent one letter to jurisdictional AO requesting to provide all the details/documents seized during the course of search in case of Sanjay Govindram Agrawal indicating involvement of the assessee.

2.2. Considering the information and examining the documents provided by the assessee the NFAC completed the assessment u/s.147 of the Act read with section 144B of the Act.

2.3. The PCIT observed that the case of the assessee was reopened on the basis of information of accommodation entries totalling to Rs.1,36,02,120/- from the entry operator Sanjay Govindram Agrawal, but concluded that the AO has not made any addition despite availability of specific information. He further concluded that there is underassessment of the income and issued notice u/s.263 of the Act for revision of the order passed u/s.147 r.w.s 144B of the Act.

2.4. The assessee in reply to the notice of Ld.Pr.CIT contended that the order of the AO is neither erroneous nor prejudicial to the interest of the revenue and hence the exercise of jurisdiction u/s 263 is barred.

2.5. The relevant part of the reply of the assessee is reproduced herewith for the sake of clarity:

Submission

“1. Your honour have proposed an addition of Rs. 1,36,02,120 being alleged transactions with Sanjay Tibrewal (i.e. Sanjay Govindram Agrawal) or Alpaben Anilkumar Shah, Jignaben Samirbhai Shah, Harish Purohit, Hasmukh Jameshkumar Purohit, Lucky Bajoria, Niranjan Nareshbhai Makwana, Sandip Nareshbhai Makwana, Vivekkumar Kamalkumar Agrawal or any employee or ex-employee of Sanjay Tibrewal.

2. We invite your honours kind attention to our earlier submissions as well as our objection to reasons recorded, in which it was repeatedly submitted to your honour that we have not carried out any such alleged transactions.

3. Even at the stage of final show cause notice, your honour has just repeated reasons recorded and proposed an addition. Your honour has not made any independent inquiry in the matter to reach to a conclusion.

4. Your honour has not supplied us

a. How the assessee is in any way connected with Sanjay Tibrewal and his group. b. Nowhere mentioned that Sanjay Tibrewal and his group has given name of assessee in any statement recorded by department.

b. How assessee is linked with Sanjay Tibrewal in his group.

c. It is not mentioned anywhere in entire show cause notice.

i. Date of transactions.

ii. Mode of transactions.

iii. Amounts of transactions.

iv. Nature of transactions.

v. The persons/ firms with whom transactions were m