IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER Assessment year : 2014-15 Assessment year : 2014-15 Assessment year : 2014-15 Assessment year : 2014-15 Assessment year : 2014-15 Assessment year : 2014-15 Assessee by : Shri Sanket Joshi Department by : Shri Amol Khairnar, CIT-DR Date of hearing : 08-01-2026 Date of pronouncement : 16-01-2026

O R D E R

PER R.K. PANDA, V.P:

This appeal filed by the assessee is directed against the order dated

18.03.2020 passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Ld. PCIT-1, Nashik relating to assessment year 2014-15.

2. Although a number of grounds have been raised by the assessee, however, these all relate to the validity of 263 proceedings initiated by the Ld. PCIT.

3. Facts of the case, in brief, are that the assesse is a company engaged in the business of running hotels at Nashik and Goa. It filed its return of income for the assessment year 2014-15 on 04.02.2016 declaring total loss of Rs.91,83,541/-. The case of the assessee was reopened u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and the assessee in response to the notice issued u/s 148 of the Act filed the return of income on 11.02.2017 declaring total loss of Rs.56,21,416/-. The Assessing Officer completed the assessment on

30.12.2017 accepting the returned loss of Rs.56,21,416/-.

4. Subsequently the Ld. PCIT observed that the assessment proceedings in this case were completed without making proper enquiries and verifications which was expected on the facts and in the circumstances of the case. He noted that the assessee in response to the questionnaire issued by the Assessing Officer filed a detailed submission and audited financial statements. As per Note 4 of the balance sheet, the assessee has three hotels namely ‘Jupiter’, ‘Indraprashtha’ and ‘The Beach Goa’ and the liability against ‘The Beach Goa’ has been shown at Rs.16,74,59,962/- since last many years. The balancing figure of that liability has been shown under tangible asset in the asset side of the balance sheet for all the above 3 hotels combined. He observed from Note.18, 20, 22 & 23 of the P&L account that ‘Income and expenditure statement, separated hotelwise’ has been shown and there was ‘nil’ income shown against ‘The Beach Goa’. Hence, he was of the opinion that the hotel ‘The Beach Goa’ has been closed but the same is not discussed in notes to account of balance sheet. In view of the above and in view of the various other issues as per para 2 of his order, the Ld. PCIT was of the opinion that the order passed by the Assessing Officer is prima facie erroneous and prejudicial to the interests of the Revenue since the same was not only without proper enquiry but also does not comply the relevant provisions of the Act properly. He, therefore, issued a show cause notice u/s 263 of the Act on 03.03.2020 asking the assessee to explain as to why the order passed by the Assessing Officer should not be set aside. Rejecting the various explanations given by the assessee and observing that the Assessing Officer has passed the order without proper verification and enquiries which the Assessing Officer was expected to do, the Ld. PCIT set aside the order passed by the Assessing Officer to his file for deciding the issue afresh and after giving due opportunity of being heard to the assessee.

5. Aggrieved with such order of the Ld. PCIT, the assessee is in appeal before the Tribunal.

6. The Ld. Counsel for the assessee at the outset filed a copy of the proposal sent by the Assessing Officer to the Ld. PCIT for review of the order u/s 263 of the Act. He submitted that the Assessing Officer vide letter dated 23.08.2019 has requested the PCIT-1, Nashik asking him to invoke the provisions of section 263 of the Act on the ground that the order passed by the Assessing Officer for assessment year 2014-15 is erroneous and prejudicial t