IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “A” BENCH: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER &

SHRI MANISH AGARWAL, ACCOUNTANT MEMBER [Assessment Year : 2020-21]

ORDER PER MANISH AGARWAL, AM :

The present appeal is filed by assessee against the order dated

28.03.2025 passed by Ld. Commissioner of Income Tax (A), Meerut [“Ld. CIT(A)”] u/s 263 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 27.03.2023 passed u/s 143(3) of the Act pertaining to Assessment Year 2020-21.

2. Brief facts of the case are that the assessee is a company, engaged in the business of manufacturing and trading in leather and non-leather footwear, accessories and shoe components etc. through its retail and wholesale chain of dealers/distributors. The assessee company filed its return of income on 10.02.2021, declaring total income of INR 20,14,05,280/-. The case of the assessee company was selected for complete scrutiny under CASS and the assessment order was passed u/s 143(3) r.w.s 144B of the Act on 27.03.2023 at INR 40,38,41,399/- by making additions of INR 17 crores on account of disallowance out of Royalty, INR 3,02,419/- u/s 14A of the Act and INR 3,21,33,700/- as Long Term Capital Gain (“LTCG”). Thereafter, Ld. PCIT had issued show cause notice u/s 263 of the Act dated 05.03.2025 wherein PCIT observed that the assessee has made deposits as well as huge Long and short terms financial obligations and the AO has failed to examine the details with regard to the interest paid on such loans vis-a-vis its business expediency and the justification of the loans taken. The assessee has filed a detailed submissions and after considering the submissions made, ld. PCIT in terms of the impugned order dated 28.03.2025 held the assessment order as erroneous and pre-judicial to the interest of the revenue by invoking the Explanation-2 of section 263 and the assessment order is partly set aside and direct the AO to conduct fresh inquiries and investigations with respect to the borrowings as well as the interest paid etc.

3. Against the said order, the assessee is in appeal before the Tribunal by taking following grounds of appeal:-

1. “That the order of the learned Principal Commissioner of Income Tax Rohtak is against law and facts.

2. That in the facts and circumstances of case of the appellant company the order of the learned PCIT in partly setting aside the orders dt.27.3.2023 u/s 143(3) r.w.s 144B holding that it was passed in casual manner without due diligence and without making enquiries and verification, the order u/s 263 is completely out of mark. arbitrary, illegal void and uncalled for. How an order where return of income was declared at Rs.20,14,05,280/- and assessment framed at Rs.40,38,41,399/- can be termed as causal without due diligence and enquiries.

3. That the orders of the learned PCIT Rohtak in mentioning that orders dated 27.3.2023 u/s 143(3) r.w.s 144B for asstt. year 2018- 19 is partly set aside under Para 8 Page 18 of the Orders is erroneous, illegal and uncalled for.”

4. Ld.AR for the assessee submits that case of the assessee was selected for complete scrutiny and during the course of assessment proceedings, AO has made detailed inquiries and verifications of the items shown in the Balance sheet and the expenses claimed in the Profit & Loss Account by issue various notices from time to time and the assessee was asked to file the details. Ld.AR drew our attention to page 63 of the Paper Book which is the reply filed in response to show cause notice before PCIT wherein the assessee has specifically pointed out that each and every allegation made by PCIT to hold the assessment order as erroneous and prejudicial to the interest of revenue were examined by the AO and necessary replies were already filed before the AO who after considering the said replies taken a plausible view.

5. Ld. AR submits that ld. PCIT has doubted the genuineness of the deposits received of INR 20,67,15,734/- and further observed