IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN “DB” BENCH: DEHRADUN BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT &

SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.17/DDN/2026 [Assessment Year : 2019-20]

Davinder Kumar Mago vs DCIT/ACIT

12/1, Punjabi Bagh, Central Circle, External Punjabi Bagh, Dehradun New Delhi-110026 Uttarakhand PAN-AJHPM9802A APPELLANT RESPONDENT Appellant by Shri Ajay Wadhwa, Adv. (VC) Respondent by Ms. Poonam Sharma, CIT DR Date of Hearing 10.03.2026 Date of Pronouncement 12.03.2026

ORDER

PER MANISH AGARWAL, AM :

This appeal filed by the assessee against the order by Pr.CIT (Central), Kanpur at Meerut passed u/s 263 of the Income Tax Act, 1861 (“the Act”) dated 08.01.2026 arising out of the order passed u/s 143(3) r.w.s. 147 of the Act.

2. Brief facts of the case are that the assessee is an individual, a search action was carried out in the case of the assessee on 24.11.2022. Thereafter, the case of the assessee was re-opened by issue of notice u/s 147 of the Act. The reassessment order was passed wherein income declared by the assessee is accepted by AO. Thereafter, based on the information provided by the AO himself, Ld.

PCIT initiated revision proceedings u/s 263 of the Act and the ld. PCIT hold the assessment order as erroneous and pre-judicial to the interest of the Revenue and by invoking the provision of Explanation 2(a) of section 263 of the Act, has directed the AO to pass the assessment order afresh after making necessary inquiries and verification with respect to the unsecured loans taken during the year under appeal.

3. Against the said order, the assessee is in appeal before the Tribunal.

4. Before us, Ld.AR for the assessee has taken as many as 13 grounds of appeal out of which, Ground of appeal No.7 is with respect to the action of ld. PCIT in invoking the provision of Explanation 2(a) of section 263 without appreciating the fact that the AO has made all the inquiries mandatorily required under the Act therefore, the same is taken first for consideration.

5. Before us, Ld.AR submits that the AO vide notice issued u/s 142(1) dated 23.08.2023, asked the assessee to file the details of the loans taken during the year. In response, the Ld.AR for the assessee filed detailed reply wherein the assessee has filed complete addresses alongwith other relevant particulars of the persons from whom loans were taken during the year under appeal. Thereafter, in response to notice issued u/s 142(1) dated 10.02.2024, the assessee vide reply dated 15.03.2024 had filed relevant details of loans taken during the year under appeal such as ledger accounts, bank statements, confirmations, ITR’s and other particulars of the lenders. Ld.AR also submits that some of the loans were repaid also during the year itself. As per Ld. AR, AO after considering these details, has accepted the genuineness of the loans taken by the assessee and has not taken any adverse inference with respect to any of the lender. Ld. AR submits that even before Ld. PCIT, vide reply dated 07.10.2025, assessee again furnished all these details however, Ld. PCIT without pointing out any error in the said details filed nor any material brought on record, has hold the assessment order as erroneous and pre-judicial to the interest of the Revenue and invoked the provisions of Explanation 2() of section 263 which cannot be applied in the given facts of the case. He therefore, prayed for the cancellation of the revision order so passed u/s 263 of the Act.

6. Per contra, Ld. CIT DR vehemently supported the orders of the Ld. PCIT and submits that AO has passed the assessment order without even mentioning or utter a single word in the assessment order about the loans taken during the year under appeal by the assessee. As per, Ld. CIT DR, no proper inquiries/investigations were done by AO and nor the source in the hands of the lenders were examined therefore, Ld. PCIT has correctly observed that assessee has failed to prove the source of source of the loan creditors and t