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In the original return filed the assessee claimed deduction of interest expenditure u/s 57 at Rs. 93,56,983/- and in the revised return it was claimed at Rs. 54,23,189/-. Since the Ld. A.O treated the revised return as invalid the alleged difference of interest expenditure of Rs. 39,33,844/- (Rs. 93,56,983/- (-) Rs. 54,23,189/-) was disallowed. Ld. A.O also observed that there were huge cash deposits in the bank account of the assessee during the month of February and March. Assessee claimed that the surrendered income of Rs. 7 crores which was invested in the form of hundi matured during the year and the money so received (Principal and Interest) was deposited in the bank account and the same were duly recorded in regular books. However Ld. A.O in view of Vyapam scam which involved the allegation of bribe of illegal money for admission in medical colleges in Madhya Pradesh, took a view that the assessee being unable to explain the source of cash deposited in bank account by not providing the information about the persons named in the hundi found during the course of survey, did not accept the source of cash explained by the assessee thus the alleged cash deposit of Rs. 7,34,79,097/- was treated as unaccounted income earned from Vyapam scam and made addition thereof. Accordingly income assessed at Rs. 14,75,87,000/-.Against the addition made by the Ld. A.O assessee filed appeal before Ld. CIT(A) who did not give any relief to the assessee against which the assessee is in appeal before the Tribunal.

Shanti Prime Publication Pvt. Ltd.

Sec. 263 of Income Tax Act, 1961— Revision —Revision order invalid as AO has applied his mind and therefore the assessment order is not vitiated on the ground that the order is erroneous and prejudicial to the interest of revenue because no enquiry were undertaken.

Facts: Assessee has raised challenged the order issued u/s 263 passed by PCIT contending that PCIT exceeded his jurisdiction by wrongly invoking the provisions of 263 and the impugned order is bad in law and void initio.

Held, that assessee submitted various relevant documents. It is also pertinent to note that AO adjudicated the issue of queries and replies in regard to said claim by passing a detailed order. Further the note sheet entries clearly shows the deliberations between the AO and the assessee company on all the issues and adjudication by the AO which was further guided by order u/s 144A. PCIT should have satisfied the twin conditions, namely order of A.O stated to be erroneous and secondly it is prejudicial to the interest of revenue. But in the instant case wherein we have examined each and every issue raised by PCIT in the light of the reply filed by assessee, information called by A.O and the finding in the assessment order, we are of the considered view that under the given facts and in law the view taken by the AO in the order passed u.s 143(3) seems to be reasonable and plausible which cannot be held as legally unsustainable and not in accordance with law. In our view it is passed with complete application of mind and thus it can neither be held as erroneous nor prejudicial to the interest of revenue. It clearly appears that A.O has applied his mind and therefore the assessment order is not vitiated on the ground that the order is erroneous and prejudicial to the interest of revenue because no enquiry were undertaken. Accordingly we find merit in the contention of the learned senior counsel for the assessee and are of the considered view that PCIT grossly erred in invoking the provisions of Section 263 on the basis of issues raised in the show cause notice. Thus the order of PCIT of setting aside the assessment order u/s 143(3) under consideration are beyond the scope of Section 263 and hence not valid and we accordingly quash the relevant order passed by PCIT u/s 263 and restore the assessment order u/s 143(3). In the result all the grounds raised by the assessee in appeal are allowed. - VINOD BHANDARI V/s PR. CIT - [2020] 81 ITR (TRIB) 237 (ITAT-INDORE)