Lack of Enquiry vs. Inadequate Enquiry’ – ITAT Chennai Allows Appeal, Strikes Down 263 Order
Subramaniam Mohan Sundaram & Ors. v. PCIT (Central)-2, Chennai (ITA Nos. 951–959/Chny/2025)
Facts:
1. A survey u/s 133A was conducted on 26.11.2019, revealing certain investments in immovable property and FDs. Case was reopened by notice u/s 148 on 31.03.2021.
2. Assessee filed return on 30.04.2021, declaring ₹26.74 lakh + agri income ₹3.69 lakh. AO issued notice u/ss 143(2) & 142(1), called for details of investments & sources.
3. Assessee furnished explanations. AO, being satisfied, accepted returned income and completed assessment u/s 147 r.w.s. 143(3).
4. PCIT opined that AO failed to verify sources of investments in property & FDs. PCIT passed order u/s 263 on 13.03.2024, holding that assessment order was erroneous & prejudicial to revenue and directed AO to modify assessment after verifying investments and deposits.
ITAT Chennai held as below:
1. We find that the details of investments as well as the corresponding sources of income for the same have been examined and verified by the AO and on satisfaction accepted the return of income filed by the assessee.
2. It is settled law that there is a difference between ‘lack of enquiry’ and ‘inadequate enquiry’. In the present case, it is certainly not a case of ‘lack of enquiry’. The moment the AO issued notice 142(1)/143(2) of the Act by calling for information, it is the trigger of initiation of enquiry.”
3. In the result, all the three appeals for A.Ys.2013-14, 2014-15 and 2015-16 filed by the assessee are allowed.
The copy of the order is as under:
