JAWAHAL LAL GULATI,147/B, YAMUNA ENCLAVE, PANIPAT, HARYANA,HARYANA vs. PR. CIT, , ROHTAK

The assessee filed its return of income originally on 30.03.2018 declaring income at Rs.1,70,76,550/- for Assessment Year 2017-18. During the course of survey action initiated under Section 133A of the Act conducted on the business premises of the assessee on 30.08.2016 the assessee admitted additional income of Rs.168,00,050/-. Such additional income was found to have been reflected in the income tax return for the year under consideration and the assessee paid due tax on the said income. Thus, upon verification of the documents the returned income of Rs.17,00,76,550/- declared by the assessee was accepted by the ACIT, Circle, Panipat by and under the order dated 17.10.2019 under Section 143(3) of the Act. The Ld. PCIT thereafter initiated a proceeding under Section 263 of the Act and according to him the amended provision of Section 115BBE is applicable for Assessment Year 2017-18. Further that the surrendered income clearly being unexplained in nature should be held unexplained income/money/investment etc. under Section 68/69/69A/69D etc. read with amended provision of Section 115BBE with taxation laws 2nd Amendment of 2016. According to him the Ld. AO has completed the assessment without carrying out necessary and proper inquiry in respect of the taxability of the surrendered income of Rs.168,00,050/- and without examining the applicability of Section 68/69/69A/69D of the Act which he ought to have carried out in respect of the said surrendered income during survey proceeding. In that view of the matter the Assessment Order under Section 143(3) of the Act dated 17.10.2019 in the case of the assessee for Assessment Year 2017-18 is erroneous insofar it is prejudicial to the interest of revenue in terms of Section 263 of the Act read with explanation given therein and thus, the AO has been directed to pass order afresh in accordance with the observations made by the Ld. PCIT as narrated hereinabove.

The Ld. Counsel appearing for the assessee joins issue here to this effect that once the proceeding initiated under Section 263 of the Act by the PCIT culminating in quashing the order passed by the Ld. AO holding it erroneous and prejudicial to the interest of the revenue without confirming as to which section out of Sections 68/69/69A/69B/69C/69D of the Act was applicable, the order itself is bad in law and thus, not sustainable. In this regard, he has relied upon a judgment passed by the Coordinate Bench in the case of Bhushan Kumar Gupta Vs. Pr.CIT, ITA No.1081/Del/2022. In that particular case the AO has not made any addition either under Section 68 or Section 69 of the Act as the surrendered income was already included by the assessee in his return of income. Further that the PCIT while reopening the assessment under Section 263 of the Act has not specified any specific charging section under which charging section the AO should have treated the surrendered amount. It was also observed that nothing has been stated either in the pre-amended or in the post amended provision of Section 115BBE of the Act that where the assessee surrendered the undisclosed income during search action for relevant assessment year the tax rate has to be charged as per provision of Section 115BBE of the Act. The applicability of that amended provision of Section 115BBE of the Act which prompted the PCIT to assume assessment under Section 263 of the Act as highly debatable issue and therefore, the assumption of jurisdiction under Section 263 of the Act alleging the order of AO erroneous and prejudicial to the interest of Revenue by way of picking up the debatable issue is wrong. That particular judgment has also been considered by the judgment passed by the Coordinate Bench in the case of Balvinder Singh Vs. PCIT in and Yogesh Kumar Vs. PCIT in wherein it has been held that PCIT was not correct and justified in invoking revisionary provision of Section 263 of the Act on debatable issue and when no specific charging section has been mentioned by the Ld. PCIT which is to be applied while making addition by the Ld. AO. The Ld. DR has not been able to controvert this particular aspect of the matter.

Having heard the Ld. Counsels appearing for the parties and having regard to the facts and circumstances of the matter particularly the order passed by the Ld. PCIT under Section 263 of the Act as impugned before us which does not mention the specific charging Section under which the Ld. AO should have treated the surrendered amount and mentioning number of sections as optional, the order passed by the Ld. PCIT is not found to be justifiable enough to hold the order passed by the Ld. AO dated 17.10.2019 under Section 143(3) of the Act erroneous in so far as it is prejudicial to the interest of Revenue in terms of Section 263 of the Act. We therefore, do not hesitate to hold that the order impugned is not sustainable in the eyes of law and thus, quashed.

The appeal preferred by the assessee is allowed.