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Facts
The assessee company filed its return for AY 2014-15, which was processed under section 143(1). Subsequently, the assessment was reopened under section 147 based on information regarding accommodation entries. The PCIT sought to revise the reassessment order under section 263, alleging the AO's order was erroneous as it failed to make an addition related to amounts received from M/s Saloni Buildtech Private Limited.
Held
The Tribunal held that the PCIT's revisionary jurisdiction under section 263 was not validly exercised. The reassessment order was based on specific reasons, and the issue sought to be introduced by the PCIT was not part of those reasons. Therefore, the revisionary proceedings were quashed.
Key Issues
Whether the PCIT validly exercised revisionary jurisdiction under section 263 when the grounds for revision were not part of the original reasons for reopening the assessment.
Sections Cited
147, 143(1), 68, 263, 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI C. N. PRASAD & SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2014-15, arises out of the order of the Pr. Commissioner of Income Tax-1, Delhi [hereinafter referred to as „ld. Pr. CIT‟, in short] in Appeal No. ITBA/REV/F/REV5/2023-24/1062789482(1) dated 17.03.2024 against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 27.03.2022 by the Assessing Officer, ITO, Ward-4(1), Delhi (hereinafter referred to as „ld. AO‟).
At the outset, we find that there is a delay in filing of appeal before us by 67 days at the behest of the Assessee. Considering the reason adduced in the condonation petition duly supported by an affidavit, we are inclined to condone the delay of 67 days in filing of appeal before us and admit the appeal of the Assessee for adjudication.
The only effective issue to be decided in this appeal is as to whether the learned PCIT had validly exercised revision jurisdiction under section 263 of the Act in the facts and circumstances of the instant case.
We have heard the rival submissions and perused the materials available on record. The Assessee company filed its regular return of income for the assessment year 2014-15 on 11-11-2014 declaring total income of Rs. 1,45,170/-. The main business of the assessee is taking loans on interest and advances the same in the form of interest bearing loans and earns interest income thereon. The regular return filed by the assessee on 11-11-2014 was processed under section 143(1) of the Act on 30-12-2014 accepting the returned income. No scrutiny assessment was framed on the said regular return. Later the assessment of the assessee was sought to be reopened under section 147 of the Act on the basis of information received on Insight Portal that assessee had taken certain accommodation entries of Rs 4,46,00000/- from companies i.e. Nicky Marmo Limited, Anuj Buildcon Private Limited, MKRS Garments Private Limited, Saabi Mining Private Limited and Archways Biofuel Private Limited alleged to be controlled by one Shri Joginder Pal Gupta. Accordingly, the reassessment proceedings stood completed on the assessee vide order dated 27- 3-2022 under section 147 of the Act after making addition of Rs 4,46,00,000/- being the amounts received from aforesaid 5 companies as unexplained cash credit under section 68 of the Act and adhoc estimation of commission at the rate of 2 percent working out to Rs 8,92,000/- thereon. The assessee preferred an appeal before the Learned CITA against this reassessment order.
Subsequently, the Learned PCIT sought to revise this reassessment order passed on 27-03-2022 by invoking his revision jurisdiction under section 263 of the Act on the ground that the order of the Learned AO is erroneous in as much as it is prejudicial to the interest of the revenue in view of the fact that the assessee was also in receipt of Rs 1,45,00,000/- from M/s Saloni Buildtech Private Limited who was found to be a tainted party in the assessment proceedings of the assessee for assessment year 2015-16 wherein, an Page | 2 addition was made under section 68 of the Act. Since amounts were received from the very same party in Assessment Year 2014-15 also by the assessee, the same was liable to be treated as accommodation entry and subjected to addition under section 68 of the Act. Since this addition was not made in Assessment Year 2014-15, the Learned PCIT invoked his revision jurisdiction under section 263 of the Act to make such addition.
Factually, the assessee did not receive any amount of Rs 1,45,00,000/- towards share premium as stated by the learned PCIT. The assessee had actually received only a sum of Rs 65 lakhs in the form of loan during the assessment year 2014-15 from M/s Saloni Build Tech Private Limited. The assessee on its part duly furnished all the relevant details to prove the three ingredients of section 68 of the Act in respect of loan received from M/s Saloni Build Tech Private Limited. In fact, the details filed by the assessee qua M/s Saloni Build Tech Private Limited are even captured in page 8 of the order of the learned PCIT. The assessee also submitted before the learned PCIT that it had repaid the loan to M/s Saloni Build Tech Private Limited. No deficiencies whatsoever were found by the learned PCIT in the furnishing of those documents to prove the three ingredients of section 68 of the Act in respect of amounts received from Saloni Build Tech Private Limited. Once the assessee furnishes the primary details to prove the nature and source of credit within the meaning of section 68 of the Act, the assessee had discharged its burden and the onus shifts to the revenue. The revenue in the instant case had not bothered to make further verification with regard to the details furnished by the assessee. Hence, no adverse inference could be drawn on the documents filed by the assessee and no addition could be made under section 68 of the Act on merits.
The learned AR before us vehemently submitted that reasons recorded for reopening the assessment was for adding the sum of Rs 4,46,00,000/- being the amounts received from five companies controlled by Sri Joginder Pal Gupta. The reassessment was completed under section 147 of the Act on 27-03-2022 after duly adding the said sum of Rs 4,46,00,000/-. Hence, no error could be Page | 3 attributed in the said reassessment order framed by the learned AO. When there is no error, the said order cannot be subjected to revision under section 263 of the Act. The learned AR placed reliance in support of this argument on the decision of coordinate Bench of Pune Tribunal in the case of Gulab Badgujar (HUF) vs CIT in and 799 / Pun/ 2015 dated 3-5-2019, wherein it was held as under:-
“9. The question which arises is the exercise of revisionary jurisdiction by the Commissioner of Income Tax under section 263 of the Act against the order passed under section 143(3) r.w.s. 147 of the Act, wherein the assessment proceedings were re-opened on specific reasons recorded for re-opening. We have already referred to the additions made on the aforesaid reasons in the hands of assessee in the Para above. Once, the re-assessment proceedings are initiated on a specific issue and the addition is made in the hands of the assessee then the Commissioner of Income Tax is precluded from exercise of jurisdiction under section 263 of the Act on a ground which is not covered by the reasons during the re- opening of the assessment since the time for completing the assessment u/s 143(3) of the Act had expired. Hence, we find no merit in the exercise of revisionary power by the Commissioner of Income Tax under section 263 of the Act in the present facts and circumstances.”
7.1. We find lot of force in the said argument advanced by the learned AR and respectively following the decision of Pune tribunal referred supra, we hold that there is no error that could be attributed in the reassessment order dated 27-03- 2022 even though no verification was indeed made by the learned AO with regard to amount received from Saloni Build Tech Private Limited.
It is a fact that amount received from Saloni Build Tech Private Limited had already been reflected in the balance sheet and in the regular return of the assessee. Hence, if at all there is any error, the error could only be attributed in the original intimation framed under section 143(1) of the Act and not in the reassessment order. Hence in that scenario, the original intimation under section 143(1) of the Act should have been subjected to revision within the permissible time limit as per section 263 of the Act. Reliance in this regard has been rightly placed by the learned AR on the decision of Hon‟ble Supreme Court in the case Page | 4 of CIT vs Alagendran Finance Limited reported in 293 ITR 1(SC). Respectfully following the same, we hold that there cannot be any error in the reassessment order framed by the learned AO with regard to non-enquiry of amounts received from Saloni Build Tech Private Limited. Hence, one of the twin conditions for initiating revision proceedings under section 263 stood non- satisfied. Accordingly, the revision proceedings are liable to be quashed and are hereby quashed. The grounds raised by the assessee are hereby allowed both on law as well as on merits.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 30/06/2025.