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Facts
The assessee filed a return declaring income, and later the AO reopened the case u/s 148 concerning 'On Money' payment. The AO passed an assessment order accepting the returned income. The PCIT later invoked Section 263, finding the assessment order erroneous and prejudicial as it did not address the 'On Money' payment.
Held
The Tribunal held that the notice issued u/s 148 was time-barred, making the reopening bad in law. Furthermore, on merits, the issue of 'On Money' was already examined during reassessment, so the PCIT's invocation of Section 263 was not justified.
Key Issues
Whether the notice issued under Section 148 was time-barred, and if the PCIT was justified in revising the assessment order under Section 263 when the issue was already examined.
Sections Cited
263, 147, 148, 144B, 148A
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Income Tax Appellate Tribunal, “F” BENCH
(Assessment Year: 2015-16) Jignesh Mahesh Gohel DCIT, Circle 41(2)(1), Shop No.4, Surya Prakash Vs. Mumbai Building, Ganesh Gavde Road, Room No. 831, Kautilya Mulund (W), Mumbai 400080 Bhavan, BKC, Mumbai 400051 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AARPG3795P (Appellant) (Respondent) निर्ााररती की ओर से / Assessee by: Shri. Aditya Ramchandran /Revenue by: Shri Vivek Perampurna CIT-DR Date of Hearing 14.08.2025 Date of Pronouncement 18.09.2025 आदेश/O R D E R PER RENU JAUHRI [A.M]: This appeal is filed by the assessee against the order of the Pr. C.I.T., Mumbai -41 (hereinafter referred to as "PCIT"] dated 26.03.2025 passed u/s. 263 of the Income-tax Act, 1961 [hereinafter referred to as "Act"] for Assessment Year [A.Y.] 2015-16.
2. The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case and in law, the learned Pr. CIT -41. Mumbai erred in invoking jurisdiction under section 263 of the Act and sought to revise the order passed under section 147 r.w.s. 144B of the Act which was bad in law.
On the facts and circumstances of the case and in law, the order passed under section 263 of the Act by the Ld. Pr. CIT-41, Mumbai is bad in law and without jurisdiction in as far as a. the notice issued under section 148 of the Act dated 26-06-2021 was not covered by the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 as held by the Hon'ble Supreme AY 2015-16 Jignesh Mahesh Gohel Court in the case of UOI vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) and; b. consequently, the order passed under section 147 r.w.s. 144B of the Act is bad in law and without jurisdiction.
3. On the facts and circumstances of the case and in law, the order passed under section 263 of the Act by the Ld. Pr. CIT-41, Mumbai is bad in law and without jurisdiction in as far as the order under section 147 r.w.s 144B of the Act which has been revised under section 263 of the Act is bad in law as the notice under section 148 dated 28-07-2022 is time barred since it has been issued beyond the 'surviving time limit under the Income-tax Act read with TOLA as it is being interpreted by the Supreme Court in the case of UOI vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) The Appellant craves leave to add, alter, amend, vary and/or withdraw any or all the above grounds of appeal.”
Brief facts of the case are that the assessee had filed return declaring income of Rs. 5,01,250/- for AY 2015-16 on 30.03.2016. Subsequently, on receipt of information from the Investigation wing regarding payment of ‘On Money’ of Rs. 81,12,000/- to M/s. Runwal Group, Ld. AO reopened the case by issuing notice u/s. 148 of the Act. Thereafter, the AO passed the assessment order u/s. 147 r.w.s. 144B of the Act on 30.03.2023 accepting the returned income. Subsequently, Ld. PCIT noticed that the documents on record revealed that the assessee had paid ‘On Money’ in cash of Rs. 81,12,000/- to the builder, M/s. Runwal Group for purchase of Shop No. G-44. Since there was no mention of this issue in the assessment order, Ld. PCIT invoked the provisions of Explanation 2 to Section 263 and set aside the impugned assessment order dated 30.03.2023 holding it to be erroneous and thereby prejudicial to the revenue vide order dated 26.03.2025, further a directed the Ld. AO to carry out due verification on the issue relating the payment of ‘On Money’ and thereafter pass a fresh assessment order. Aggrieved with the order of the Ld. PCIT, the assessee has preferred an appeal before the Tribunal.
Before us, Ld. AR has submitted that the order u/s. 147 r.w.s. 144B was itself bad in law as a notice dated 26.06.2021 u/s. 148 of the Act was not covered by the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). For challenging the validity of notice u/s. 47 during the proceedings related to Section 263, Ld. AR has placed reliance on a decision of the co-ordinate bench in in the case of Westlife Development Vs PCIT-5 Mumbai, wherein the co-ordinate bench has held that the assessee is permitted to challenge the validity of order passed u/s. 263 on the ground that the impugned assessment order was non-est, and hence Ld. CIT(A) could not have assumed jurisdiction to make revision of a non-est order.
4.1. On the issue of limitation, Ld. AR placed reliance on the decision of the Hon'ble Supreme Court in the case of UOI vs. Rajiv Bansal [2024] 167 taxxman.com 70 (SC). He further argued that even on merits, the order passed u/s. 263 is bad in law as the issue on which u/s. 263 has been passed was the same for which the case was reopened u/s. 147 of the Act. The assessment order u/s. 147 r.w.s. 144B was passed by the Ld. AO after due examination of the issue and, therefore, the same could not be held to be erroneous and prejudicial to the revenue.
Ld. DR on the other hand, relied on the order of Ld. PCIT and pointed out that the order u/s. 147 r.w.s. 144B dated 30.03.2023 does not mention anything on the issue of payment of ‘On Money’. As the issue in question has not been AY 2015-16 Jignesh Mahesh Gohel examined by the Ld. Assessing Officer, this case is squarely covered by the Explanation 2 to section 263 of the Act, which specifies that if an order is passed without making enquiries or verification which should have been made, then the order passed by the AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue.
We have heard the rival submissions and perused the material placed on record. We note that as per the amended provisions of reopening applicable in this case, the notice issued u/s. 148 on 28.07.2022 was time barred as per the decision of the Hon'ble Apex Court in the case of Rajeev Bansal (Supra). The relevant dates are as per the table below:
As the initial notice was issued on 26.06.2021, the Ld. AO had 5 days of surviving time period available to issue the notice u/s. 148. Since the notice has been issued on 28.07.2022 the same was clearly time barred and hence the reopening was bad in law.
Even otherwise, on merits also, as the Ld. AO has issued notice u/s. 148 on the same issue which is the subject matter of revision u/s 263 by the PCIT. In this regard, a copy of the order u/s. 148A(d) dated 23.05.2022 has been placed on record from which it is clear that the case was reopened for examination of the issue related to payment of ‘On Money’ of Rs. 81,12,000/- by the assessee to M/s. Runwal Group of Companies for purchase of Shop No. G- 44 in the project Runwal Green. Since the issue had already been examined during the reassessment proceedings, mere non mentioning of the facts in the assessment order passed u/s. 147 r.w.s. 144B does not imply that there was any failure on the part of Ld. Assessing Officer. Accordingly, Ld. PCIT was not justified in invoking Explanation 2 to section 263 of the Act in the facts and circumstances of this case. Hence on merits also the order u/s. 263 is not sustainable.
Thus, on the legal issue as well as on merits, the appeal is decided in favour of the assessee and the order u/s. 263 is hereby set aside.
In the result, appeal of the assessee is allowed.