JIGNESH MAHESH GOHEL,MUMBAI vs. DCIT, CIRCLE 41(2)(1), MUMBAI

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.

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.

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:

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.