BHAGIRATH RAMA MALI,THANE vs. PCIT-THANE 1, THANE

At the outset, we note that, apart from raising Grounds No. 1 to 3 challenging the merits of the order passed by the Ld. PCIT under section 263 of the Income-tax Act, the assessee has also filed an application seeking admission of an additional ground of appeal. The same is reproduced hereinbelow:

After having gone through the contents of the application and having heard both the parties, we find that the assessee intends to raise an additional ground, which is legal in nature. Therefore, we accordingly allow the application of the assessee for raising the additional ground.

Grounds No. 1 to 3 and the additional ground raised by the assessee are interlinked and interconnected and arise out of the order passed by the Ld. PCIT under section 263 of the Income-tax Act. Therefore, we have decided to adjudicate upon all these grounds through the present consolidated order.

We have heard the counsels for both the parties, perused the material placed on record, considered the judgments cited before us, and examined the orders passed by the Revenue authorities. From the records, we note that, on the facts of the case, the Ld. PCIT invoked the revisional jurisdiction under section 263 of the Income-tax Act by observing that the assessee was a non-filer for the year under consideration and that information had been received through the Insight Portal to the effect that, during the year under consideration, the assessee had sold an immovable property valued at Rs. 1,15,62,500/-. The assessee had also purchased an immovable property valued at Rs. 87,35,600/-.

Since the assessee had not filed his return of income for the year under consideration, the source of investment in the purchase of the immovable property remained unexplained, and no income arising from capital gains on the sale of the immovable property had been offered to tax.

Accordingly, on the basis of the aforesaid information, the Assessing Officer decided to reopen the case of the assessee. In this regard, a show- cause notice under section 148A(b) of the Income-tax Act was issued to the assessee on 17.03.2022, requiring him to explain the nature of the transactions and furnish the necessary supporting documentary evidence. However, the assessee did not file any response in compliance with the said show-cause notice.

The Ld. PCIT further observed that reassessment proceedings had been initiated on the ITBA portal. Subsequently, on perusal of the record, it was noticed that, after issuance of the notice under section 148 of the Act, no further steps were taken by the Assessing Officer and the proceedings initiated under section 148A of the Act were dropped on 17.04.2022 without making any inquiry and without following the applicable rules, procedures and guidelines in this regard.

Thus, the Ld. PCIT was of the view that the order passed by the Assessing Officer was erroneous insofar as it was prejudicial to the interests of the Revenue. Accordingly, proceedings under section 263 of the Act were initiated. In this regard, a separate show-cause notice was issued to the assessee on 20.03.2025. However, the assessee neither filed any reply nor raised any objections before the Ld. PCIT.

Subsequently, while exercising the powers conferred under section 263 of the Act, the Ld. PCIT set aside the order dropping the proceedings as reflected on the ITBA portal and remitted the matter back to the Assessing Officer for de novo examination, with a direction to undertake a detailed inquiry and verification of the case and thereafter pass a speaking order in accordance with the provisions of the Income-tax Act, after affording due opportunity of being heard to the assessee.

Aggrieved by the aforesaid order, the assessee has preferred the present appeal before us. The appeal is delayed, and in this regard, the Ld. AR appearing on behalf of the assessee furnished an explanation seeking condonation of the delay.

After hearing both the parties, considering the entire factual position explained before us, and keeping in view the principles laid down by the Hon'ble Supreme Court in the case of Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors., 1987 AIR 1353 (SC), wherein it has been held that when substantial justice is pitted against technicalities arising from non-deliberate delay, substantial justice should be preferred, we are of the view that the principle of advancing substantial justice is of prime importance.

Accordingly, considering the explanation furnished by the assessee and the fact that the delay has been satisfactorily explained, and applying a liberal interpretation to the expression "sufficient cause", we are inclined to condone the delay in filing the appeal before us. Consequently, the delay is condoned and the appeal is admitted for adjudication on merits.

As regards the merits of the grounds raised by the assessee, including the additional ground, it is an undisputed fact that the assessee was a non- filer and did not appear before the Ld. PCIT in response to the show-cause notice issued under section 263 of the Act. Further, no plausible or satisfactory reason has been placed on record explaining the assessee's non- appearance before the Ld. PCIT.

The only contention advanced by the assessee is that the Ld. PCIT took a decision within a very short period. However, in our considered view, the mere fact that the order was passed within a short period cannot, by itself, constitute a valid ground for setting aside an otherwise reasoned and speaking order passed by the Ld. PCIT under section 263 of the Act, particularly when no specific prejudice caused to the assessee has been demonstrated.

Even otherwise, we note that the present appeal was filed by the assessee after a gap of approximately ten months, and there was complete non-cooperation on the part of the assessee before the Ld. PCIT. Therefore, in the facts and circumstances of the present case, we find no sufficient reason to interfere with the order passed by the Ld. PCIT under section 263 of the Act.

By way of the additional ground, the assessee has contended that no order was purportedly passed on 17.04.2022 dropping the reassessment proceedings initiated pursuant to the notice dated 20.03.2022 under section 148 of the Income-tax Act.

However, the order of the Ld. PCIT carries a presumption of correctness, particularly when the Ld. PCIT has specifically recorded that the proceedings under section 148 of the Act were dropped by the Assessing Officer on 17.04.2022 without making any inquiry whatsoever.

In this regard, although the Ld. AR submitted that a copy of such order was never supplied to the assessee, the fact remains that the assessee has not placed any documentary evidence on record to demonstrate that this objection was raised before the Ld. PCIT. Rather, the assessee did not even appear before the Ld. PCIT and did not cooperate in the proceedings.

Further, during the course of arguments, the Ld. AR stated at the Bar that consequential proceedings pursuant to the order passed by the Ld. PCIT under section 263 had also been completed by the concerned Assessing Officer. However, a copy of the consequential order has also not been placed on record by the assessee.

Nothing has been placed on record to establish that the specific objection regarding the alleged non-passing of an order dated 17.04.2022, or the non-supply of a copy thereof, was ever raised by the assessee during the consequential proceedings before the Assessing Officer. Further, no application under the Right to Information Act, 2005, appears to have been filed by the assessee seeking a copy of the alleged order.

Since the assessee remained ex parte before the Ld. PCIT and failed to demonstrate as to how the order passed under section 263 has caused prejudice to his rights, we find no reason to interfere with the order passed by the Ld. PCIT. The assessee would, in any event, be at liberty to raise his claims and substantiate the same before the Ld. CIT(A), in accordance with law, if he is aggrieved by the consequential order passed by the Assessing Officer.

In view of the foregoing discussion, and considering the fact that the assessee remained ex parte before the Ld. PCIT and failed to demonstrate any prejudice caused to him by the impugned order, we find no reason to interfere with the well-reasoned order passed by the Ld. PCIT under section 263 of the Income-tax Act.

Accordingly, all the grounds raised by the assessee, including the additional ground, are dismissed.

Consequently, the appeal filed by the assessee stands dismissed.