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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI AMARJIT SINGH, AM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. Principal Commissioner of Income Tax-30, Mumbai dated 04.03.2020 for assessment year 2010-11 passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The assessee has challenged the jurisdiction of the Ld. PCIT to have invoked revisional jurisdiction u/s 263 of the Act without satisfying the condition precedents as laid u/s 263 of the Act. According to the Ld. AR, the subject matter (issue) on which the Ld. PCIT has found fault with assessment order was pending before the Ld. CIT(A). And therefore as per the bar placed by clause (c) of Explanation – 1 to Section 263 of the Act. And therefore according to Ld. AR, the Ld. PCIT could not have usurped jurisdiction u/s 263 of Rajnish C. Bharti the Act on the same subject-matter which was pending before Ld. CIT(A) (First Appellate Authority) 3. Brief facts the Ld. PCIT notes that the assessee had filed return of income for AY. 2010-11 on 23.07.2010 declaring total income of Rs.1,49,900/-. Subsequently, it was noticed that a sum of Rs.21,73,11,403/- has been credited in different bank accounts held by the assessee during the financial year 2009-10. Thereafter, the assessment was reopened u/s 147 of the Act. And then, the assessment was completed u/s 143(3) r.w.s. 147 of the Act on 30.11.2017 assessing the total income of assessee at Rs.57,30,400/- by making an addition of Rs.55,80,495/- being 2% of the total credit of Rs.27,90,24,758/- on account of unexplained credits. According to the Ld. PCIT, on perusal of the assessment records along with bank statements it was found that the entire credit amount was either withdrawn in cash from bank, through ATM or transferred to M/s. Bharati Trade Link and M/s. Bharati Enterprises where the assessee in the capacity of Karta, is the proprietor of these concerns. The total deposits and withdrawal in the bank accounts amounted to Rs.5,50,95,772/- and Rs.5,70,77,042/- respectively. According to Ld. PCIT, these transactions were not for cheque discounting business as for cheque discounting business such cash withdrawals are not involved. According to him therefore it indicates that transactions are not for genuine purposes. And there is no evidence on record that the assessee has earned only commission @ 2% on these transactions. Thus, according to Ld. PCIT, the AO without bringing any evidence on record to show that the assessee had earned only commission @ 2%
Rajnish C. Bharti on these transactions has erred in taxing only 2% of these transactions. And therefore, the Ld. PCIT was of the opinion that the order passed by the AO u/s 147 of the Act read with 143(3) of the Act dated 30.11.2017 appears to be erroneous and prejudicial to the interest of the revenue. Accordingly Ld. PCIT issued show-cause notice to assessee, however, the assessee did not file any written-submission nor attended the proceedings before him. Therefore, he was pleased to set aside the assessment order dated 30.11.2017 and directed the AO to frame the assessment denovo in accordance with law. Aggrieved by the aforesaid action of the Ld. PCIT, the assessee is before us.
We have heard both the parties and perused the records. The facts aforestated are not disputed (But the assessee contested the observation of the Ld. PCIT that show cause notice was issued u/s 263 of the Act for appearance by letter dated 12.02.2020). The Ld. AR, assailed the action of the Ld. PCIT on the ground that the Ld. PCIT ought not to have invoked his jurisdiction u/s 263 of the Act on the issue which was already subject matter of appeal before the Ld. CIT(A). According to the Ld. AR, the assessment order was passed on 30.11.2017 u/s 143(3) r.w.s. 147 of the Act wherein the AO has recorded the reason for re-opening the assessment for AY. 2010-11 based on the specific information from ADIT (Inv.) that a sum of Rs.21,73,11,403/- has been credited in the different accounts of the assessee reopened the assessment u/s 147 of the Act wherein the assessee had accepted that the assessee was in the business of “carrying on the activity of cheque discounting for a commission” and Rajnish C. Bharti accordingly the credit in the bank account was treated as accommodation entry for several parties (beneficiaries) and on the basis of which for AY. 2009-10 an addition of commission @ 2% of the total credit appearing as per the bank statement was made by holding as under: - “7 It is pertinent to mention here that the assessee had himself admitted during the scrutiny proceedings for the A.Y. 2008-09 that he was into the business of cheque discounting at the rate of 0.05%. In view of acceptance of several accommodation entry providers in their statement recorded under oath that commission on such transaction in the market is 1.5 to 2%, I am of the considered view that the assessee have earned commission at the rate of 2% on these transaction which has not been offered for taxation while filing the return of income. Hence, sum of Rs. 55,80,495 fs hereby added as undisclosed commission income of the assessee. The reply of the assessee that assessment proceedings in the case of the HUF is going on and the addition based on the information received on 12.05.2017 should not be made is not considered as the issue involved in the. case of the HUF is completely different. Penalty proceedings under section 271(1)(c) is initiated separately for concealment of income.
Considering the above, total income of the assessee is computed as under: 1 Total income as per return filed on 23.07.2010 ` 1,49,900 Add: Undisclosed commission income as discussed 55,80,495 above Total taxable income 57,30,395 Rounded off to 57,30,400
Rajnish C. Bharti 5. Aggrieved by the aforesaid action of the AO, the assessee had preferred an appeal before the Ld. CIT(A) on 17.05.2018 (refer page 25 to 27 of the PB) wherein i.e Form no. 35 filed by the assessee before the Ld. CIT(A)-41, Mumbai the assessee has challenged the merit of addition of sum of Rs.55,80,495/-. Thus, according to the Ld. AR, the subject matter of appeal of the assessee before the Ld. CIT(A) was in respect of the total credit of Rs.21,94,78,010/- which action of AO was based on the admission that he was in the business of carrying out the activity of cheque discounting for commission and thus providing accommodation entry for the beneficiaries for which the AO added the commission income at 2% of it (total credit) and aggrieved by it the assesse has preferred an appeal before the Ld. CIT(A). In such a scenario, according to the Ld. AR, the CIT(A) who has co-terminus powers as that of AO can do whatever action the Ld. PCIT has suggested in his impugned order by even enhancing the addition on the issue of transaction of Rs.21,73,11,403/-. Therefore, according to Ld. AR, the subject matter (Rs.21,73,11,403/-) was already before Ld. CIT(A), so the Ld. PCIT could not have invoked the jurisdiction u/s 263 of the Act because of the bar placed by clause (c) of Explanation-1 to Section 263 of the Act which does not permit the Ld. PCIT to invoke his revisional jurisdiction on the same issue. We find force in the submission of the Ld. AR. We note that the AO has re-opened the assessment for the precise information about the transactions in assessee’s various bank accounts to the tune of Rs.21,73,11,403/- and after enquiring about this issue, the AO has made addition of commission income @ 2% of Rs.21,73,11,403/- i.e. Rs.55,80,495/-
Rajnish C. Bharti which same issue the Ld. PCIT in his impugned order has found fault with in his order. Thus, we note that issue was already subject matter of appeal before the Ld. CIT(A). Therefore, the bar placed by clause (c) of Explanation-1 to Section 263 of the Act does come in the way of Ld. PCIT to revise again on this issue (subject matter) because the subject-matter (Rs.21,73,11,403/-) is pending adjudication before Ld. CIT(A) who has got co-terminus powers as that of the AO and can even enhance the assessment passed by the AO on this issue. Therefore, the Ld. PCIT erred in invoking revisional jurisdiction on the issue u/s 263 of the Act on the aforesaid facts and circumstances of the case, therefore, the assessee succeeds and we are inclined to quash the impugned order of Ld. PCIT dated 04.03.2020.
In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the open court on this 22/11/2022.