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Facts
The assessee did not file a return for the assessment year and the case was reopened. The assessee later filed a return, which was accepted by the AO. The PCIT initiated revision proceedings u/s 263, alleging that commission income of Rs. 12 lakhs from Form 26AS was not offered to tax. The assessee clarified that this amount was part of their turnover and already offered to tax.
Held
The Tribunal held that the PCIT's order was erroneous as the Rs. 12 lakhs commission income was indeed part of the turnover and had been offered to tax. Accepting the PCIT's order would lead to double taxation. Therefore, the reassessment order passed by the AO was not erroneous or prejudicial to the revenue.
Key Issues
Whether the PCIT's revisionary order under Section 263 was justified when the alleged omitted income was already offered to tax by the assessee and accepted by the AO, and whether such revision would lead to double taxation.
Sections Cited
139(1), 147, 148, 143(2), 142(1), 263, 194H, 194C, 44AD, 246A, 144B
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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by the assessee against Pr. CIT’s Order vide DIN &Notice No: ITBA/COM/F/17/2023-24/1059134810(1) dated 28.12.2023, challenging the revision order passed by the ld. Pr.CIT order dated 12.03.2024, DIN & Order No. ITBA/COM/F/17/2023- 24/1062470216(1)
Briefly stated, the facts of the case are that assessee did not file return of income for the impugned Assessment Year as per provision of section 139(1) of the Act. Accordingly, the case was reopened following due procedure as per sections 147/148 of the Act and accordingly notice under section 148 of the Act was issued and served on the assessee on 26.03.2021. Accordingly, assessee filed return of income on 16.04.2021 declaring total income of Rs.5,48,500/-. Income from House Property Rs.3,36,000/-, income from business / profession under section 44AD of Rs.2,25,000/-, income from other sources of Rs.3,068/- and claimed deduction under chapter VI A of Rs.35,568/- and he also claimed TDS of Rs.65,000/-. Resultantly, there is refund of Rs.29,260/- as per the acknowledgement of return. Subsequently, notice under section 143(2) of the Act was issued to the assessee and other statutory notices under section 142(1) of the Act was issued on 29.11.2021 and 04.01.2022. Assessee made compliance on 24.02.2022 with documentary support. The AO accepted the documents furnished and returned income was also accepted. Later on, the learned PCIT exercised his power as per section 263 of the Act and issued notice dated 28.12.2023 vide DIN and Notice No. ITBA/COM/F/17/2023-24/1059134810(1) observed that as per Form No.26AS there is commission receipt of Rs.12 lakhs which has not been offered in the return filed in response to notice under section 148 of the Act. However, as per Form 26AS there is TDS of Rs.65,000/- which has been claimed by the assessee. The AO has without verifying the documents and information available he accepted the return of income. Accordingly, as per provisions of income tax Act, Order passed by the AO is erroneous and prejudicial to the interest of Rvenue. During the proceedings before the learned Pr.CIT, assessee explained that the gross turnover for the year under consideration is Rs.24,50,000/- and the assessee has offered the income under the presumptive @ 10% as per section 44AD of Rs.2,45,000/- is which includes Rs.12 lakhs as part of the turnover which is appearing in Form 26AS. Assessee is a small civil contractor and the deductor has wrongly posted under section 194H of the Act. He should have deducted TDS under section 194C of the Act however it has been deducted under section 194H of the Act under the head commission which is completely wrong. The learned Counsel further referred to Paper Book Page No. 22 which is submission made before AO in which it has been clarified that Rs.12 lakhs is included in the turnover of Rs.24,50,000/- and assessee is engaged in civil construction contract. After verifying all these facts, the AO has accepted the return of income. The receipts disclosed in Form 26AS has been duly offered for tax and TDS has also been claimed by the assessee which has been allowed by the AO and as per the computation the assessee has been allowed refund of Rs.37,207/-. Accordingly, Order passed by the AO is not erroneous and not prejudicial to the interest of Revenue. He further submitted that if the arguments of the assessee is not accepted it would change the opinion and would amount to double taxation to the assessee on the same income which is contrary to the provisions of income tax law.
At the outset of hearing, we noticed that the appeal filed by the assessee is delayed by 349 days. In this regard, assessee has filed affidavit which is placed on record at Paper Book Page Nos.19 to 23. The reasons stated by the assessee are as under:
The learned assessing officer after considering the explanations and details filed by the appellant, concluded the assessment by accepting the income returned by the appellant of Rs. 5,48,500/- declared in the return filed in response to the notice issued under section 148 of the Act, without making any adjustments either by making any addition or disallowance. The learned assessing officer passed an order of re-assessment under section 147 r.w.s. 144B of the Act, dated 30/03/2022 assessing the total income of the appellant at Rs. 5,48,500/- as against the income reported / returned by the appellant of Rs. 5,48,500/-. Thereafter, revision proceedings under section 263 of the Act were initiated by the Hon’ble Principal Commissioner of Income-tax, Bengaluru – 1, Bengaluru by issuance of Show Cause Notice under section 263 of the Act, dated 28/12/2023, by erroneously observing that the commission income of Rs. 12,00,000/- though the same is appearing in Form 26AS wherein TDS amounting to Rs. 65,000/- is available in the credit of the assessee and the same was claimed by the assessee in the return of income, however the assessee has not included the said commission income received of Rs. 12,00,000/-. The appellant filed the details and documents in support of his case and the Hon’ble Principal Commissioner of Income-tax, Bengaluru – 1, Bengaluru vide order of revision under section 263 of the Act, dated 12/03/2024, held that the order of re- assessment passed by the learned assessing officer is erroneous and prejudicial to the interest of the revenue and set-aside the order of reassessment passed directed the learned assessing to make fresh assessment. The learned assessing officer pursuant to the order of revision passed by the Hon’ble Principal Commissioner of Income-tax, under section 263 of the Act, dated 12/03/2024, issued various statutory notices calling for details and explanations. The learned assessing officer in the impugned proceedings of give effect to the revision order passed under section 263 of the Act, had infact travelled / traversed beyond the scope and also the power by making an addition which was never a finding or direction or subject matter in the order of revision passed under section 263 of the Act. It is submitted that the learned assessing officer to give effect to the order of revision passed under section 263 of the Act, has to follow only such of the directions which have been given or passed in the order of revision under section 263 of the Act and the learned assessing officer cannot enlarge his scope beyond the directions given in the order passed under section 263 of the Act and which were not subject matter of revision proceedings under section 263 of the act which is impermissible in the eyes of law and statute. The learned assessing officer called for various details and the appellant filed details as called for and the learned assessing officer without properly appreciating and also traversing beyond the scope of directions in the revision order passed, concluded the proceedings by passing an order of assessment under section 143 [3] r.w.s. 263 r.w.s. 144B of the Act, dated 12/03/2025, by determining the total income of the appellant at Rs. 2,88,45,750/- as against the income returned by the appellant at Rs. 5,48,500/- and accepted by the order passed by the learned assessing officer under section 147 r.w.s. 144B of the Act dated 30/03/2022. Being aggrieved by the impugned order of assessment passed by the learned assessing officer under section 143[3] r.w.s. 263 r.w.s. 144B of the Act the appellant has preferred an appeal before your Honour as per the provisions of section 246A of the Act, which is beyond time by about 34 days in filing the present appeal and the reasons for the delay in filing the appeal are set-out hereinafter. It is submitted that the appellant could not file the appeal within the statutory time permitted by the statute for the reason that soon after the impugned order was passed and came to the knowledge of the appellant, he approached his chartered accountant for taking his advice as regard to the next course of remedy available against the impugned order of assessment passed by the learned assessing officer wherein certain additions were made. The Chartered Accountant suggested the appellant to prefer statutory appeal before the Hon’ble Commissioner of Income-tax [Appeals] and the said Chartered Accountant due to oversight and also due to his other pre-occupied professional works skipped his attention as regard to the due date for filing the appeal and further the appellant was also under a Bonafide belief and impression that an appeal against the impugned order of assessment would have been filed by the said Chartered Accountant.
It is submitted that when the appellant called the Chartered Accountant for a copy of the appeal papers which were supposed to be filed by the said Chartered Accountant, then and then only the said Chartered Accountant realized that the due date for filing the present appeal was on or before 11/04/2025 and by the time the present counsel could realise there arose a delay in filing the present appeal by about 34 days. In view of the above fact the Appellant could not file the Appeal before this Hon’ble appellate authority in time as per the scheme of the Act and there was a delay of about 34 days in filing this present appeal before this Hon’ble appellate authority. The delay in filing the present appeal is due to the facts brought out in the earlier paragraphs and not deliberate. The appellant would not gain anything by not filing the appeal rather it loses its rights by not filing the appeal, thus the delay in filing the present appeal was circumstances beyond the control of the appellant, which fact requires to be appreciated by your Honour. It is humbly prayed that the Hon’ble Commissioner of Income-tax [Appeals] takes lenient and compassionate view and condone the delay of about 34 days in filing the present appeal against the order of the learned Assessing Officer under section 143[3] r.w.s. 263 r.w.s. 144B of the Act dated 12/03/2025 and humbly pray your Honour to hear the same on merits for the advancement of substantial cause of justice. It is humbly submitted that if this application for condonation of delay in filing the appeal is not allowed, the appellant / Petitioner would be put to great hardship and irreparable injury and on the other hand no hardship or injury would be caused to the Respondent if this application of condonation of delay is allowed. Reliance is placed on the decision of the Hon’ble Apex Court in the case of Collector, Land Acquisition vs. MST. Katiji and Others [1987] 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd., vs. Smt. Nirmala Devi and Others 118 ITR 507. Further the Appellant relies on another decision of the Hon’ble Apex Court in the case of Radha Krishna Rai vs. Allahabad Bank & Others [2009] 9 SCC 733. Wherefore the appellant / Petitioner once again humbly pray before your Honour to kindly condone the delay in filing of about
34 days in filing the present appeal and hear the same on merits of the matter for the advancement of substantial cause of justice.
On going through the explanation submitted by the learned Counsel and by relying on the judgment of the Hon’ble Supreme Court in the case of Collector of Land Acquisition Vs. MST Katiji and Others, (1987) 2 SCC 107 : 1987 (2) SC, the delay in filing the appeal is condoned.
DR relied on the Order of learned Pr.CIT and submitted that learned Pr.CIT has power to exercise his jurisdiction as per provisions of section263 of the Act that any Order passed by the AO can be examined as per the provisions of income tax Act.
Considering the rival submissions and on perusal of the entire material available on record and Orders of authorities below, we noted that assessee has filed return of income in pursuance to under section 148 of the Act dated 16.04.2021 declaring gross total income of Rs.5,48,500/- and claimed TDS of Rs.65,000/-. The AO issued notice under section 143(2) of the Act. On going through the notice issued under section 142(1) of the Act, we noted that AO had asked specific question on the disputed point and it has been replied by the assessee on 24.02.2022 which is placed at Paper Book Page No.22 in which the assessee has replied as under:
“The Income of Rs. 1200000 is already included in the statement of total income under the head business. There was a total receipt of Rs. 2450,000 received by me including the said Rs. 1200000 towards civil construction contract. Already the same has been shown in the income tax return.
I have not maintained any books of account, hence I have declared the receipts under presumptive basis U/s. 44AD ofthe income tax act. In view of the above, I request your honor to dispose off the case at the earliest and oblige. Thanking you Yours sincerely M MUNIRAJU PS: Due to space constraint, Bank statement will be submitted in the next attachment sir.”
The AO after considering the submissions, he has accepted the return of income filed by the assessee and amount of Rs.12 lakhs as appearing in Form 26AS has already been offered by the assessee in his turnover and has claimed TDS deduction as submitted by the learned Counsel that the assessee was never engaged in earning commission income. He is a small civil contractor and carrying civil contract works and we also have gone through the computation of income furnished by the assessee. The amount of Rs.12 lakhs received from Gatik Business Solutions Pvt. Ltd., has already been offered for tax and included in his turnover. If the order passed by the ld. Pr.CIT is accepted then in such case it would be double taxation on the receipts already disclosed by the assessee which does not permit. Accordingly, we hold that reassessment Order passed by the AO is not erroneous and not prejudicial to the interest of the Revenue. Accordingly revisionary power exercised by the Pr. CIT is not sustainable.
In the result, appeal filed by the assessee is allowed.