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Facts
The Revenue filed an appeal against the order of the CIT(A) who had set aside an intimation order passed by the CPC. The assessee had filed a revised return which was alleged to be fraudulent, with inflated turnover and a fabricated challan. The assessee had initiated legal action against the Chartered Accountants involved.
Held
The Tribunal agreed with the CIT(A)'s finding that the revised return was fraudulent. The CIT(A) had rightly set aside the intimation order based on the fake return, as the AO is duty-bound to assess the correct income.
Key Issues
Whether the CIT(A) erred in admitting additional evidence without proper procedure and whether the revised return filed by the assessee was indeed fraudulent.
Sections Cited
143(1), 139(1), 46A(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the Revenue for Assessment Year (AY) 2018-19 arises out of the order of Learned Commissioner of Income Tax, Appeal, Addl./JCIT(A)-1, Hyderabad [hereinafter “CIT(A)”] dated 27.03.2025 vide intimation u/s. 143(1) of the Income-tax Act, 1961 (hereinafter “the Act”) issued by Centralized Processing Center, Bengaluru (hereinafter “CPC”) dated 02.11.2019.
Chny/2025 Peacock Hospitals Pvt. Ltd. :- 2 -:
There is a delay of 18 days in filing the appeal by the Revenue.
The Revenue has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. We have considered the petition/affidavit of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is hereby condoned.
The assessee has filed its return of income for the A.Y. 2018-19 u/s. 139(1) of the Act on 31.10.2018 declaring loss of Rs.29,29,155/-.
The assessee has also filed a tax audit report along with return in conformity with return income, in which the turnover of the company was reported at Rs.25,19,93,356/-. Subsequently, a revised return was filed on 25.03.2019 declaring total income of Rs.16,70,70,848/-, by inflating the turnover to Rs.25,19,93,356/- without enclosing the tax audit report to support the revised return. In the revised return, a tax payment of Rs.5,05,01,000/- was also claimed to have been made vide challan No. 36457 dated 23.03.2016. The CPC, while processing the revised return, accepted the revised income of Rs.16,70,29,580/- but did not allow credit of the tax payment so claimed raising demand of Rs 6,01,18,170/-. The assessee filed appeal before the Ld. Addl.
CIT(A). The assessee before Ld. Addl CIT(A) has submitted that the Chny/2025 Peacock Hospitals Pvt. Ltd. :- 3 -: revised return has been fraudulently filed by two Chartered Accountants who were handling the company’s accounts, by showing inflated turnover of Rs. 25,19,93,356/- and fabricating a challan of Rs.5,05,01,000/-. It was further submitted that the revised return did not reflect the true affairs of the company and, therefore, the assessee had lodged a complaint with the Commissioner of Police, Cyber Crime Branch, Chennai, and also filed a criminal petition under the Code of Criminal Procedure before the Chief Metropolitan Magistrate Court, Egmore, Chennai. The assessee accordingly prayed before the Ld. Addl. CIT(A) that the revised return be declared void ab-initio and the original return be restored, to establish that the revised return was false and non-est. The Ld. Addl. CIT(A), after considering the facts, accepted the assessee’s contention and held that the revised return was not genuine but a fraudulent one, and that the processing of such return had given rise to a fake demand. Accordingly, he set aside the intimation order passed by the CPC.
The Ld. Departmental Representative (DR) submitted that the Ld. CIT(A) had admitted additional evidence without recording any reason and without affording the Assessing Officer an opportunity to examine the documents, as mandated under Rule 46A(3) of the Income-tax Chny/2025 Peacock Hospitals Pvt. Ltd. :- 4 -:
Rules, 1962. The Ld. DR therefore requested that the matter be restored to the file of the Assessing Officer for proper examination of the issue.
On the other hand, the Ld. AR of the assessee supported the order of the Ld. CIT(A) and placed on record copies of the original and revised returns. He reiterated that the revised return was fraudulent filled as there was no basis for the inflated turnover, no tax audit report filed along with it, and no actual tax payment had been made. The Ld. AR further submitted that the assessee had already initiated legal action against the concerned Chartered Accountants.
We have heard the rival submissions and perused the material available on record. We find that the Ld. Addl. CIT(A), after examining both the original and revised returns, has given a categorical finding that the revised return was a fake one fraudulently filled. The Ld. Addl. CIT(A) has held that A.O is duty bound to assess the correct income and therefore, set aside the intimation u/s 143(1) of the Act dated 2.11.2019 based on the fake return. We are in complete agreement with the finding given by the Ld. Addl. CIT(A), therefore Chny/2025 Peacock Hospitals Pvt. Ltd. :- 5 -: upheld the same. Accordingly, the grounds raised by the Revenue are dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 29th day of August, 2025 at Chennai.