MOHD RIYAZUDDIN,HYDERABAD vs. ACIT., CENTRAL CIRCLE - 2(1), HYDERABAD

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ITA 243/HYD/2024Status: DisposedITAT Hyderabad07 April 2025AY 2019-20Bench: Shri Vijay Pal Rao, Vice-President A N D Shri Manjunatha, G. (Accountant Member)15 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the assessee's appeal. It rejected the assessee's additional grounds challenging the validity of the assessment order (due to alleged lack of DIN for Section 153D approval) for want of evidence. On the merits, the Tribunal found the Assessing Officer's acceptance of the cash as business income without proper inquiry into its source or the nature of real estate business, and without applying Section 115BBE, rendered the assessment order erroneous and prejudicial. Thus, the Pr. CIT was justified in invoking Section 263 to set aside the assessment for fresh adjudication.

What were the facts?

During a search operation, cash of Rs. 62.00 lakhs was found. The assessee initially explained Rs. 15.00 lakhs belonged to him/his son and Rs. 45.00 lakhs to relatives. However, in the income tax return, the entire Rs. 62.00 lakhs was offered as business income from real estate. The Assessing Officer completed the assessment under Section 143(3) by accepting this claim without further inquiry or applying Section 115BBE. The Principal Commissioner of Income Tax (Pr. CIT) subsequently invoked Section 263 to revise this assessment, deeming it erroneous and prejudicial to revenue due to lack of inquiry and incorrect tax rate application.

What were the issues?

1. Whether the Principal Commissioner of Income Tax's revision order under Section 263 was valid, given the Assessing Officer's purported lack of inquiry and failure to apply Section 115BBE on unexplained cash. 2. Whether the original assessment order was invalid for want of a valid approval under Section 153D, specifically lacking a Document Identification Number (DIN).

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 115BBE,Section 153D,Section 132(4),Section 143(1),Section 142(1),Section 68,Section 69,Section 69A,Section 144A,Section 153B(1)(b)

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Income Tax Appellate Tribunal, Hyderabad ‘ DB-B ‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.

Hearing: 29/01/2025

(िनधा�रण वष�/Assessment Year: 2019-20) Shri Mohd. Riyazuddin Vs. Asstt. Commissioner of Hyderabad Income Tax, PAN:AHUPM6145M Central Circle 2(1) Hyderabad (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Advocate Siddharth Toshnival राज� व �ारा/Revenue by:: Shri LV Bhaskar Reddy, DR सुनवाई की तारीख/Date of hearing: 29/01/2025 घोषणा की तारीख/Pronouncement: 07/04/2025 आदेश/ORDER

Per Vijay Pal Rao, Vice President

1.

This appeal by the assessee is directed against the revision order dated 18/01/2024 of the learned Pr. CIT (Central) Hyderabad the A.Y.2019-20.

2.

The assessee has raised the following grounds of appeal:

3. The assessee has also raised additional grounds reads as under:

4. In the additional ground, the assessee has challenged the impugned order passed u/s 263 of the Act on the ground that Page 3 of 15 the assessment order passed by the Assessing Officer is invalid for want of a valid approval u/s 153D of the Act. The learned AR of the assessee has submitted that the approval granted u/s 153D is without any DIN and therefore, it is contrary to the CBDT Circular No.19/2019 whereby the Document Identification Number (DIN) is mandatory for any communication. Another contention of the learned DR challenging the assessment order is that, the approval granted u/s 153D is mechanical and without application of mind. The 3rd contention to challenge the impugned order passed u/s 263 as raised in the additional ground is that, once the assessment order is passed after taking approval u/s 153D, then the said order cannot be subject to revision u/s 263 of the I.T. Act, 1961. In support of his contention, the learned AR of the assessee has relied upon various decisions as under: i) Finesse International Design (P) Ltd vs. DCIT (2023) 204 ITD 594 (Delhi Trib.) ii) Bawa Float Glass Ltd vs. DCIT in dated 2/1/2024 iii) Smt. Abha Bansal vs. Pr.CIT (2021) 132 Taxmann.com 231 (Delhi Trib.) iv) Gyan Infrabuild (P) Ltd vs. Pr.CIT in to 178/PAT/2023 dated 13/05/2024 v) Ramamoorthy Vasudevan vs. Pr.CIT (Central) in Ita No.967 & 968/PUN/2016, dated 29/11/2018.

4.1 He has also relied upon the decision in the case of ACIT v. Serajuddin & Co. reported in ( 2023) 454 ITR 312 and SLP filed by the Department has been dismissed by the Hon'ble Supreme Court reported in 463 ITR 698. Thus, the learned AR has submitted that when the assessment order itself is not valid, then the order passed by the Pr. CIT u/s 263 of the I.T. Act, 1961

Page 4 of 15 would not survive. He has further contended that, even otherwise, the issue of applicability of provisions of section 68/69 r.w.s. 115BBE of the Act is a debatable issue and once the Assessing Officer has conducted an inquiry and accepted the claim of the assessee, then the Pr. CIT has no jurisdiction to invoke the provisions of section 263 on this debatable issue merely because he does not agree with the view of the Assessing Officer. In support of his contention, he has relied upon the decision of Delhi Benches of the Tribunal in the case of Balvinder Singh vs. Pr. CIT in ITA No.570/Del/2022. Thus, the Assessing Officer has taken a possible view while accepting the source of the cash found and seized during the course of search as business income of the assessee then the impugned order passed by the Pr. CIT is not sustainable in law. In support of his contention, he has relied upon the decision of the Delhi Benches of the Tribunal in case of Yogesh Kumar vs. Pr. CIT in dated 30/08/2023. He has further contended that the impugned order has been passed without giving a finding, as to what is the correct rate of tax and therefore, the Pr.CIT has not conducted any inquiry before passing the impugned order and hence he was not sure about the correct rate of tax and again asked the Assessing Officer to redo the same. The Revisionary Authority is supposed to conduct a minimum inquiry before setting aside the order as erroneous and prejudicial to the interest of Revenue. In the absence of any inquiry conducted by the Pr.CIT, the order is not sustainable in law. In support of his contention, he has relied upon the decision of the Hon'ble Delhi High Court in the case of Pr. CIT vs. Delhi Airport Metro Express Pvt. Ltd reported in 398

Page 5 of 15 ITR 8 and submitted that the Hon'ble High Court has held that, the Revisionary Authority could not have remitted the matter to the Assessing Officer without undertaking an inquiry by himself. Thus, the learned AR has submitted that the impugned order passed by the Pr. CIT is not sustainable in law and liable to be set aside.

5.

On the other hand, the learned DR has submitted that, this is an appeal against the order passed u/s 263 of the Act and therefore, the validity of the assessment order cannot be challenged in these proceedings as raised by the assessee in the additional grounds of appeal. He has further contented that, even otherwise, the approval granted u/s 153D of the Act is not a communication or order issued to the assessee and therefore, it does not require a DIN as per CBDT Circular No.19/2019. The learned DR has further contented that it is a communication between one tax authority and another tax authority and therefore, it cannot be compared with the order issued u/s 144A of the Act on which the assessee has relied some case law. He has further contended that. when the Assessing Officer has not conducted any inquiry and applied his mind on this issue and accepted the claim of the assessee which is completely contrary to the explanation as given at the time of search & seizure action while recording a statement u/s 132(4) of the I.T. Act, 1961. The learned DR has pointed out that at the time of recording the statement u/s 132(4), the assessee has explained the cash found and seized to the tune of Rs.62.00 lakhs as to the extent of Rs.15.00 lakhs belongs to himself and his son and the balance

Page 6 of 15 cash of Rs.45.00 lakhs belongs to his relatives. In the return of income, the assessee has offered the said amount of Rs.62.00 lakhs as business income but, without any supporting evidence. Thus, when the assessee has taken a contrary stand at the time of assessment, the Assessing Officer was supposed to conduct a proper inquiry before accepting the claim of the assessee. In the absence of conducting an inquiry on the part of the Assessing Officer, the order passed by the Assessing Officer is erroneous. so far as it is prejudicial to the interest of the Revenue and therefore, the Pr. CIT has rightly invoked the provisions of section 263 and set aside the order passed by the Assessing Officer for fresh adjudication after conducting a proper inquiry. The learned DR has further submitted that, the approval u/s 153 was done and communicated through the ITBA Portal and therefore, the authenticity of the same cannot be doubted. The very purpose of generating a DIN is to bring transparency in the communication of orders/notices and other communication to the assessee in relation to the proceedings of assessment/appeal etc. Thus, when the Assessing Officer has not conducted an inquiry on this issue, then the same is rightly held as erroneous and prejudicial to the interest of the Revenue. He has relied upon the impugned order of the Pr. CIT.

6.

We have considered the rival submission as well as the relevant material available on record. So far as the additional grounds raised by the assessee are concerned, the assessee is challenging the validity of the assessment order for want of a valid approval u/s 153D of the I.T. Act, 1961. It is pertinent to note

Page 7 of 15 that this appeal is not against the assessment order but challenging the order of the learned Pr. CIT passed u/s 263 of the I.T. Act, 1961. Though the assessee can challenge the revision order passed u/s 263 of the Act on the ground of validity of the assessment order itself, however, in order to challenge the validity of approval u/s 153D in the proceedings against the order passed u/s 263 of the Act, the assessee himself has to bring on record the very approval order passed u/s 153D to show the legal infirmity in the same. The assessee has not produced any record to show that the said approval was given by the Addl. CIT without application of mine or before passing the impugned order by the Assessing Officer u/s 153(3) of the Act. Once the impugned approval itself is not placed before us, the question of validity of the approval cannot be decided. Therefore, in the absence of any material and the impugned approval itself u/s 153D, we cannot analyze the relevant aspects of the approval and give a finding whether the same is valid or invalid. Hence, in the facts and circumstances of the case, the additional ground raised by the assessee are rejected and stand dismissed.

7.

As regards the contention of the assessee that the Assessing Officer has taken a possible view while accepting the business income of the assessee to the tune of Rs.62.00 lakhs on account of the cash found and seized during the course of search & seizure action, it is pertinent to note that the Assessing Officer while passing the impugned order has simply accepted the contention of the assessee without deliberating or even discussing the crucial relevant facts about the cash of Rs.62.00 lakhs found

Page 8 of 15 and seized during the course of search and seizure action. The Assessing Officer has accepted the claim of business income offered by the assessee of the said amount of Rs.62.00 lakhs in para 2 to 4 as under:

8.

Though the Assessing Officer has mentioned that, the notices u/s 142(1)of the Act have been issued on various dates calling for information and in response, the assessee has uploaded the information which was verified by the Assessing Officer, but nothing has been either brought on record by the assessee or considered by the Assessing Officer in respect of the explanation of the assessee at the time of the assessment, which Page 9 of 15 is in complete departure from the stand taken by the assessee at the time of recording the statement u/s 132 (4) of the I.T. Act, 1961. The assessee has not disputed that, at the time of search & seizure action, the assessee has explained the cash of Rs.62.00 lakhs to the extent of Rs.15.00 lakhs belongs to himself and his son, and the balance of Rs.45.00 lakhs belongs to his relatives. The assessee has not produced any evidence, either in support of the explanation of the cash at the time of the search & seizure action. or at the time of assessement proceedings. The assessee in the return of income has offered the said income as income from real estate business, whereas the only declared business of the assessee was in the name and style of Maharaja Hotel. Thus, the claim of income from real estate business of the assessee in respect of cash of Rs.62.00 lakhs found during the search & seizure action is a new stand taken by the assessee in the return of income and that too, without any supporting evidence to substantiate this claim. Though the Assessing Officer has issued notices u/s 142(1), however, in reply to those notices, the assessee has not produced any record or material in support of this stand of doing the business of real estate and the cash of Rs.62.00 lakhs found during the search is generated from the business of real estate. Therefore, accepting the claim of the assessee while passing a non-speaking order which is rather sub- silentio on the very issue and subject matter of the assessment is definitely falls in the category of lack of inquiry on the part of the Assessing Officer. The order passed by the Assessing Officer without application of mind and contrary to the stand of the assessee taken at the time of search & seizure action is erroneous

Page 10 of 15 due to non-application of mind as well as lack of inquiry and therefore, the learned Pr. CIT has rightly invoked the provisions of section 263 of the I.T. Act, 1961 by issuing the show cause notice u/s 263 of the Act, dated 11/12/2023 as under:

9.

The learned Pr.CIT has clearly recorded the relevant facts and also stated the correct rate of tax u/s 115BBE at 60% instead of the normal rate of tax applied by the Assessing Officer. After considering the reply of the assessee to the show cause notice, the learned Pr. CIT has given his findings in para 5 & 6 as under:

10.

Thus, it is manifest from the record that neither the Assessing Officer has called for any details nor the assessee filed any supporting evidence to substantiate the claim as income from real estate business offered to tax in the return of income, as against the source of cash of Rs.62.00 lakhs explained by the assessee during the course of search & seizure proceedings as Rs.15.00 lakhs belongs to himself and his son and balance cash of Rs.45.00 lakhs belongs to his relatives. This fact itself renders the assessment order erroneous in so far as it is prejudicial to the interest of the Revenue. Accordingly, in the facts and circumstances of the case as discussed above, we do not find any error or illegality in the order of the learned Pr. CIT. The decisions relied upon by the learned AR of the assessee cannot be applied in the facts of the present case.

11.

In the result, the appeal of the assessee is dismissed.

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