M.RADHAKRISHNAN,ERODE vs. PCIT-2, ERODE

This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax-2, Coimbatore dated 28.02.2020 relevant to the assessment year 2011-12 passed under section 263 of the Income Tax Act, 1961 [“Act” in short].

Brief facts of the case are that the assessee filed his return of income for the assessment year 2011-12 on 29.03.2012 admitting total income of ₹.9,01,580/-. The return of income was processed under section 143(1) of the Act. However, during the assessment proceedings for the assessment year 2013-14, the sundry creditors deposed that no amount was due for them from the assessee. Based on the information, the assessment for the assessment year 2011-12 was reopened under section 147 of the Income Tax Act, 1961 [“Act” in short]. In response to the notice issued under section 148 of the Act, the assessee filed return of income on 24.12.2016 admitting income of ₹.21,69,700/-. An assessment order under section 143(3) of the Act was passed on 16.06.2017 by accepting the gross business receipts @ 6% of the gross business receipts.

On examination of records, the ld. PCIT observed that the assessee has not been maintained any regular books of accounts. As per the provisions of the Income Tax Act, the minimum percentage of income shall not be less than 8% unless it is supported by audit report as required under section 44AB of the Act. The ld. PCIT further observed that for the assessment years 2013-14 and 2014-15, the income was assessed @ 8%, which was accepted by the assessee. Since the ld. PCIT was of the opinion that the Assessing Officer has concluded the assessment without verification of facts and suffers in as much as it was erroneous and also prejudicial to the interest of revenue, by invoking the provisions of section 263 of the Act, the ld. PCIT passed revision in directing the Assessing Officer to redo the assessment afresh after verification of the facts.

On being aggrieved against the revision order passed under section 263 of the Act, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that after verification of all the details called for, the Assessing Officer completed the assessment. By following the decision of the Tribunal in assessee’s own case for the assessment year 2009-10, where the income was estimated at 6%, the Assessing Officer concluded the assessment by accepting the income returned and thus prayed for quashing the revision order passed under section 263 of the Act.

On the other hand, the ld. DR has submitted that for the assessment years 2013-14 and 2014-15, the income was assessed at 8% which was accepted by the assessee and thus, strongly supported the order passed under section 263 of the Act.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including the paper book filed by the assessee. In this case, during the course of assessment proceedings for the assessment year 2013-14, the sundry creditors in the statement recorded, deposed before the Assessing Officer that no amount was due for them from the assessee. Accordingly, the Assessing Officer reopened the assessment by issuing notice under section 148 of the Act. In response to the notice issued under section 148 of the Act, the assessee filed return of income on 24.12.2016 for the assessment year 2011-12 admitting income of ₹.21,69,700/-. An assessment order under section 143(3) of the Act was passed on 16.06.2017 by accepting the gross business receipts @ 6% of the gross business receipts. However, the ld. PCIT invoked the provisions of section 263 of the Act and passed revision order on the ground that for the assessment years 2013-14 and 2014-15, the income of the assessee was assessed at 8%, which was accepted by the assessee and therefore, the Assessing Officer was ordered to redo the assessment after verification of facts. On perusal of the assessment for the assessment year 2011-12, we find that the Assessing Officer accepted the business income of the assessee at 6% based on the order of the ITAT in assessee’s own case for the assessment year 2009-10. Under the above facts and circumstances, we quash the revision order passed under section 263 of the Act and allow the appeal of the assessee.