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Facts
The assessee, an individual, failed to file an Income Tax Return for AY 2013-14 but had bank transactions totalling Rs. 3.34 Crores. The Assessing Officer reopened the assessment under Section 147, and after the assessee filed a return and provided explanations, the AO accepted the return. Subsequently, the Principal Commissioner of Income Tax (Pr. CIT) invoked Section 263 to revise the AO's order, deeming it erroneous and prejudicial to revenue, and directed the AO to tax Rs. 80.75 Lakhs of gifts as unexplained cash deposits under Section 69 read with Section 115BBE.
Held
The Tribunal held that the Pr. CIT exceeded its jurisdiction by giving specific directions to the Assessing Officer to complete the assessment in a particular manner. Relying on a Madras High Court judgment, the Tribunal set aside the Pr. CIT's order, thereby restoring the original order passed by the Assessing Officer.
Key Issues
Whether the Pr. CIT was justified in invoking Section 263 to revise the AO's order and give specific directions for taxing gifts as unexplained cash deposits, when the AO had conducted inquiries and accepted the assessee's return.
Sections Cited
147, 144B, 148, 143(2), 142(1), 263, 69, 115BBE, 50C(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE VICE- & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against order passed by Learned Principal Commissioner of Income Tax, Visakhapatnam -1 [hereinafter “Ld.Pr.CIT”] vide DIN & Order No. ITBA/COM/F/17/2023-24/1063341276(1) dated 25.03.2024for the A.Y. 2013-14 arising out of order passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (in short ‘Act’) dated 25.03.2022.
I.T.A.No.224/VIZ/2024 Satti Chandra Reddy 2. Brief facts of the case are that, assessee being an individual did not file his return of income for the impugned assessment year. Later, notice under section 148 of the Act dated 31.03.2021 was issued after obtaining approval from the concerned authorities. The reason for invoking section 147 of the Act observed by the Ld. Assessing Officer [hereinafter in short “Ld. AO"] was due to the fact that the assessee has not filed his return of income whereas the assessee had transactions in the Savings Bank Account totalling to Rs.3,34,21,125/- during the impugned assessment year. Therefore, Ld. AO treated the amount of Rs.3,34,21,125/- as income escaping assessment while reopening the case under section 147 of the Act. In response to notice u/s 148, assessee filed his return of income on 04.03.2022 declaring a total income of Rs.1,84,950/-. Subsequently, statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. In response, assessee submitted copies of bank statements, cash books and confirmations from family members, etc. Considering the reply of the assessee, Ld. AO accepted the return of income filed by the assessee and completed the assessment under section 147 r.w.s. 144B of the Act.
By exercising his powers under section 263 of the Act, Ld.Pr.CIT observed that order of the Ld. AO passed under section 147 r.w.s. 144B of the Act dated 25.03.2022 for the A.Y. 2013-14 as erroneous and prejudicial to the interest of the revenue. Thereafter, Ld.Pr.CIT issued a show-cause notice dated 12.03.2024 and duly served on the assessee. In response, assessee made various Page No. 2
I.T.A.No.224/VIZ/2024 Satti Chandra Reddy submissions before Ld.Pr.CIT. Considering all the submissions made by the assessee, the Ld.Pr.CIT passed the order with following directions: -
“9. The Assessing Officer is directed to pass consequential order keeping in view the direction given in para 7 above. Thus the Assessing Officer is directed to bring to tax the amount of Rs.80,75,000/- being unexplained cash deposits u/s.69 of the I.T.Act and to be taxed u/s.115BBE of the I.T.Act. The Assessing Officer is directed to pass necessary consequential order accordingly.”
On being aggrieved by the order of the Ld.Pr.CIT, assessee is in appeal before us by raising following grounds of appeal: -
1. The order of the learned Principal Commissioner of Income Tax is contrary to the facts and also the law applicable to the facts of the case.
The learned Pr. Commissioner of Income Tax, Visakhapatnam is not justified in assuming jurisdiction u/s 263 of the Act in as much as the assessment order u/s 147 r.w.s.144B dated 25.03.2022 for the A.Y 2013-2014 is neither erroneous nor prejudicial to the interests ofrevenue.
3. The learned Pr. Commissioner of Income Tax, Visakhapatnam is not justified in directing the Assessing officer to treat the following amounts as unexplained money u/s 69 of Income Tax Act, 1961 and to assess the same to taxation us 115BBE of the Act: (Rs.) a) Gift from HUF 20,25,000 b) Gift from Sons 20,00,000 c) Gift from Wife 12,50,000 d) Gift from Brothers and Sisters 28,00,000 80,75,000 4. The learned Pr. Commissioner of Income Tax, Visakhapatnam ought to have appreciated that the assessing officer initiated enquiries in respect of the above issues and as such it is not a case of 'lack of inquiry to enable the learned Commissioner of Income Tax to invoke the provisions of S.263.
Any other ground that may be urged at the time of appeal hearing.” Page No. 3
I.T.A.No.224/VIZ/2024 Satti Chandra Reddy 5. At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] argued that the Ld.Pr.CIT has given a specific direction to complete the assessment in a particular manner. He submitted that the Ld.Pr.CIT has exceeded his jurisdiction in directing the Ld. AO to complete the assessment in a particular manner by giving a specific direction. On this count he relied on the order of the Hon’ble Madras High Court in the case of CIT v. Smt. Tasneem Z. Madraswala [(2010) 324 ITR 0067]. He therefore pleaded that the order of the Ld.Pr.CIT is void abinito.
With respect to the merits of the case, Ld.AR argued that the Ld. AO has made enquires and on being satisfied accepted the return of income filed by the assessee. He argued that various judicial pronouncements have held that provisions of section 263 of the Act cannot be invoked in cases where there are two opinions possible. He pleaded that even on merits the order of the Ld.Pr.CIT deserves to be deleted.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] relied on the orders of the Ld.Pr.CIT. Ld.DR submitted that, Ld.Pr.CIT considering the submissions made by the assessee has passed a detailed order as assessee failed to substantiate its case with evidence. He therefore pleaded that the order of the Ld.Pr.CIT be upheld.
We have heard both the sides and perused the material available on record. It is an undisputed fact that various judicial pronouncements have held Page No. 4
I.T.A.No.224/VIZ/2024 Satti Chandra Reddy that the Ld.Pr.CIT while passing the order under section 263 of the Act cannot give specific direction to the Ld. AO to complete the assessment in a particular manner. In the reliance placed by the Ld.AR in the case of CIT v. Smt. Tasneem Z. Madraswala (supra), the Hon’ble Madras High Court in paragraph No. 8 of the order held as follows: -
“8. A reading of the abovesaid judgment would clearly show that while remanding the matter, the CIT ought not to have given a specific direction to complete the assessment in a particular manner. Further, the Tribunal has only set aside the abovesaid direction by which the AO was directed to complete the assessment by following s. 50C(2)(b) of the Act. We do not find any error in the order passed by the Tribunal. The questions of law raised by the Revenue are answered against the Revenue. Accordingly, the tax case appeal is dismissed. No costs.”
In the instant case, the facts are identical and similar to the case cited by the Ld.AR in CIT v. Smt. Tasneem Z. Madraswala (supra). Judicially following the decision of the Hon’ble Madras High Court, we hereby set-aside the order of the Ld.Pr.CIT thereby restoring the order of the Ld. AO. Accordingly, appeal of the assessee is allowed and all the other grounds raised by the assessee are not adjudicated being academic in nature.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 31st January, 2025.