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Facts
Following search and seizure operations, the assessee's assessments for AYs 2015-16 to 2018-19 were completed u/s 153A. The PCIT invoked revisional jurisdiction u/s 263, alleging contravention of section 40A(3) regarding cash payments and directed fresh orders. The assessee challenged the PCIT's revisional orders.
Held
The Tribunal held that the PCIT's revisional order u/s 263 was unsustainable. For unabated assessments, the AO could not have examined the 40A(3) issue in 153A proceedings without incriminating material. Crucially, as the assessments were passed u/s 153A with prior approval u/s 153D, they could not be revised u/s 263 without a finding that the approval itself was vitiated or erroneous.
Key Issues
Can an assessment order passed under Section 153A, especially with prior approval under Section 153D, be revised by the PCIT under Section 263, particularly when no incriminating material was found for certain assessment years?
Sections Cited
Section 263, Section 153A, Section 40A(3), Section 153D, Section 143(3), Section 263A
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Income Tax Appellate Tribunal, DELHI BENCHES : B : NEW DELHI
Before: SHRI M. BALAGANESH & SHRI ANUBHAV SHARMA
(Appellant) (Respondent) Assessee by : Shri Raj Kumar Gupta, CA & Shri J.P. Sharma, CA Revenue by : Shri T. James Singson, CIT-DR Date of Hearing : 28.08.2024 Date of Pronouncement : 30.08.2024 ORDER PER BENCH: These are appeals preferred by the assessee against the orders u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 20.03.2024, 20.03.2024, 20.03.2024 & 27.03.2024 of the Principal Commissioner of Income Tax (Central), Gurgaon (hereinafter referred as ‘the Ld. PCIT’) in Appeal Nos. PCIT (Central), Gurgaon/Revision- 263/100000653484/2024, PCIT (Central), Gurgaon/ Revision-
ITAs No.1890 to 1893//Del/2024 263/100000653483/2024, PCIT (Central), Gurgaon/ Revision- 263/100000653482/2024 and PCIT (Central), Gurgaon/ Revision- 263/100000652485/2024, respectively arising out of the assessment orders dated 25.09.2021 passed u/s 153A of the Act by the ACIT, Central Circle, Faridabad (‘the ld. AO’ for short).
The facts of the case, in brief, are that consequent to search and seizure operations, the case of the assessee, who is in the business of stone crusher, the assessments were completed u/s 153A of the Act on the returned income. However, the ld.PCIT was not satisfied and, accordingly, invoked the revisional jurisdiction u/s 263 of the Act for examining the bank statements and bank book of the assessee’s proprietary concern, M/s Sanjeev Stone Crushing Company and found that certain payments were made otherwise than account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system and the amounts exceeding Rs.10,000/- or Rs.20,000/- were accordingly found to be paid in contravention of the provisions of section 40A(3) of the Act and ld. PCIT was of the opinion that the same should be disallowed and, accordingly, after show-causing the assessee and considering the reply, had directed the AO to pass an order afresh which has been challenged before us by the assessee. The grounds in the four appeals are similar except for the amounts mentioned and, therefore, were together heard and are decided together for the convenience and to avoid the cost repetition or contradiction. 2
ITAs No.1890 to 1893//Del/2024
Heard and perused the record.
At the time of arguments, the ld. counsel for the assessee has submitted that & 1891/Del/2024 for assessment years 2015-16 & 2016-17 pertain to unabated assessments, while & 1893/Del/2024 for AYs 2017-18 & 2018-19 are abated assessments. It was submitted that there was no incriminating material found during the search. Therefore, the AO could not have examined the issue of making addition by reference to section 40A(3) of the Act in assessment proceedings u/s 153A of the Act.
4.1 This aspect could not be rebutted by the ld. DR and, thus, we are of the considered view that on this ground alone in regard to AYs 2015-16 and 2016- 17, the impugned order of PCIT u/s 263 of the Act is not sustainable as what could not have been done by the AO u/s 153A cannot be made to be done by AO by invoking the provisions of section 263A of the Act.
Further, the ld. AR has submitted that in regard to the assessment orders under consideration for the four years, the assessment orders were passed u/s 153A of the Act after approval of Addl. CIT u/s 153D dated 24.09.2021. It was submitted by the ld. AR that an order which has been subject of approval u/s 153D of the Act cannot be subject to revision u/s 263 of the Act and for that the ld. AR has relied the following judicial pronouncements:-
i) PCIT vs. Prakhar Developers Pvt. Ltd. (2024) 162 taxmann.com 48 (MP); 3
ITAs No.1890 to 1893//Del/2024 ii) Smt. Abha Bansal vs. PCIT (2021) 132 taxmann.com 231 (Del- Trib); iii) Gyan Infrabuild (P) Ltd. vs. PCIT (2024) 162 taxmann.com 664 (Patna); iv) BU Bhandari Schemes v. Pr. CIT [IT Appeal Nos. 637 to 641/Pune/2018 dated 14-11-2018]; v) Vishwa Infraways (P.) Ltd. v. CIT (Central) [IT Appeal Nos. 596,597 & 599/Pune/2015]; vi) Rasi Kalal M. Dhariwal (HUF) v. CIT [IT Appeal Nos. 1102 to 1107/ Pune / 2014]; vii) Ramamoorthy Vasudevan v. PCIT [IT Appeal Nos. 967 & 968/Pune/2016]; viii) Dhariwal Industries Ltd. v. CIT [IT Appeal Nos. 1108 to 1113 (Pune) of 2014, dated 23-12-2016]; ix) Smt. Nama Chinnamma v. Dy. CIT [IT Appeal Nos. 1150-1157 (Hyd.) of 2015, dated 9-8-2017]; x) Trinity Infraventures Ltd. v. Dy. CIT [IT Appeal Nos. 584-589 (Hyd.) of 2015, dated 4-12-2015]; xi) S. Satyanarayana v. Syed Rasiuddin [IT Appeal No. 901 (Hyd.) of 2014]; xii) Mehtab Alam v. Dy. CIT [IT Appeal No. 288/Luck/2014, dated 18-11- 2014]; 4
ITAs No.1890 to 1893//Del/2024 xiii) Dharmendra Kumar Bansal v. CIT [20141 48 taxmann.com 53/[2015] 152 ITD 406 (Ip. - Trib.); & xiv) CIT vs. Dr. Ashok Kumar, Proprietor, S.S. Nursing Home, ITA 192/2000, order dated 06.08.2012
This is countered by the ld. DR by relying the order of Nagpur Bench of this Tribunal in order dated 01.04.2022 in M/s Shrigopal Rameshkumar Sales Pvt. Ltd. vs. ACIT.
We have given thoughtful consideration to this aspect of the controversy and we find that a specific ground No.2 is raised by the assessee as follows:- “2. That the asstt. Order passed u/s 153A r.w.s. 143(3) after getting an approval of Addl. Commissioner U/s 153D could not be revised u/s 263, hence Ld. PCIT exceeded his jurisdiction in invoking Sec.263 in respect of impugned asstt. Order framed u/s 153A r.w.s. 153D.”
The assessment orders make it categorical that the same are passed with statutory approval of Addl. Commissioner of Income-tax, Central Range, Gurgaon communicated vide his office letter F. No. Addl.CIT(CR)/GGM/2021- 22/664 dated 24.09.2021 in accordance with section 153D of the Income Tax Act.
We find that in the impugned order the ld. PCIT has not taken account of the fact that the assessments were completed after prior approval of the competent authority. Thus, we are of the considered view that at the time of examining the issue as to if the assessment order is erroneous so far as prejudicial to the interest of the Revenue, the ld. revisional authority is not only 5
ITAs No.1890 to 1893//Del/2024 supposed to see the assessment record of AO, but also the record of the approval which as far as the revisional authority is concerned becomes “record” of the quasi judicial authority whose order is being examined by invoking the revisional jurisdiction. Therefore, without giving a finding that the prior approval u/s 153D was vitiated and was also erroneous so far as prejudicial to the interest of the Revenue, the assessment order independently cannot be held to be erroneous so far as prejudicial to the interest of the Revenue.
9.1 The catena of judicial pronouncements relied by the ld. AR have also laid down the same proposition of law and we will like to refer specifically to the judgement of the Hon’ble Madras High Court in the case of PCIT vs. Prakhar Developers (P) Ltd. (supra) where the Hon’ble Madras High Court has taken into consideration the fact that the Pune Bench order in the case of Ramamoorthy Vasudevan v. PCIT [IT Appeal Nos. 967 & 968/Pune/2016] wherein it was held that the order passed by the PCIT is unsustainable due to lack of jurisdiction in invoking section 263 of the Act for the reason that the same was passed upon taking prior approval u/s 153A of the Act, was not challenged by the Department before the Hon’ble High Court or the Hon’ble Supreme Court and, thus, the Hon’ble Madras High Court in its judgement dated 01.04.2024 has held as follows:- “8. Even otherwise, as per Section 263 of the Act, the Principal Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Assessing Officer, is erroneous in so far as it is prejudicial to the interests of the Revenue, he 6
ITAs No.1890 to 1893//Del/2024 may make enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. For passing any order under Sections 143(3) & 153A of the Act, prior approval of Joint Commissioner is required under Section 153A of the Act, or Principal Commissioner or Commissioner as the case may be. Therefore, once prior approval had already been taken by the Assessing Officer and accepted the return submitted by the assessee, then the same authority cannot exercise the power under Section 263 of the Act to reverse the order of Assessing Officer.”
The judgement which the ld. DR has relied is not applicable as in that judgement, this aspect was not actually examined at all and only for the reason that there also the impugned assessment order was passed u/s 153A of the Act, does not lay down a view contrary to the one we are relying above.
In the light of the aforesaid discussion, we are inclined to allow grounds No.2 and 3 for AYs 2015-16 and 2016-17; and ground No.3 in AYs 2017-18 and 2018-19. Consequently, the appeals are allowed and the impugned orders in respective years are quashed. Order pronounced in the open court on 30.08.2024. Sd/- Sd/- (M. BALAGANESH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30th August, 2024. dk
ITAs No.1890 to 1893//Del/2024