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Facts
The assessee filed an appeal against the order of the PCIT, who held the assessment framed under section 143(3) as erroneous due to the non-invocation of section 115BBE of the Act. The PCIT found that an addition made under section 69C, taxable at 60% under section 115BBE, was taxed at the normal rate by the AO.
Held
The Tribunal modified the direction of the PCIT for a de-novo assessment. The AO was directed to frame the assessment without being influenced by the PCIT's direction and to consider the assessee's contentions based on documentary evidence.
Key Issues
Whether the PCIT erred in holding the assessment framed under section 143(3) as erroneous and prejudicial to the revenue due to the non-invocation of section 115BBE for the addition made under section 69C.
Sections Cited
143(3), 69C, 115BBE, 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI PRAKASH CHAND YADAV
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the PCIT, Bengaluru - 3 dated 21/03/2023 vide DIN No. ITBA/REV/F /REV5/2022-23/1051053404(1) for the assessment year 2018-19.
The only issue raised by the assessee is that the ld. PCIT erred in holding the assessment framed u/s 143(3) of the Act dated 31/03/2021 as erroneous in so far as prejudicial to the interest of revenue.
2.1 In the present case, the assessment was framed by the AO u/s 143(3) of the Act after making an addition of Rs. 12,66,354/- under the provisions of sec. 69C of the Act. However, the ld. PCIT on examination of the records found that the addition made by the AO u/s 69C of the Act is subject to tax @ 60% as specified u/s 115BBE of the Act, whereas the AO in the assessment has levied tax at the normal rate of tax. Accordingly, the ld. PCIT proposed to hold the assessment framed by the AO u/s 143(3) of the Act as erroneous in so far as prejudicial to the interest of revenue vide notice dated 14/03/2023 but there was no compliance by the assessee. Therefore, the ld. PCIT treated the assessment order framed by the AO as erroneous and prejudicial to the interest of revenue on account of non-verification of the provisions of sec. 115BBE of the Act while making the addition under section 69C of the Act.
Being aggrieved by the order of ld. PCIT, the assessee is in appeal before us.
The ld. AR before us filed a paper book running from pages 1 to 207 and fairly admitted that the order passed by the ld. PCIT holding the assessment as erroneous in so far prejudicial to the interest of the revenue on account of non-invocation of the provisions of sec. 115BBE of the Act while making the addition made by the AO u/s 69C of the Act is per the provisions of law. However, the ld. AR before us submitted that the addition made by the AO u/s 143(3) of the Act has already been challenged before ld. CIT(A). Besides the above, the AO in consequential order passed u/s 143(3) r.w.s. 263 of the Act has invoked the provisions of sec. 115BBE of the Act vide order dated 19/03/2024, which has also . challenged before the ld. CIT(A). Furthermore, the ld. AR before us submitted that if the assessee gets the relief before the ld. CIT(A) in the appeal filed against the assessment order u/s 143(3) of the Act dated 31/03/2021 then, other proceedings will become infructuous. It was also pointed out by the ld. AR that the assessee has a fair chance of succeeding in the appeal filed against the proceedings u/s 143(3) of the Act. It was further submitted by the ld. AR that the assessee has not incurred any expenses so as to attract the provisions of sec. 69C of the Act. Thus, the ld. AR before us prayed that the directions given by the ld. Pr.CIT u/s 263 of the Act can be modified only to the extent that the AO shall frame the de-novo assessment in pursuance to the direction given by the ld. CIT(A) u/s 263 of the Act vide order dated 21/03/2023 so as to avoid multiple proceedings.
On the other hand, the ld. DR contended that the present proceedings are limited to the extent of invoking the provision of section of 115BBE of the Act, which was omitted by the AO under the proceedings u/s 143(3) of the Act. The question whether the addition made by the AO u/s 69C of the Act of Rs. 12,66,354/- is sustainable or not does not arise in the present proceedings. However, the ld. DR did not raise serious objection considering the multiple proceedings if the direction given by the ld. CIT(A) is modified for de-novo assessment at the level of the AO.
We have heard the rival contentions of both the parties and perused the materials available on record. Undeniably, there is common issue involved in the proceedings u/s 143(3), 263 and 143(3) r.w.s 263 of the Act. The core issue revolves with respect to the addition made by . the AO u/s 143(3) of the Act under the provisions of sec. 69C of the Act on account of non-submission of the relevant details during the assessment proceedings which is already under challenge before the CIT-A. Thus, in the interest of justice and fair play and to avoid multiple proceedings, which the assessee is facing in the given facts and circumstances, we are inclined to modify the direction given by the ld. PCIT u/s 263 of the Act for de-novo assessment. As such, we direct the AO to frame the assessment without being influenced by the direction of ld. PCIT under section 263 of the Act. It is also directed to the assessee to raise his contention based on the documentary evidence during the proceedings before the AO. The ld. AR at the time of hearing also agreed to withdraw the appeal filed against the order passed under section 143(3) and 143(3) r.w.s. 263 of the Act if directions are given for de-novo assessment. Hence, the ground of appeal of the assessee is hereby allowed for statistical purposes.