SHREE SHYAM BUILDSTRUCTURE PRIVATE LIMITED,SIKAR vs. ITO WARD -1, SIKAR

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ITA 814/JPR/2024Status: DisposedITAT Jaipur17 December 2024AY 2013-14135 pages
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What did the Tribunal hold?

The Tribunal held that the PCIT was not justified in observing that the AO had not verified the Rs. 11 lacs transaction. The AO had issued notices, sought responses and documents, and ultimately accepted the returned income, thus fulfilling the verification requirement. Regarding the Rs. 50 lacs transaction, the Tribunal noted that it pertained to AY 2014-15, and the Learned DR admitted this fact and that the assessment for AY 2014-15 was also re-opened and considered. The Tribunal found it unexplained how the PCIT, with knowledge of the AY 2014-15 assessment, exercised powers under Section 263 for AY 2013-14 concerning a transaction from AY 2014-15. The Tribunal reiterated that the AO cannot assume jurisdiction over other income discovered during reassessment proceedings under Section 147 without following the prescribed procedure, and consequently, the PCIT also lacks jurisdiction to direct assessment of such income. The ratio is that a PCIT cannot direct reassessment of income not forming the basis of the original reopening notice under Section 147, nor can it include income from a different assessment year in the revision proceedings of another assessment year without proper basis.

What were the facts?

The Assessing Officer (AO) reopened the assessment for Assessment Year (AY) 2013-14 concerning an income of Rs. 11 lacs based on information received from the DDIT. After issuing notices and receiving responses and documents from the assessee, the AO accepted the returned income. The Principal Commissioner of Income Tax (PCIT) later issued directions to the AO for a fresh assessment, considering not only the Rs. 11 lacs but also another transaction of Rs. 50 lacs, alleging lack of verification and proper enquiry by the AO. The assessee contended that the Rs. 50 lacs transaction pertained to AY 2014-15, which was also re-opened and considered by the AO. The PCIT had passed orders under Section 263 for AYs 2013-14, 2014-15, and 2015-16.

What were the issues?

1. Whether the PCIT was justified in directing a fresh assessment concerning the Rs. 11 lacs transaction (issue of mixed law and fact, concerning Section 263 and Section 147 of the Income Tax Act, 1961) when the AO had already verified it and accepted the returned income. 2. Whether the PCIT had jurisdiction to direct a fresh assessment concerning the Rs. 50 lacs transaction (issue of mixed law and fact, concerning Section 263 and Section 147 of the Income Tax Act, 1961) in the proceedings for AY 2013-14, when this transaction pertained to AY 2014-15 and was not part of the AO's original reassessment proceedings. Assessee's contentions: The AO had properly verified the Rs. 11 lacs transaction. The Rs. 50 lacs transaction related to AY 2014-15, which was re-opened and considered by the AO, and thus the PCIT erred in including it in the AY 2013-14 proceedings under Section 263. The AO cannot acquire jurisdiction over other income not forming the basis of reopening under Section 147 without following prescribed procedures. Revenue's contentions: The PCIT exercised powers under Section 263 as the department had no remedy to appeal the AO's assessment order. The power of revision under Section 263 does not require a specific show cause notice, only an opportunity of hearing, as held in Amitabh Bachhan's case.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 148

AI-generated summary — verify with the full judgment below

25.

As a result of the above discussion and findings, we find merit in this appeal, and consequently, hereby set aside the impugned order passed by Learned PCIT.

File be consigned to the record room, after the needful is done by the office.

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