Loading judgment…
Facts
The assessee filed an appeal against the order of the PCIT under Section 263 of the Income-tax Act, 1961. There was a delay of 24 days in filing the appeal, which was condoned. The PCIT had found the Assessing Officer's (A.O.) order to be erroneous and prejudicial to the revenue due to lack of proper inquiry and verification regarding certain investments and gifts.
Held
The Tribunal held that the PCIT had the jurisdiction under Section 263 of the Act as the issues found to be erroneous were not subject to the pending appeal before the CIT(A). The Tribunal found no infirmity in the PCIT's order regarding the lack of inquiry and verification by the A.O. concerning the gift from the father and the assessee's savings.
Key Issues
Whether the PCIT's order to revise the assessment order passed by the A.O. was justified due to lack of inquiry and verification by the A.O., and whether the PCIT had the necessary jurisdiction.
Sections Cited
263, 133A, 147, 69B, 115BBE, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee is against the order of Learned Principal Commissioner of Income Tax, Chennai-2 [hereinafter “PCIT”] dated 27.02.2024 passed u/s. 263 of the Income- tax Act, 1961 (hereinafter “the Act”).
There is a delay of 24 days in filing the appeal by the assessee. The assessee has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. We have considered the petition of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is condoned accordingly.
The only effective ground of appeal in this appeal of assessee is against the order of Ld. PCIT holding the order passed by the A.O erroneous and prejudicial to the interest of revenue and directing the A.O to modify the assessment order u/s. 263 of the Act .
The brief facts of the case are that the assessee is an individual and partner in M/s. Shri Rasi Mahal and M/s. Sree Balaji Enterprises.
A survey operation u/s. 133A of the Act was conducted in the business premises of M/s. Shri Rasi Mahal and M/s. Sree Balaji Enterprises on 31.01.2018. The assessee during survey has admitted undisclosed investment in cash of Rs. 1.10 Cr in M/s. Shri Rashi Mahal. However the assessee in the return of income filled on 26.10.2018 admitted undisclosed income of Rs.64,00,000/- only. The A.O in the assessment order passed u/s 147 has made addition of Rs.35,90,000/- of gift from her husband u/s. 69B of the Act and assessed total income at Rs. 1,02,55,390/-. The Ld. PCIT has called for the record and found that the assessee has made cash investment of Rs. 1.10 Cr. in M/s. Shri Rasi Mahal and explained the source of investment as unexplained income of Rs. 64,00,000/- admitted in the return of income, Rs. 12,00,000/- from own savings, gift of Rs.3,21,450/- from her father and gift of Rs. 35,90,000/- from her husband. The A.O in the assessment order has only made addition of gift from husband of Rs 39,50,000 u/s 69B of the Act and has not made any enquiry in respect of gift of Rs. 3,21,450/- from her father and her own savings of Rs.12,00,000/-. The A.O has also not computed the tax on admitted undisclosed income of Rs. 64,00,000/- as per Section 115BBE of the Act. The Ld. PCIT therefore, held the order erroneous and prejudicial to the interest of revenue and directed the A.O to modify the assessment by making necessary enquiry and verification and apply the provisions of Section 68 r.w.s 115BBE of the Act and tax the assessed income as per deeming provisions.
The Ld. Authorized Representative (A.R) of the assessee before us has submitted that the Ld. PCIT has not specified the provision for taxing of Rs.64,00,000/- and has not stated any justification for invoking provisions of Section 68 of the Act. The Ld. AR also submitted that the assessee does not maintain books of accounts therefore, mandatory requirement for Section 68 of the Act is not satisfied and relied on the decision of Hon’ble Jurisdictional High Court in the case of Varadharajaperumal Pradeepkumar v. ITO in WP No.10721 of 2021 dated 06.03.2024 (Mad.). The Ld. AR has also relied on the order of ITAT, Delhi Bench in the case of Yogesh Kumar for A.Y 2017-18 dated 30.08.2023 (Del-Trib.). The Ld. AR has further submitted that appeal has been filled before the Ld. CIT(A) against the assessment order being revised therefore, the Ld. PCIT does not have jurisdiction u/s. 263 of the Act while larger matter is pending before first appellate authority and relied on the decision of Hon’ble Madras High Court in the case of Smt.
Renuka Philip vs. ITO 409 ITR 567 (Mad.).
The Ld. Departmental Representative (DR), on the other hand, relied on the order of Ld. PCIT and argued that the A.O has not made necessary verification in respect of certain income disclosed during survey therefore, as per Explanation 2 to Section 263 of the Act, the order of Assessing Officer is erroneous and prejudicial to the interest of revenue.
We have heard the rival submissions, and perused the materials available on record. The assessee has made cash investment of Rs.1.10 Cr. in M/s. Shri Rasi Mahal and admitted the same as undisclosed income during survey proceeding u/s 133A of the Act. The assessee during assessment proceeding has explained the source of cash investment as Rs.12,00,000/- from her own savings, gift of Rs.3,21,450/- from her father and gift of Rs. 35,90,000/- from her husband and Rs. 64,00,000/- as unexplained income offered in the return of income filed on 13.08.2018. The A.O has made addition of gift of Rs. 35,90,000/- received from her husband u/s. 69B of the Act and accepted the explanation of own savings of Rs.12,00,000/- and gift from her father of Rs.3,21,450/-. The Ld. PCIT found that the A.O has not made enquiry and verification about gift of Rs.3,21,450/- from her father about genuineness and capacity of donor. The Ld. PCIT has also found that A.O has not made enquiry about savings of Rs.12,00,000/-, therefore held the order passed by A.O erroneous and prejudicial to the interest of revenue. As regard to unexplained income of Rs. 64,00,000/- offered in the return of income, the Ld. PCIT has held that the same should be taxed under the provisions of section 115BBE of the Act.
As per Explanation 2 to Section 263 of the Act, an order passed by the A.O shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Pr. Commissioner or Commissioner, the order is passed without making enquiry or verification which should have been made. The Ld. PCIT in respect of gift from her father of Rs.3,21,450/- and own savings of Rs.12,00,000/- has found that the assessment order was passed without making enquiries or verification which should have been made and therefore, held the order erroneous and prejudicial to interest of revenue. We do not find any infirmity in the order of Ld. PCIT in these respects. As regard to the jurisdiction issue u/s 263 of the Act and the arguments of the Ld. AR that the assessee has filed an appeal against the assessment order and the same is pending before Ld CIT(A), we find that the issues for which assessment order has been held to be erroneous, are not subject matter of appeal before Ld. CIT(A).
Therefore, as held by Special Bench of ITAT, Bengaluru in the case of Intellinet Technologies India P. Ltd vs. ITO 5 ITR (Trib.) 96 (Bang.), the Ld. PCIT has jurisdiction u/s. 263 of the Act. The case laws relied on by the assessee are not applicable to the facts of the present case.
We accordingly, uphold the order of Ld. PCIT holding the order of A.O erroneous and prejudicial to the interest of revenue. In view of the above, the Ld. A.O is directed to pass assessment order as per the provisions of Act after making necessary enquiry and verification as directed by the Ld. PCIT.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on 11th December, 2024.
Sd/- Sd/- (मनु कुमार िग�र) (जगदीश) (Manu Kumar Giri) (Jagadish) �ाियक सद! / Judicial Member लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�नई/Chennai, �दनांक/Dated: 11th December, 2024. EDN/-