BANDA SATYANARAYA ,HYDERABAD vs. INCOME TAX OFFICERS ,WARD-9(1), HYDERABAD

The brief facts of the case are that the assessee filed his return of income for the A.Y 2012-13 on 29.09.2012 admitting total income of Rs.8,09,450/-. The assessment has been completed u/s 143(3) of the I.T. Act, 1961 on 26.03.2015 and determined the total income at Rs.83,42,008/- by making addition towards investment in purchase of property for Rs.65,75,880/- u/s 69 of the I.T. Act, 1961. The assessee filed appeal before the learned CIT (A). The learned CIT (A) in vide order dated 29.12.2015 dismissed the appeal filed by the assessee and upheld the addition made by the Assessing Officer towards unexplained investment in purchase of property. The assessee preferred an appeal before the ITAT and the ITAT Hyderabad “B” Bench in ITA No.291/Hyd/2016 set aside the issue of addition towards unexplained investment in purchase of property to the file of the Assessing Officer with a direction to verify the contention of the assessee with regard to the source for investment in purchase of property. Pursuant to the directions of the Tribunal, the Assessing Officer called upon the assessee to file necessary evidences to justify the source for purchase of property. In response, the assessee has filed various details including the details of housing loan availed from Bank of India, advance received from sale of plots and unsecured loan taken from various persons. The Assessing Officer after considering the relevant submission of the assessee completed the assessment u/s 143(3) r.w.s. 254 of the I.T. Act, 1961 on 05.02.2019 and determined the total income at Rs.17,66,130/-, where the Income Tax Officer accepted the sources for investment in purchase of property to the extent of Rs.65,75,880/-.

The case has been subsequently taken up for revision proceedings by the learned Pr. CIT and a show cause notice u/s 263 of the I.T. Act, 1961 dated 22.08.2019 was issued and called upon the assessee to explain as to why the assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 254 cannot be revised. In response, the assessee submitted that the assessment order passed by the Assessing Officer cannot be considered as erroneous in so far as it is prejudicial to the interest of the Revenue, because the very purpose of the Assessing Officer to complete the assessment u/s 143(3) r.w.s. 254 is the direction of the hon ITAT to verify the source for investment in new asset and the Assessing Officer after considering the relevant evidences filed by the assessee has accepted the claim of the assessee. Therefore, it cannot be said that the Assessing Officer has not considered the issue which renders the assessment order to be erroneous and prejudicial to the interest of the Revenue. The learned Pr. CIT after considering the relevant submission of the assessee and also taken note of various facts, observed that although the assessee has introduced a new asset to the tune of Rs.65,75,880/- and also claimed source for the said property out of loan from bank and advance from sale of property and unsecured loan from various parties, but the Assessing Officer failed to verify the identity, genuineness and creditworthiness of the unsecured loan creditors which renders the assessment order to be erroneous and prejudicial to the interest of the Revenue. Therefore, set aside the assessment order passed by the Assessing Officer u/s 143(3) r.w.s 254 of the I.T. Act, 1961 dated 05.02.2019 and directed the Assessing Officer to verify the loan creditors and also the nexus between the secured loan and investment in the said property.

Aggrieved by the order of the learned Pr.CIT, the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee submitted that the learned Pr. CIT is erred in setting aside the assessment order by exercising the powers conferred u/s 263 of the I.T. Act, 1961 without appreciating the fact that the assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue on the issue of source of investment in the new asset. The learned Counsel for the assessee referring to various documents which are available in Paper Book filed by the assessee submitted that the assessee has explained the source for introduction of new asset out of secured loan from Bank of India, advance received from sale of property and unsecured loan from various parties. The assessee has furnished all the details. The Assessing Officer after verifying the relevant details has concluded the assessment and accepted the claim of the assessee towards the source for investment in new asset. Therefore, it cannot be said that the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue.

The learned DR, on the other hand, supporting the orders of the learned Pr. CIT submitted that the assessment order passed by the Assessing Officer is brief and cryptic and there is no discussion on the issue considered by the learned PCIT in revision proceedings. Although the Assessing Officer has called for relevant evidences in support of source for investment in property, but the claim of the assessee was not verified to ascertain the correctness of unsecured loan claimed by the assessee. The learned PCIT after considering the relevant facts has rightly invoked the jurisdiction u/s 263 of the I.T. Act, 1961 and set aside the assessment order and therefore, the order of the learned PCIT should be upheld.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The sole basis for the Assessing Officer to take up assessement proceedings is the directions of the Tribunal in an appeal filed by the assessee where the Tribunal has set aside the issue of investment in purchase of new asset to the file of the Assessing Officer to verify the claim of the assessee regarding the source for investment. The Assessing Officer has taken up the assessement proceedings as per the directions of the ITAT and also called for various details including the relevant ITRs filed in the earlier A.Ys, copies of deeds for purchase of property, details of loan borrowed from Bank of India, copy of agreement of sale dated 1.10.2019, details of advance received for sale of property and also confirmation from unsecured loan. The Assessing Officer discussed the issue in his assessment order at page 4 to 8 and after considering the relevant facts has accepted the explanation of the assessee with regard to the source of Rs.65,75,880/- towards investment in new asset. Once the very purpose for which the assessment has been taken up is to verify the source for investment in a property and the Assessing Officer has considered the said decision in the assessement proceedings and also accepted the claim of the assessee, in our considered view, the learned PCIT cannot say that the Assessing Officer has not considered the issue of source for investment in purchase of property. If we go by the reasons given by the learned PCIT to treat the assessment order passed by the Assessing Officer as erroneous and prejudicial to the interest of the Revenue is only on the issue of unsecured loan claims to have been received by the assessee to explain source for investment in new asset. In our considered view, once the Assessing Officer has considered the very same issue and accepted the claim of the assessee, then the learned PCIT cannot exercise his powers on very same issue on the ground that the Assessing Officer has not carried out the required enquiries, he ought to have been carried, unless the learned PCIT makes out a case that the Assessing Officer has not considered the issue at all.

In the present case, on perusal of the assessment order, we find that the sole purpose for the Assessing Officer to take up the assessment is to verify the source of investment in new asset as per the directions of the Tribunal and the Assessing Officer has carried out necessary inquiries and also accepted the claim of the assessee. Therefore, we are of the considered view that the assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. Thus, we set aside the order passed by the learned PCIT u/s 263 of the I.T. Act, 1961 and restore the assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 254 of the I.T. Act, 1961.

In the result, appeal filed by the assessee is allowed.