CHANDRAKANT GANPATI VAIJAPURE,UDGIR vs. PCIT, NASHIK-1, NASHIK

These are the two appeals filed by the different Assessees but involving identical facts and issues, directed against the separate orders of the ld.PCIT, Nashik-1 dated 22.03.2024 passed u/s.263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) for the Assessment Year 2019- 20.

Identical grounds have been taken by the assessees in these appeals. Therefore, we proceed to dispose of these appeals by the consolidated order for the sake of convenience.

Brief facts of the case relating to appeal are stated herein :

Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.

When the matter was called on, none appeared on behalf of the assessee despite due service of notice of hearing. We therefore proceed to dispose of the appeal after hearing the ld. Departmental Representative.

We heard the ld. Sr.DR and perused the material on record. The issue in the present appeal relates to the validity of the revision exercised by the ld. PCIT u/s 263 of the Act. The Parliament had conferred the power of revision on the Commissioner of Income Tax u/s.263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatable or not a plausible view. In a case where the Assessing Officer examined the claim, took one of the plausible view, the assessment order cannot be termed as an “erroneous”. Adverting to the facts of the present, case, admittedly, the excess stock and excess cash found during the course of survey was offered to taxation as additional income and credited to the profit and loss account. Therefore, the amount representing excess stock/excess cash is certainly disclosed business income and cannot be termed as unexplained investment. Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section to 69 or 69A and 115BBE of the Act have no application to the present case. It is nothing but ‘business income’ as held by the Hon’ble Rajasthan High Court in the case of CIT vs. Bajargan Traders (2017) 86 taxmann.com 295 (Rajasthan). We have been taking a consistent view that such income cannot be taxed as unexplained money/unexplained investment invoking the provisions of section 69 of the Act. In the circumstances, the assessment order cannot be said to be erroneous. The ld. PCIT ought not to have exercised the jurisdiction u/s.263 of the Act as the satisfaction of twin conditions, being the assessment order is erroneous and prejudicial to the interest of the Revenue does not stand satisfied in the present case. Therefore, the order of revision passed by the ld. PCIT is hereby quashed and the appeal filed by the appellant stands allowed.

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

To sum up, both the appeals filed by the respective assesses are allowed.