MR. UDAISING U. JADHAV,PUNE vs. PR. CIT-3, PUNE, PUNE

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ITA 760/PUN/2024Status: DisposedITAT Pune23 September 2024AY 2018-19Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI VINAY BHAMORE (Judicial Member)4 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Principal Commissioner rightly exercised jurisdiction under Section 263 as the Assessing Officer had not made necessary enquiries. The assessment order was set aside for fresh assessment after proper enquiries, causing no prejudice to the assessee.

What were the facts?

The assessee declared remuneration from partnership firms of Rs. 32,00,000, but Form 26AS showed Rs. 37,00,000. The Assessing Officer made an addition of Rs. 8,00,000 but did not include it in the tax liability. The Principal Commissioner invoked Section 263, finding the assessment order erroneous and prejudicial to revenue.

What were the issues?

Whether the Principal Commissioner correctly invoked Section 263 due to inadequate enquiry by the Assessing Officer and whether the assessment order was erroneous and prejudicial to the interest of the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI INTURI RAMA RAO & SHRI VINAY BHAMORE

For Appellant: Shri Piyush Bafna
For Respondent: Shri Ajay Kumar Keshari
Hearing: 23.09.2024Pronounced: 23.09.2024

Assessee by : Shri Piyush Bafna Revenue by : Shri Ajay Kumar Keshari Date of hearing : 23.09.2024 Date of pronouncement : 23.09.2024 आदेश / ORDER PER INTURI RAMA RAO, AM :

This is an appeal filed by the assessee directed against the order of ld. Principal Commissioner of Income Tax, Pune-3, dated 14.02.2024 passed u/s.263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) for the assessment year 2018-19.

2.

Briefly, the facts of the case are that the appellant is an individual deriving income under the head “Business”. The Return of Income for the A.Y.2018-19 was filed on 30.10.2018 declaring income of Rs.12,58,650/-. Against the said return of income, the assessment was 2 completed by the Assessing Officer (AO) vide order dated 05.04.2021 passed u/s.143(3) r.w.s.143(3A) & 143(3B) at a total income of Rs.20,58,650/-. The ld. PCIT, on examination of the assessment record, found that the appellant infact received remuneration to the tune of Rs.37,00,000/- from the following partnership firms based on the information reflected in Form No.26AS whereas the appellant had disclosed remuneration from partnership of Rs.32,00,000/- only.

S.No. Name of the Partnership Firm Remuneration Received Rs. 1 M/s. Business Solutions 29,00,000/- 2 M/s. Fitness 18 5,00,000/- 3 M/s. Shri Ganesh Associates 3,00,000/- Total Rs.37,00,000/- The ld. PCIT further held that though in the assessment order the AO made addition of Rs.8,00,000/- only, the same was not included while computing the tax liability of the appellant. Thus, the ld. PCIT formed opinion that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Accordingly a show cause notice u/s.263 was issued to the appellant on 07.12.2023 for which no compliance was made and another notice was issued on 24.01.2024 which also remained uncomplied. In the circumstances, the ld. PCIT vide order dated 14.02.2024 passed ex parte order setting aside the assessment order to the file of AO for passing assessment order afresh after making necessary enquiries on the issue.

3.

Being aggrieved, the appellant is in appeal in the present appeal. The appellant filed the following additional ground contending that no valid notice u/s.263 was issued by the PCIT :

3 “On the facts and in the circumstances of the case and in law, the order passed u/s.263 by the ld. PCIT-3 is not valid since there is no valid and proper service of show cause notice u/s.263 and, therefore, the same may please be quashed.

4.

During the proceedings before this Tribunal, the ld. CIT-DR has shown the Bench the acknowledgement for proof of service of show cause notice u/s.263, the scanned copy of which is reproduced below :

5.

Thus, the additional ground of appeal filed by the appellant is misconceived and dismissed as such.

6. We heard the rival submissions and perused the material on record. On merits of the case, the contention of the ld. AR that it is only a mere inadequate enquiry and not lack of enquiry, therefore, the ld. PCIT ought not to have exercised jurisdiction u/s.263, cannot be accepted for the reasons that the AO had not made necessary enquiries, 4 which are required in the facts of the case. Moreover, the ld. PCIT had only set-aside the assessment order for passing assessment order afresh after making necessary enquiries on the issue. Therefore, no prejudice is caused to the appellant. The ld. AR had failed to show that there is an apparent mistake in exercise of jurisdiction u/s.263 and the appellant had failed to comply with the notices issued by the ld. PCIT u/s.263. Further, the ld. AR had failed to demonstrate as to how the assessment order by the AO is not erroneous and prejudicial to the interest of the Revenue. In the light of this discussion, we hold that the ld. PCIT had rightly exercised jurisdiction u/s.263 of the Act.

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