DIPIKABEN KANIYALAL PRAJAPATI,AHMEDABAD vs. THE PR. CIT, AHMEDABAD -3, AHMEDABAD

PER MS. SUCHITRA KAMBLE, JUDICIAL MEMBER :

This appeal filed by the assessee is directed against the order passed by the learned Principal Commissioner of Income-Tax, Ahmedabad-3 [hereinafter referred to as “PCIT” for short] dated 12.02.2024, in exercise of his revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for the Assessment Year (AY) 2015-16. 2. The Grounds of appeal raised by the assessee are as follows:-

“[1] That the learned principal Commissioner of Income tax, Ahmedabad-3, has erred in assuming the juri iction under section 263 of the Income Tax Act, 1961 which is bad in law inter alia for this reason that the reassessment order passed under section 147 r.w.s. 144B of the IT Act, dated 26/03/2022 which is sought to be revised u/s.263 itself was invalid, in inter alia on various grounds as mentioned below and thus proceedings Dipikaben Kaniyalal Prajapati AY : 2015-16 [2] initiated under section 263 against the invalid re assessment order is clearly bad in law.

a) The assumption of juri iction under section 147 is itself is bad in law as the reason recorded would not have led to the formation of belief of escapement of income.

b) That no valid satisfaction/approval under section 151 was obtained.

c) That impugned reassessment order was passed without complying with the mandatory conditions of section 147 to 151. [2] That the learned principal Commissioner of Income tax, Ahmedabad-3, has erred in assuming the juri iction under section 263 of the Income Tax Act, 1961 and, thereby, holding that the assessment has framed by the assessing officer is erroneous and prejudicial to the Interest of the revenue and further erred in setting aside the order dated 26/03/2022 as passed by the Assessing Officer. Where assessment was sought to be reopen based on documents found during search in case of third party, correct course of reassessment was under section 153C and not under section 147. Therefore, order passed u/s.147 r.w.s. 144B of the IT Act is not in accordance with the law. [3] That the learned Principal Commissioner of Income tax, Ahmedabad-3, has failed to appreciate the fact that, the assessment had been framed after due application of mind and through investigation and all the issues/impounded material has been analyzed, enquired in to, and dealt with by the concerned assessing officer, before passing the order u/s. 147 r.w.s. 144B of the IT Act. [4] That the learned Principal Commissioner of Income tax, Ahmedabad-3, erred in law and on the facts and in the circumstances of the case in directing the Assessing Officer, to pass fresh assessment order after properly ascertaining the correct fact in respect of placing reliance on order of ITSC and verification of on money and deposit/credit appearing in bank during the year under consideration, even though the appellant denied payment of on money. [5] That the learned Principal Commissioner of Income tax, Ahmedabad-3, erred in law and on the facts and in the Dipikaben Kaniyalal Prajapati AY : 2015-16 [3] circumstances of the case in directing the Assessing Officer to make fishing and roving inquiries in concluded matters. [6] The Order of the Principal Commissioner, Ahmedabad-3 being contrary to laws, evidence and facts of the case may be set- aside / cancelled / amended or modified. [7] The Learned Principal Commissioner of Income Tax has erred in holding that the Assessment Order dated 26/03/2022 passed by the Assessing officer is erroneous in so far as the same is prejudicial to the interest of the revenue. [8] The Learned Principal Commissioner of Income Tax failed to appreciate that the conditions specified under explanation-2(a) section 263 are not satisfied in the appellant case. Accordingly, the appellants prays that impugned order passed by the Learned Commissioner of Income Tax is ultra vires, in valid and ought to be struck down. [9] The Learned Principal Commissioner of Income Tax has erred in holding that the Assessing Officer failed to conduct adequate inquiries during the course of assessment proceeding in spite of the facts that the Assessing officer had considered adequate evidence submitted by the appellant during the course of assessment proceeding. [10] The Learned Principal Commissioner of Income Tax failed to appreciate that, there is due application of mind by the Learned Assessing Officer during assessment proceeding and setting aside of the impugned order is erroneous, in excess of juri iction and bad in law. [11] The Learned Principal Commissioner of Income Tax has ought to have appreciated that, where the Learned Assessing Officer adopted one view out of the two possible views, the provision of section 263 of the act, cannot be invoked merely because the Principal Commissioner proposes to take another view. [12] That the replies as filed during the course of proceeding before the assessing officer and the learned Principal commissioner of Income- tax, have not considered property. [13] The Learned Principal Commissioner of Income Tax, Ahmedabad- 3, has neither herself conducted any inquiry nor got such inquiry conducted on the issue(s) on which the impugned order u/s.263 of the IT Act, 1961 has been set-aside, therefore, the Principal Commissioner of Income Tax, Ahmedbad- Dipikaben Kaniyalal Prajapati AY : 2015-16 [4] 3 is not justified in exercising powers u/s.263 of the IT Act, 1961. [14] That, the reasons for initiating revision proceedings under section 263 of the IT Act, 1961 given in show-cause notice u/s. 263 of the IT Act, 1961 dated 12/01/2024 are ambiguous, non- specific and different from the reasons for which the impugned assessment order has been set-aside, hence the said revision order is insupportable in law and on the facts and deserves as to be quashed and the assessment order restored. [15] That, the Learned Principal Commissioner of Income Tax, Ahmedabad-3, has failed to bring on record lack of inquiry on the part of the Assessing Officer during the assessment proceedings on the issues dealt within the proceedings u/s.263 of the IT Act, 1961, therefore, the assumptions of juri iction u/s.263 of the IT Act, 1961 is void ab initio and the consequent impugned order passed u/s.263 of the IT Act, 1961 is unsustainable in law and on the facts and liable to be quashed. [16] That, the order passed u/s 263 of the IT Act, 1961 by The Learned Principal Commissioner of Income Tax, Ahmedabad-3, is contrary to the Principals of natural justice and equity and liable to be quashed. [17] That the twin conditions that the impugned assessment is erroneous and prejudice to the interest of the revenue are totally absence in the facts of the present case hence, the order under appeal is bad in law and deserves to be quashed. [18] That the Learned Principal Commissioner of Income Tax, Ahmedabad-3, has erred in law and on the facts in not pointing out specifically any categorically as to how the assessment order was erroneous as well as prejudicial to the interest of the revenue, therefore, the impugned revision order passed u/s.263 of the IT Act, 1961 is liable to be quashed. [19] That the Learned Principal Commissioner of Income Tax, Ahmedabad-3, has erred in law and on the facts by not considering second proviso to section 245M(5) of the Act, while reopening revision proceeding u/s.263.”

inquiry. Thus, the invocation of Explanation 2 to Section 263 in assessee’s case for denovo inquiry thereby setting aside the assessment order is not justifiable on the part of the PCIT. Hence, the appeal of the assessee is allowed.

Order pronounced in the open Court on 20/09/2024 at Ahmedabad. (MAKARAND V. MAHADEOKAR) JUDICIAL MEMBER Ahmedabad, Dated 20/09/2024 **btk

आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : अपीलाथ" / The Appellant