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Income Tax Appellate Tribunal, RAIPUR BENCH: RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / O R D E R PER ARUN KHODPIA, ACCOUNTANT MEMBER:
This captioned appeal filed by the assessee is directed against the order of the Principal Commissioner of Income-tax (PCIT)-1, Raipur for Assessment Year 2015-16 dated 09.03.2021, arose out of the order of Income -tax Officer -2, Surguja under Section 143(3)/147 of the Income-tax Act, 1961 dated 11.12.2018.
2 :: 2. The assessee has raised the following grounds of appeal:
1. Learnd PCIT erred in invoking the provisions of Section 263 and in setting aside the assessment order for fresh enquiry. Order passed under Section 263 is unsustainable and is passed without properly appreciating the facts and evidence on record. The assessment order is neither erroneous nor prejudicial to the interest of Revenue.
2. The appellant reserves the right to add, amend or modify any of the ground/s of appeal.”
At the outset, Registry pointed that the present appeal is barred by limitation by 409 days and Learned AR of the assessee was asked to explain the reason for delay. It was explained that out of 409 days 388 days were covered by the relief in limitation granted by Hon’ble Supreme Court in the wake of the pandemic COVID, regarding remaining 21 days, it was the submission of Learned AR that the Counsel of the assessee, Mr. Vijay Jaiswal was unwell during those days thus the appeal couldn’t have been prepared for submission, in support certain copies of Medical Reports and Prescriptions from Narayan Institute of Cardiac Sciences were furnished before us. On perusal of such submissions and documents, we found it satisfactory and reasons beyond the control of the assessee by which assessee was prevented to file the appeal in time. Therefore, the request for condonation of appeal of the assessee was considered and permitted to be placed for hearing.
The brief facts of the case are that the assessee is a resident who has not filed its return of income for A.Y. 2015-16. The case of the assessee was picked up by ITBA, AIMS Module for reassessment within the provision of Section 147 of the Act. Under reasons recorded, Learned AO observed that certain information was available in their office, showing cash transactions in a month of Rs.13,20,000/- and payment to contractor of Rs.8,61,564/- during the F.Y. 2014-15 relevant to A.Y. 2015-16 and accordingly, notice under Section 148 of the Income Tax Act was issued to the assessee. Issues raised under the proceedings under Section 147 of the Income Tax Act were discussed. Assessee has submitted Income-tax return computation, Bank Statements, copy of Balance Sheet and Partnership Deed also submitted the information as required by the Assessing Officer by issuing a questionnaire in this respect. While framing the assessment under Section 147 r.w.s 143(3) of the Act, Learned AO also noted that certain information pertaining to deposit of Rs.21,81,564/- by the assessee during the A.Y. 2014-15 was questioned and duly explained by the assessee that the assessee has a medical shop, wherein the assessee firm is transacting in the purchase and sale of medicines, the assessee is a partnership firm in which Mr. Sandeep Kumar Gupta and Mr.
4 :: Manav Kumar Gupta are partners. After deliberations, the assessment was completed and return income shown by the assessee firm for Rs.55,170/- was accepted the Assessing Officer. Subsequently, the case of the assessee was examined by the Learned PCIT, wherein it was found that during the assessment proceedings certain enquiries were made by the Assessing Officer while discussing about the deposits in Bank account for Rs. 21,81,564/- by the assessee firm, but Learned AO failed in verifying the capital account of partners and also the admissibility of expenses towards interest to partners, since no proper evidence pertaining to payment of interest to partners claimed at Rs.5,07,115/- was found in the assessment records. A show-cause notice under Section 263 was issued upon the assessee dated 25.02.2021 to invoke the provision of Section 263 by virtue of powers vested with the Learned PCIT under the Provisions of said section. In continuation, again a show-cause notice was issued to the assessee through ITBA on 21.12.2020, however no compliance was made by the assessee. Thereafter, Learned PCIT relying upon certain decisions had completed the revisionary assessment proceedings under Section 263 of the Act, observing that I am fully satisfied that the assessment order is erroneous in so far as it is prejudicial to the interest of Revenue in view of Explanation-2 of 5 :: Section 263 of the Income Tax Act. Therefore, the AO is directed to make adequate enquiries with regard to genuineness of business, source of cash deposit and all credit entries in the light of Section 68/69A of the Act. With such observation, the order of Learned Assessing Officer under Section 147 r.w.s 143(3) of the Act was set aside for framing fresh assessment order after granting adequate opportunity to the assessee.
5. Aggrieved with the order of Learned PCIT, the present appeal is instituted by the assessee assailing the grounds as extracted hereinabove.
6. At the very outset, the Learned AR of the assessee submitted written synopsis which reads as under:
1. 1. Case was reopened us 148 for verification of source of cash deposit of Rs. 13.20,000/-. Copy of reasons at PN 4 of PB. Such fact mentioned in 1" para of the assessmem order.
2. During assessment. AO raised specific query about source of cash deposit, which was explained to be out of sale proceeds of medicine. Relevant observations on 2nd page of assessment order, last para. Query raised vide order sheet entry dt. 11.12.2018.
3. Reply of assessee was also included in assessment order, page 2. last para. Submitted at PN 31 of PB, para no. 5.
6 :: 4. Bank statement filed during original assessment, copy at PN 9 to 30 of PB. It depicts payments to pharma dealers on various dates. For example, bank statement on PN 9 of PB shows payment to medical concerns only. Genuineness of business activity established.
Copy of partnership deed filed before the AO, placed at PN 32 to 36 PB. Relevant business clause no. 4 at PN 33 of PB which also shows medicine business. Deed filed before AO, as mentioned on page no. 2, last but one para of assessment order.
Business of medicine trading also substantiated by computation of income. In computation, such income disclosed as business income, PN 8 of PB. Figure of turnover (Rs 73.84,963/-) disclosed therein.
- Income u/s 44AD returned & accepted. Business accepted by AO.
7. AO considered reply of assessee and after necessary verification, did not make addition on account of cash deposit.
8. Issue already examined by AO. Jurisdiction u/s 263 could not be assumed. Reliance on:-
i) Malabar Industrial Co. Ltd. vs. CIT- (2000) 243 ITR 83 (SC) ii) CIT vs Max India Limited (2007) 295 ITR 282 (SC) iii) CIT vs Gabrial India Ltd. (1993) 203 ITR 108 (Bom.)
Regarding issue of cash deposit, no query raised by Ld. Pr. CIT and no opportunity allowed to the assessee. Revision order is liable to be cancelled on this account.
Sec. 263 envisages passing of revision order "after giving assessee an opportunity of being heard. Before deciding an issue, providing of opportunity to assessee is essential. Absence of opportunity vitiates the validity of revision order. Reliance on:
7 :: i) CIT vs Amitabh Bachchan (2016) 384 ITR 200, 211 & 212 (SC) ii) Smt. Shardaben B. Patel vs Pr. CIT (2020) 180 ITD 328 (Ahd.) relevant finding at (para no. 6.5 & 6.6 & para no. 6.7). Held vide para no. 6.7 that the matter cannot be set aside to the file of Pr. CIT.
On the issue of admissibility of payment of interest to partners of Rs. 5,07,115/-, no direction given by Ld. Pr. CIT to verify this issue. Evident from para no. 5 of revision order. - Case was reopened for verification of cash deposit & contract receipts. - -Admissibility of partners' interest was never the issue and so AO was not required to enquire into this aspect.
7. Learned DR on the other hand vehemently supported the order of PCIT.
We have heard the rival contention, perused the material available on record and case laws relied upon. On perusal of the order of Learned PCIT under Section 263 in para 3, it is mentioned that a show-cause notice was issued to the assessee through ITBA on 21.12.2020 but no compliance was made by the assessee. This fact was not disputed by the assessee. Therefore, it is evident that the notice issued under Section 263 by the Learned PCIT and thereafter, a show-cause notice issued dated 21.12.2020 were not responded by the assessee, therefore, Learned PCIT has no material in hand to deliberate upon the issue and to consider the contentions
8 :: of the assessee so as to decide the issue on its merit. Under such circumstances, Learned PCIT has set aside the matter to the file of Learned AO to examine the same, offering adequate opportunity to the assessee. Since, the assessee was non-compliant before Learned PCIT and no addition was made or directed to be made by the Learned PCIT, the matter was only restored back to the files of AO which was the only option available with the PCIT, so as to comply with the principles of natural justice. Assessee was provided with the adequate opportunity to explain its case or to comment upon on the reasons recorded for revisionary proceedings wherein the issues were raised by the Learned PCIT so as to establish that the order of AO was not erroneous so far as it is prejudicial to the interest of Revenue in view of Explanation-2 of Section 263 of the Income Tax Act but assessee chooses not to rebut on the same. Under such a scenario since the issue raised in the order under Section 263 of the Act were restored back to the file of AO and the assessee has the opportunity to explain its case and liberty to submit necessary evidence/information before the AO there was no prejudiced caused to the assessee. We, therefore, are of the considered opinion that there was no infirmity in the order of Learned PCIT which calls for any interference. Accordingly, the 9 :: order of Learned PCIT stand sustained. Consequently, grounds raised by the assessee in the present appeal are rejected.
In the result, appeal filed by the assessee is dismissed.
Order pronounced on the 18th day of September 2023, in Raipur.
Sd/- Sd/- Sd/- (रवीश सूद) (अ�ण खोडिपया) (ARUN KHODPIA) (RAVISH SOOD) लेखा सद�य/ACCOUNTANT MEMBER �ाियक सद�/JUDICIAL MEMBER रायपुर/Raipur, �दनांक/Dated: 18th September, 2023. Priti Yadav, Sr.PS (on Tour) आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु� (अपील) / The CIT(A)-1, Raipur (C.G) 4. The Pr.CIT-1, Raipur (C.G) 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर ब�च, रायपुर / The DR, ITAT, Raipur Bench, Raipur. 6. गाड� फाईल/Guard File आदेशानुसार / By Order
व�र� िनजी सिचव / Sr. Private Secretary आयकर अपीलीय अिधकरण, रायपुर / ITAT, Raipur