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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax [in short, “Pr.CIT”], Vijayawada dated 19.03.2022 for the Assessment Year (A.Y.) 2017-18. 2. Brief facts of the case are that the assessee is an individual, filed his return of income for the A.Y.2017-18 on 24.08.2017, admitting total income of Rs.7,28,760/-. The case was selected for limited scrutiny under CASS to 2 ITA No.78/Viz/2022, A.Y.2017-18 Rakesh Kumar Jain, Vijayawada
verify cash deposit and transaction in property and capital gain / loss on sale of property. Notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (in short ‘Act’) were issued and served on the assessee. In response to the notices, the assessee furnished the information as called for and the income returned by the assessee was accepted and the assessment for the A.Y.2017-18 was completed u/s 143(3) of the Act. On subsequent examination of the relevant assessment record, the Ld.Pr.CIT observed that the assessment order was passed without making inquiries or verification , thereby considered the assessment order as erroneous and prejudicial to the interest of the revenue, hence, issued a detailed show cause notice u/s 263 dated 11.02.2022 calling for his objections if any against the proposed revision of the assessment. Written submissions along with necessary documents furnished by the assessee have been considered by the Ld.Pr.CIT and the Ld.Pr.CIT held that it is unambiguously clear that the assessment order was passed without making inquiries or verification which should have been made with regard to the issue for which the case was selected for limited scrutiny. The Ld.Pr.CIT concluded that the assessment order u/s 143(3) dated 11.12.2019 is erroneous and prejudicial to the interest of the revenue and set aside the assessment order with a direction to redo the assessment in accordance with law after
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making necessary inquiries and verification after affording a reasonable opportunity of being heard to the assessee.
Aggrieved by the order of the Ld.Pr.CIT, the assessee preferred an appeal before the Tribunal and raised the following grounds of appeal :
That the orders passed under the provisions of section 263 of the I.T.Act is contrary to the provisions of law and facts of the case.
The Ld.Principal Commissioner of Income Tax (in short “Pr.CIT”) ought to have known that the case was selected for limited scrutiny only to examine i) cash deposits in bank ii) capital gains, therefore, which the AO did examine, considering these, the finding of the Ld.Pr.CIT that the AO order is erroneous and prejudicial to the interest of revenue is contrary to facts of the case and provisions of law.
The Ld.Pr.CIT had come to the adverse finding considering that there was no discussion in the AO order, with regard to two issues which were selected for limited scrutiny, that by itself could not have been a reason to say AO order is erroneous and prejudicial to the interest of revenue, therefore, invoking the powers u/s 263 of the IT Act is not legally acceptable proposition.
The Ld.Pr.CIT finding that the AO failed to examine the issues for which the case was selected for limited scrutiny is not correct because the very purpose of selecting the case for limited scrutiny is to verify the subject issue of which the Ld.Pr.CIT has considered in his order.
The Ld.Pr. CIT failed to take cognizance of the fact that in the assessment proceedings the AO has applied his mind on the issue in which case the AO order cannot be termed as erroneous for invoking powers u/s 263 of the IT Act.
For these and other reasons that are to be urged at the time of hearing of the appeal the appellant prays that there is no error in the order passed by AO and in fact the order passed by Ld.PCIT itself is erroneous both on fact and as well as in law, therefore, the same needs to be set aside in the interest of justice.
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At the outset, the Ld.AR relied on the grounds of appeal filed by him and requested to uphold the order of the AO.
Per contra, the Ld.DR submitted that the AO has not verified the claim of the assessee about the payment of interest of Rs.46,62,006/-, renovation charges of Rs.26,10,000/- and brokerage of Rs.5 lakhs with regard to purchase of the property of Rs.2,22,00,000/-. He further submitted that the assessee also received gifts from brother’s wife and grandmother amounting to Rs.12,00,000/-, but the AO has not examined the credit worthiness of the donors and also without examining any details, he concluded the assessment and passed order u/s 143(3). Therefore, without examining the above said facts, passing the assessment order is erroneous and prejudicial to the interest of the revenue. Hence, the Ld.Pr.CIT initiated proceedings u/s 263 of the Act. Therefore, the orders passed by the Ld.Pr.CIT to be confirmed.
We have heard both the parties and perused the material placed on record. It is an admitted fact that the AO has not examined and verified the interest payment expenditure claimed by the assessee and the AO has also not examined the credit worthiness of the donors and also has not verified the genuineness of the gifts received from his
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brother’s wife and grandmother. Therefore, without examining these material aspects, we are of the view that it is erroneous and prejudicial to the interest of the revenue. Therefore, we do not find any infirmity in the orders passed by the Ld.Pr.CIT. Hence, the grounds raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed.
Order Pronounced in open Court on 23rd August, 2022. (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 23.08.2022 L.Rama, SPS
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आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Rakesh Kumar Jain, 27-12-5, Chetla Bazar Governorpeta, Vijayawada 2. रधजस्व/The Revenue – Income Tax Officer, Ward-2(1), C.R.Building, 1st Floor Annex, M.G.Road, Vijayawada 3. प्रधान आयकर आयुक्त / The Principal Commissioner of Income Tax, Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 5.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam