The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) held that no reasons were recorded by the PCIT (Principal Commissioner of Income Tax) for holding assessment order by AO (Assessing Officer) to be erroneous and for application of Section 115 BBE of the Income Tax Act 1961, thus the Bench set aside revisionary order passed under Section 263 of Income Tax Act.
The assessee in this case is Jasjot Singh Garcha. A survey operation under Section 133A of the Income Tax Act was carried out at the business premises of the assessee. During the course of survey operation, certain discrepancies were noticed and as a result, the assessee offered a sum of Rs. 70,00,000 apart from his normal business income. Subsequently, the assessee filed his return of income showing total income of Rs. 81,22,830 including the surrendered income of Rs. 70,00,000.
The case of the assessee was taken up under compulsory scrutiny and notice under section 143(2) and 142(1) of the Income Tax Act were issued alongwith detailed questionnaire. The submissions of the assessee and the returned income filed was accepted by the AO in its assessment order passed under Section 143(3) of the Income Tax Act.
Subsequently, the assessment records were called for and examined by the PCIT and a show cause under Section 263 of the Income Tax Act has been issued for the reason that there was a survey operation at the business premises of the assessee and assessee has offered a sum of Rs. 70,00,000/- during the course of survey. Since the assessee has not paid taxes as per the provisions of Section 115BBE of the Income Tax Act, the PCIT deemed it appropriate to invoke the revisionary jurisdiction.
The PCIT held the assessment order to be erroneous in so far as prejudicial to the interest of the Revenue and the matter was set aside to the file of the AO for passing a fresh order in accordance with law.
Aggrieved by the order the assessee filed an appeal before the Tribunal. The Authorised Representative of the assessee Sudhir Sehgal, submitted that the assessee is an individual running Orthopaedics & Dental Clinic under the name and style of M/s Garcha Orthopedic & Dental Care. It was submitted that other than the said business, the assessee does not have any other source of income.
It was further submitted that after verification of details filed by the assessee, the AO took a possible view based on the due application of mind and based on verification made by the AO, the assessment order was passed under Section 143(3) of the Income Tax Act wherein the returned income of the assessee was accepted and surrendered income was accepted as part of regular business income chargeable at normal rate of tax.
It was further submitted that the revision proceedings under Section 263 of the Income Tax Act have been initiated merely basis of difference of opinion which cannot be a ground to determine the order passed by the AO as erroneous and prejudicial to the interest of the revenue and thus the action of the PCIT under Section 263 of the Income Tax Act cannot be sustained.
Vivek Nangia appeared as Departmental Representative.
The Bench relied on the decision in the case of Gandhi Ram Vs. Pr. CIT where it was held that, there is no inquiry or investigation which has been conducted by the Ld. Pr. CIT and there is no positive evidence brought on record as to why the deeming provision read with Section 115BBE of the Income Tax Act are applicable in the instant case. Therefore in absence of clear cut findings recorded by the PCIT as to how the order passed by the AO is erroneous in so far as prejudicial to the interest of the Revenue, the findings of the PCIT deserves to be set aside.
The Two Member Bench comprising of Aakash Deep Jain, Vice President and Vikram Singh Yadav, Accountant Member observed that there is no findings recorded by the PCIT as to how the deeming provisions are applicable in the instant case and the order so passed by the AO is erroneous, and it was held that merely stating that there was survey operation at the business premises of the assessee and provisions of Section 115BBE Income Tax Act are attracted, the same can be a basis for exercise of jurisdiction under section 263 of the Income Tax Act.
Therefore the order so passed by the PCIT under Section 263 of the Income Tax Act was set aside and the assessment order of the AO was restored and so the appeal of assessee in this matter was allowed.
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