Amount already offered to Tax by Assessee: ITAT quashes revision order by PCIT [Read Order]

The Banglore Bench of the Income Tax Appellate Tribunal has recently held that the amount already offered to tax by assessee cannot be added to assessment by the Assessing Officer(AO) under the direction of Principal Commissioner of Income Tax (PCIT).

A Search & seizure action under Section 132 of the Income Tax Act,1961 was carried out in the case of M/s. Mukka Sea Food Industries P Ltd and also at the residence of assessee.

During the assessment proceedings, the assessee submitted that the additional income admitted during search proceedings on account of cash expense had been declared as commission income under the head "Income from other sources" in the return of income filed. The AO accepted the admission and assessment order was passed.

Examination of case records by the PCIT revealed, according to the submissions of the Department representative that, during the assessment proceedings, no further details were enquired regarding the money admitted during the search.

The PCIT has also stated that AO should have treated the said income as unexplained cash credit and addition should have been made under Section 68 of the Income Tax Act,1961. This contention was not accepted by the tribunal as for invoking the provisions of Section 68 as there has to be entries in the books of account for which no explanation is offered by the assessee.

It was pointed out by the bench comprising Judicial Member Beena Pillai and Accountant Member Chandra Poojari that,  from the arguments of the authorized representative of the appellant, in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Income Tax Act, 1961.

It was observed that “In the present facts of the case, the order passed by the AO may be prejudicial however, it cannot be held to be erroneous and the Ld.AO had adopted one of the possible views” and held that the revisionary proceedings initiated in the present facts to be bad in law and quashed the consequential order passed.

To Read the full text of the Order CLICK HERE

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