ITAT Invalidates PCIT's Hasty Revision u/s 263 and Remands Case for Fresh Hearing [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) invalidated the Principal Commissioner of Income Tax's (PCIT) hasty revision under Section 263 of Income Tax Act,1961 and remanded the case for a fresh hearing, ensuring the assessee would have a fair opportunity to address the issues raised comprehensively.

Dineshbhai Dahyabhai Patel,the appellant-assessee, filed an appeal against the Principal Commissioner of Income Tax's (PCIT) order dated March 30, 2021, concerning the assessment year (AY) 2015-16.

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Initially, the assessee declared an income of ₹53,76,830, which was later assessed at ₹54,06,208. Following a reopening of the assessment under Section 147, the total income was revised to ₹67,06,230, incorporating significant additions under Section 56(2)(vii) and short-term capital gains.

During a review of the assessment, the PCIT identified multiple cash transactions exceeding ₹20,000, which raised concerns regarding compliance with Section 40A(3) of the Act. He noted that the AO had failed to adequately scrutinize these transactions and based the assessment solely on the cash book submitted by the assessee.

This lack of thorough inquiry led the PCIT to conclude that the assessment order was both erroneous and prejudicial to the interests of the Revenue.

In the appeal, the counsel for the assessee argued that the PCIT had acted with undue haste, completing the proceedings in just 12 days despite having over a year available for a thorough review. They highlighted an apparent non-application of mind, particularly regarding a reference to a claim under Section 54B, which the assessee had not raised in the original assessment. This oversight was presented as evidence of the hastiness of the PCIT’s decision.

The tribunal found that the PCIT's conclusions regarding a lack of inquiry by the AO were not sufficiently backed by evidence and also noted that the assessee had been denied a fair opportunity to present their case due to the rushed proceedings and lack of adequate time provided for response.

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Additionally, the bench emphasized that any inquiry into payments exceeding ₹20,000 under Section 40A(3) required further factual verification, and the matter had not been sufficiently explored by the PCIT.

The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Annapurna Gupta(Accountant Member) remanded the matter to the PCIT for a fresh hearing, ensuring that the assessee would have the opportunity to address the issues raised comprehensively.

In conclusion,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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