The Income Tax Appellate Tribunal (ITAT) Jaipur, in a ruling dated October 16, 2024, has quashed the revision order issued by the Principal Commissioner of Income Tax (PCIT) against the assessee under Section 263 of the Income Tax Act observing that no substantial error or prejudice to revenue was established by the PCIT.
The case involved a search and seizure operation under Section 132 of the Income Tax Act, during which certain unaccounted cash sales were identified by the Assessing Officer (AO). The AO had added these cash sales as business income under Section 143(3) r.w.s 153A of the Income Tax Act.
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However, the PCIT contended that the addition should have been made under Section 69A of the Income Tax Act, which deals with unexplained money, and taxed under Section 115BBE at a higher rate. The PCIT claimed that the AO’s assessment was erroneous and prejudicial to the interests of revenue.
The tribunal bench of Accountant Member Dr. S. Seethalakshmi and Rathod Kamlesh Jayantbhai, Judicial found that the AO had taken a conscious decision after verifying the facts and considering the seized materials.
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The AO had treated the unaccounted cash sales as business income and taxed them at the regular rate, which was a plausible view based on the facts of the case. The Tribunal ruled that this was not a case of an erroneous order but rather a difference of opinion.
Since the PCIT could not demonstrate any error in law or establish prejudice to the revenue, the ITAT quashed the revision order, ruling in favour of the assessee.
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