The Income Tax Appellate Tribunal ( ITAT ) Jaipur bench while allowing the appeal has held that the jurisdiction of the Principle Commissioner of Income Tax (PCIT) is not invokable in absence of any incorrectness and incompleteness in fact appreciation by Assessing Officer (AO).
Mujmmeel, the asseessee challenged the order of Principle Commissioner of Income Tax, Central, Jaipur [ PCIT ], which was passed on 26-03-2024 as per provision of section 263 of the Income Tax Act, 1961. A survey under section 133A of the IT Act 1961 was conducted in the case of assessee on 02.03.2020. Assessee is a individual and derives commission income from sale and purchase of immovable properties.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
The assessee filed his ITR under section 139 for the A.Y. 2020-21 on 20.11.2020 declaring total income of Rs. 4,61,600/- and agricultural income of Rs. 45,500/-. The case of the assessee was selected for compulsory scrutiny in accordance with the guidelines issued by the Central Board of Direct Taxes (CBDT). Notice under section 143(2) was issued to the assessee on 29.06.2021 and served to assessee through ITBA.
During the survey proceeding, inventory of cash found at the premises of the assessee was prepared by the survey team and the cash of Rs. 9,00,000/- were found. As the source of cash found remained unexplained the amount was considered as not established the source of said cash was considered as unexplained money as per provision of section 69A of the Act.
The survey team impounded certain incriminating material from which the AO noted that the assessee made transaction to the tune of Rs. 1,44,35,000/-. The assessee was asked to submit details / explanation of that transaction consisting with Shri Uchab Lal of Rs. 14,20,000/-, Shri Mukut Bihari Meena of Rs. 90,00,000/- and Shri Babulal Khan of Rs. 60,15,000/- vide show cause notice.
Read More:ITAT Jaipur quashes Section 263 Order Due to Violation of Natural Justice
It was stated in that reply that the assessee has sold the plots on a commission basis on behalf of the above persons. The assessee submitted list of buyers to whom assessee sold plots on commission basis. But as the assessee has offered the commission income of Rs. 6,62,150/- only from the buyers of various plots. In view of that facts as the assessee not shown commission income from the transaction of Rs. 1,44,35,000/- mentioned on impounded documents, it was estimated @ 2 5 % of such transaction which was added for an amount of Rs. 2,88,700/-.
On culmination of the assessment the PCIT (Central), Jaipur called for the assessment records for examination as per provision of section 263 of the Act. Upon examination of the record the PCIT noted that the assessee was not able to explain the transactions mentioned in diaries, which were impounded during survey proceedings , PCIT further noted that various financial transactions were recorded on these documents. In absence of supporting evidence as regard to the ownership of the transactions, the AO failed to add the sum of Rs 1,44,35,000/- as unexplained investment of assessee under section 69 consequently, liable to be taxed under section 115BBE of the Act. In the light of that observation PCIT issued a Show Cause Notice.
In exercise of powers conferred upon me as per provisions of section 263 of the Income Tax Act 1961,, the PCIT directed the assessing officer to initiate that clarification/explanation of the transactions recorded on the impounded documents is ascertained and examined by the Assessing Officer. The tax implication of the same has also not been examined or considered while making the assessment by the AO. Accordingly, the error relating to addition made on account of unexplained money under section 69 of the Act and taxed as per provision under section 115BBE of the Actby the Assessing Officer has caused prejudice to the interests of Revenue .
The bench noted that the assessee has challenged the order of the PCIT on three count, (a) the order of the AO is neither erroneous nor prejudicial to the interest of the revenue, (b) the issue which the PCIT raising has already been examined and therefore, there cannot be review of the order under section. 263 of the Act and (c) The PCIT cannot direct the AO to add whole amount when he has after making due enquiry decided to add the commission income.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
A two member bench of Shri Rathod Kamlesh Jayantbhai, AM & Shri Narinder Kumar, JM, observed that one of the pre-requisite before invoking S. 263 and the allegation of the PCIT is that there has been incorrect assumption of fact and law by the Assessing Officer.
The bench viewed that there is no incorrectness and incompleteness in the appreciation of facts made by AO and the PCIT cannot substitute the view taken by the AO as per her understanding of facts of the case. In view of the above, the bench while allowing the appeal held that the order passed under section 263 of the Act is not sustainable.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
