Mere Suspicions of PCIT cannot be basis for Initiation Proceedings u/s 263: ITAT quashes Revisional Order [Read Order]

The Chandigarh Bench of Income Tax Appellate Tribunal(ITAT) has held that mere suspicions of Principal Commissioners of Income Tax (PCIT) cannot be the basis for initiation proceedings under section 263 and quashes revisional order.

The appellant, Smt. Sunita Goyalhas not filed any return of income u/s 139(1) and 139(4) of the Act. As per information of investment amounting to Rs.5,06,562/- towards the purchase of immovable property,proceedings were initiated u/s 147 and the appellant filed a return declaring income of Rs.1,34,401/-.

Notices u/s 143(2) and 142(1) were issued to the assessee and considering the reply, the returned income was accepted by the Assessing Officer. Revisionary proceedings by the PCITwere initiated against the assessment order under section 263 of the Income Tax Act, 1961. The CIT (A) holds that the order passed by the AO was passed without carrying out full and proper inquiries.

The counsel for the appellant submitted that the suspicion in PCIT’s mind regarding the source of investment is the sole reason for the initiation of the proceedings by ignoring the fact that the relationship was demonstrated and the identity of the nephew by way of his PAN number stood quoted concluded that the affidavit is a bald self-serving document without upsetting its contents.

The Tribunal observed that the suspicions of the PCIT cannot be the basis for setting aside a validly passed assessment order. Law requires the PCIT to meet the twin conditions of pointing to the error in the order passed and that too such an error which can be termed to be prejudicial to the interests of the Revenue.

The division bench presided by Smt. Diva Singh, Judicial Member,and Mr. Vikram Singh Yadav, Accountant Member have quashed the impugned order passed under section 263 of the Income Tax Act 1961

AdvocateMr. Nikhil Goyal and Mr. Sarabjeet Singh appeared on behalf of the appellant and the revenue respectively.

Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.