Non-Responding and Non-Complaining before PCIT when issue Restored to AO for Proper Enquiries cannot make Revision Illegal and not Maintainable: ITAT [Read Order]

The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has held that non responding and non-complaining before Principal Commissioner of Income Tax (PCIT) when issue was restored to the Assessing Officer (AO) for proper enquiries could not make revision illegal and not maintainable.

The return of income was not filed by the assessee, Mahesh Prasad Singh under Section 139(1) of the Income Tax Act, 1961 whereas the assessee deposited cash in his savings bank account during the financial year 2010-11 relevant to the assessment year 2011-12. The case was selected for scrutiny and an assessment order was passed under Section 143(3)/147 of the Income Tax Act, 1961.

After the culmination of the assessment proceedings, the PCIT called for the assessment records. It was observed by the PCIT that the enquiries made about the source of cash deposits/transactions were not completed, that the assessee declared business income under Section 44AD & 44AE of Income Tax Act stating deemed income. On perusal of the statement of computation of income furnished by the assessee along with the copy of ITR, he had declared business income but there was nothing on record to confirm the business and transport activities, if any, of the assessee.

On perusal of the assessment order, it was observed by the PCIT that as stated by the assessee before the A.O the cash deposits were out of the transactions made in the course of his coal purchase and sale and transporting business. On verification, there was nothing on record to confirm the such claim. The assessee had not furnished any satisfactory explanation with documentary evidence in support of the nature and source of cash deposits.

On the basis of his aforesaid observation, the PCIT was of the view that there were lapses on the part of the A.O in respect of the issues and points, therein, the order passed by the A.O held to be erroneous in so far it was prejudicial to the interest of the revenue. Accordingly, the PCIT had proposed to revise the order passed under Section 143(3)/147 of the Income Tax Act by virtue of the power vested under Section 263 of the Income Tax Act. 

R.B Doshi, on behalf of the assessee submitted that no other enquiries were made by the A.O and this itself shows that the A.O was satisfied with the submissions of the assessee and therefore, once such issues were raised by the A.O and submissions were made by the assessee, and thereafter, the A.O had arrived at a view on the same, in such circumstances, initiation of revisionary proceedings by invoking provisions of Section 263 of Income Tax Act  by the PCIT were illegal and unjustified and not permitted in law

He further filed certain more information and additional evidences under Rule 29 of the Income Tax Rules, 1963 to support its contention that the assessee was deriving income from trading of coal which was been offered under Section 44AD of the Income Tax Act and also from transport business which was offered under Section 44AE of the Income Tax Act. It was submitted that since evidences were vital for adjudicating the issue in hand, therefore, such additional evidences should be admitted under Rule 29 of the Income Tax Rules, 1963

Debashis Lahir, on behalf of the revenue on the other hand, strongly relied on the orders of the lower authorities.

The two-member Bench of Ravish Sood, (Judicial Member) and Arun Khodpia, (Accountant Member) observed that since, the additional evidence were filed before us for the first time which were neither produced before the A.O nor before the PCIT, therefore, the same needed examination/verification in order to establish their authenticity and correctness.

On a perusal of the notice issued by the A.O dated 28.09.2018 and written submission filed by the assessee before the A.O dated 13.12.2018, it was clearly emanating that a short reply was submitted by the assessee and was summarily accepted by the AO, thus, verification of the information made by the A.O were not found to be adequate on which the PCIT had rightly doubted and assumed jurisdiction to initiate revisional proceedings by invoking the provisions of Section 263.

The PCIT had made certain observations, however, without giving any findings on the facts had restored the issue back to the file of the A.O for making proper enquiries and to re-adjudicate the issue in view of the Explanation 2 of Section 263 of the Income Tax Act. Such order of the PCIT wherein further opportunity was granted to the assessee, to appear before the AO to submit necessary explanations/information for substantial justice, whereas the assessee had not responded and remain non-compliant in explaining his case before the PCIT, could not be termed as perverse or illegal or not maintainable.

The Bench dismissed the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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