The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the revisional jurisdiction under Section 263 of the Income Tax Act, 1961 is not invokable on simple disagreement with plausible views of the Assessing Officer (AO).
The only issue raised by the assessee in the various grounds of appeal is against the invalid exercise of jurisdiction by PCIT under Section 263 of the Income Tax Act without satisfying the conditions precedent for assumption of jurisdiction under Section 263 of the Income Tax Act.
The PCIT observed that for this reason, the assessment framed under Section 143(3) read with Section 147 of the Income Tax Act declaring total income at Rs. 81,68,304/- is erroneous insofar as it is prejudicial to the interest of the revenue. Accordingly a show cause notice was issued under Section 263 of the Income Tax Act which was replied by the assessee.
The PCIT after taking into account the contentions of the assessee, passed the revisionary order under Section 263 of the Income Tax Act setting aside the assessment order by directing the AO to frame the assessment afresh after affording a reasonable opportunity to the assessee.
The A.R submitted before the PCIT that the order of AO is neither erroneous nor prejudicial to the interest of the revenue as a plausible view has been taken the AO by applying 8% of the total cash deposits. It was contended that it was unequivocally stated before the AO that the assessee did not own bank accounts as referred by the AO nor did the proprietary concern M/s Galaxy Trading Company belonged to the assessee.
The D.R on the other hand relied on the order of PCIT heavily by submitting that there were huge deposits in the name of assessee proprietary concern into two bank accounts which were duly opened after taking assessee’s signature and by filing KYC documents of the assessee and therefore the plea taken on the part of Shri Devesh Upadhyaya that the deposits of cash were not belonging to him did not have any force and therefore the jurisdiction was rightly invoked by the PCIT.
It was also submitted that by exercising the jurisdiction under Section 263 of the Income Tax Act, the assessee is not put to any prejudice as the assessee would be given a fair opportunity to explain his position during the set aside proceedings.
A Two-Member Bench comprising Sanjay Garg, Judicial Member and Rajesh Kumar, Accountant Member observed that “We are of the view that it can be said to be plausible and possible view on the basis of evidences before the AO and the PCIT cannot invoke the jurisdiction under Section 263 of the Income Tax Act on the ground that he does not agree with the view taken by the AO and direct the AO to add the entire cash deposits in the hands of the assessee. In our opinion, the jurisdiction under Section 263 of the Income Tax Act can be invoked if twin conditions are satisfied i.e. order is erroneous and is prejudicial to the interest of the revenue as has been decided in the case of Malabar Industrial Co. Ltd.”
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