Section 115BBE of Income Tax Act not to be triggered by modifying premise of revisional directions: ITAT [Read Order]

A Division Bench of the Income Tax Appellate Tribunal ( ITAT ), Delhi held that Section 115BBE of Income Tax Act, 1961 not to be triggered by modifying premise of revisional directions.

The assessee, Sanjiv Kumar Mittalfiled return of income and the same was subjected to limited scrutiny through CASS (Computer Aided Scrutiny Selection) on the following issue of ‘Payment of tax in cash during demonetization period’. The income offered by the assessee was assessed under Section 143(3) of the Income Tax Act without any adjustments.

Thereafter, the PCIT in exercise of revisionary powers, issued show cause notice to show cause why the assessment so framed under section 143(3) of the Income Tax Act should not be modified or set aside on the ground that such order is erroneous in so far as prejudicial to the interest of the Revenue.

The PCIT observed that the Assessing Officer failed to inquire as to why the assessee had paid taxes at normal tax rate instead of maximum marginal rate chargeableunder Section 115BBE of the Income Tax Act on such undisclosed income. Hence, the action of the Assessing Officer in determining the tax liability on assessed income is clearly erroneous and prejudicial to the interest of the Revenue.

Aggrieved by the revisional order passed by the PCIT, the assessee preferred appeal before the Tribunal to challenge the supervisory jurisdiction usurped by the PCIT under section 263 of the Income Tax Act. The case of Assessee that the error alleged by the PCIT on the touchstone of Section 68 of the Income Tax Act is fundamentally incorrect where the Assessee has owned up and surrendered the amount of investment in firm as its investment and contribution. In the absence of any credit in the books of assessee partner, the provisions of Section 68 of the Income Tax Act have no application on which the allegation is based

The Bench of Narender Kumar Choudhry, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that “We thus find traction in the contention that where Section 68 of the Income Tax Act as alleged and invoked by the Pr CIT is not applicable, Section 115BBE of the Income Tax Act could not be triggered by modifying the premise of revisional directions. The revisional action of the PrCIT thus failed on this count.”

To Read the full text of the Order CLICK HERE

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