Income Tax Revision Order Unsustainable as PCIT Conducted No Independent Inquiry and AO Had Taken a Plausible View: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, set aside the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, holding that no independent inquiry was conducted by the PCIT and that the Assessing Officer (AO) had taken a plausible view.

The appellant, Choksi Ranchhodlal Kishordas, filed an appeal against the order of the PCIT dated 21.03.2024 invoking revisionary jurisdiction under Section 263 of the Act for Assessment Year (AY) 2013-14.

The case was reopened on the basis of information that the appellant had received ₹2,36,38,665 from Renuka Mata Multi State Urban Co-operative Credit Society Ltd, as per the information available with the Department, was mainly used as a conduit for placement of unaccounted cash into the banking system.

The counsel for the appellant, Rushin Patel, contended that during reassessment proceedings, the appellant explained that the amounts received from Renuka Mata Society were on account of sales made to Parishram Bullion.

It was also contended by the appellant counsel that the transactions were duly accounted for and considered in the computation of total income. Copies of bank statements, ledger confirmation of Parishram Bullion, sales invoices, audited accounts and VAT audit report were also submitted by the appellant.

Rignesh Das, representing the RevenueDepartment, supported the order of the PCIT contending that he had rightly held the assessment order to be erroneous and prejudicial to the interest of the Revenue on the ground that the AO had not conducted proper enquiries regarding the source of the amounts received from Renuka Mata Society.

Sanjay Garg, Judicial Member, and Annapurna Gupta, Accountant Member, observed that it was not the case of the PCIT that no inquiry was conducted by the AO. The appellant had explained the nature of receipts from Renuka Mata as sales consideration received from Parishram Bullion and had supported the explanation with evidence.

The Tribunal further noted that the PCIT had not pointed out any deficiency, infirmity or falsity in the explanation of the appellant and had conducted no inquiry but held the assessment order to be erroneous for not having conducted proper enquiries.

In the light of the facts and circumstances, the Tribunal held that there was no basis with the PCIT to hold the assessment order to be erroneous so as to cause prejudice to the revenue. Accordingly, the order of the PCIT under Section 263 was set aside as not sustainable in law and the appeal filed by the appellant was allowed.

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