ITAT Quashes ₹65 lakh Addition Revisionary Order Terming It “Unsustainable” [Read Order]
The Tribunal relied on the earlier appellate decision quashing the revision under Section 263.
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The bench of the Income Tax Appellate Tribunal, Raipur, has ruled that the addition of ₹65 lakh made under Section 68 of the Income Tax Act, 1961 cannot be sustained, as the very basis of such addition stood quashed in earlier appellate proceedings.
The appellant, Sun Developers and Builders Private Limited, had originally filed its return of income for Assessment Year 2013-14 declaring nil income. The assessment was completed under Section 143(3), accepting the returned income.
Later, the Principal Commissioner of Income Tax, Bilaspur (PCIT), set aside this assessment under Section 263, questioning the genuineness of share application money of ₹1.65 crore received from Sakshi Real Estate Pvt. Ltd.
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Acting on this revision, the Assessing Officer (AO) passed a fresh order making an addition of ₹65 lakh. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [CIT(A)], upheld this addition in an ex-parte order.
The Appellant, represented by Veekaas S Sharma, argued that the Tribunal had already quashed the Section 263 order in an earlier round in ITANo.112/RPR/2018, dated 17.10.2022. Therefore, the reassessment order based on the quashed Section 263 order was non-est, making the addition unsustainable.
The Revenue, represented by Anubhaa Tah Goel, did not dispute that the Section 263 order had already been set aside by the Tribunal.
The Bench comprising of Judicial Member, Ravish Sood and Accountant Member, Arun Khodpia observing the appellant’s own case ruled that since the very foundation of the reassessment did not survive, the addition of ₹65 lakh also could not stand.
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The Tribunal noted the distinction between “lack of enquiry” and “inadequate enquiry” from the precedent's Pr. CIT v. Brahma Centre Development Pvt. Ltd. (2021), as well as the Bombay High Court in CIT v. Gabriel India Ltd. (1993). Thus, holding that revision under Section 263 is justified only in cases of complete lack of enquiry.
Since the AO in this case had undertaken detailed verification of the share application money, the revisionary jurisdiction under Section 263 could not have been invoked.
Accordingly, ITAT set aside the order of the CIT(A).
Consequently, quashed the reassessment order framed under Section 143(3) read with Section 263 of the Act.
Therefore, the appeal of the assessee was allowed.
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