Parallel Proceedings for Same AY After CIT(A) Set Aside Reassessment: ITAT Sets Aside ₹169.75 Cr Addition u/s 69A Arising from Section 263, Restores Matter to AO [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, held that to avoid parallel proceedings for the same Assessment Year (AY) 2014-15, the addition of ₹169.75 crore made under Section69A pursuant to revision under Section 263 of the Income Tax Act, 1961, was set aside and restored the matter to the Assessing Officer for fresh adjudication.

The appellant, Jatin Kumar Patel, filed an appeal before the Tribunal against the order of the Commissioner of Income Tax (Appeals) (CIT(A)), contending that parallel proceedings should be consolidated to avoid multiplicity

The respondent, Revenue Department, issued a notice under section 148 of the Income Tax Act, on 27.07.2022 to the appellant. During the reassessment proceedings, it emerged that aggregate credits of ₹123.12 crores had appeared in the appellant bank accounts, out of which more than ₹111 crores represented cash deposits.

Despite repeated notices, the appellant failed to furnish supporting documents. Consequently, in the original reassessment order on 20.03.2023 passed under Sections 147 read with 144 and 144B of the Income Tax Act, AO estimated income at 6% of the total bank credits on a presumptive basis.

The Principal Commissioner of Income Tax invoked revisionary jurisdiction under Section 263 of the Income Tax Act, on the ground that the reassessment order had been passed without proper enquiry and was prejudicial to the interests of the Revenue.

The Principal CIT set aside the earlier reassessment and directed the Assessing Officer to pass a fresh order after examining the entire bank credits.

The Assessing Officer completed the assessment and treated ₹169,75,68,149 as unexplained money under section 69A. The amount was taxed under section 115BBE, and penalty proceedings under sections 271(1)(c) and 271B were initiated, along with levy of interest under sections 234A, 234B and 234C.

At the appellate stage, CIT(A) rejected all legal and factual objections raised by the appellant, declined to keep the proceedings in abeyance, upheld both the reopening and the revisionary action under Section 263, sustained the addition, and dismissed the appeal.

Sulabh Padshah, counsel for the appellant, submitted that the original reassessment order for the same year had already been set aside by the CIT(A) in separate proceedings and restored to the AO for de-novo adjudication.

It was contended by the appellant counsel that continuation of proceedings arising from the Section 263 order would result in parallel adjudication for the same assessment year.

The revenue department was represented by Rignesh Das.

Siddhartha Nautiyal, Judicial Member and B.R.R. Kumar, Vice President, observed that the reassessment order for this year has already been set aside by the CIT(A) in separate appellate proceedings with a direction for de-novo adjudication, and the present appeal arises out of the order passed pursuant to revision under section 263.

It was held by the tribunal that allowing both streams to continue independently would only lead to multiplicity of proceedings and the possibility of inconsistent findings.

The tribunal set aside the order of the CIT(A) as well as the consequential assessment order passed by the AO under sections 144 read with 263 and 144B of the Act and restored the entire matter to the file of the AO for de-novo consideration in accordance with law.

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