2022 (5) TMI 1540 - AT - Income Tax

Revision u/s 263 - CIT observed that the assessee contravened the provisions of section 40A(3) and also that the income declared during the course of survey on account of excess stock was not declared - These issues were found not to have been considered by the Assessing Officer at the time of completing the assessment - Pr.CIT proceeded ex parte and held the assessment order to be erroneous and prejudicial to the interests of the Revenue - HELD THAT - Pr.CIT did not himself adjudicate on the two issues espoused by him for revision primarily on the ground that the assessee did not furnish any reply by the stipulated date. Though the assessee furnished its reply giving necessary details on 15.03.2021, being, the same date as given by the ld. Pr.CIT for making submissions, the ld. Pr.CIT passed order on 18.03.2021 without taking note of such replies. This shows that the impugned order has been passed without considering the replies of the assessee. Under these circumstances, we are of the considered opinion that it would be in the fitness of things if the impugned order is set aside and the matter is restored to the file of the ld. Pr.CIT. We order accordingly and direct him to pass the revisionary order afresh as per law after allowing reasonable opportunity of hearing to the assessee and taking into consideration the replies already filed by the assessee and any further reply that the assessee may seek to lodge. Appeal is allowed for statistical purposes.

Summary

Issues:
1. Revision u/s 263 of the Income-tax Act, 1961 regarding contravention of section 40A(3) and undeclared income.
2. Consideration of assessee's reply by the Principal Commissioner of Income Tax (Pr.CIT) before passing the order.

Analysis:
1. The appeal was against the order dated 18.03.2021 passed by the ld. Pr.CIT, Pune-1 under section 263 of the Income-tax Act, 1961 for the assessment year 2015-16. The assessee, engaged in manufacturing and trading of gold and silver ornaments, had filed a return declaring total income of Rs.15,06,560. The assessment completed under section 143(3) accepted the declared income. The ld. Pr.CIT observed contravention of section 40A(3) and non-declaration of income on account of excess stock, which were not considered by the Assessing Officer during assessment. The Pr.CIT issued show cause notice to the assessee, who did not reply, leading to an ex parte decision setting aside the assessment order for revisiting the issues after giving the assessee a proper hearing opportunity.

2. The Tribunal noted that the Pr.CIT did not adjudicate on the issues as the assessee did not reply by the specified date. However, the assessee had uploaded replies on the same date as required. The Tribunal found that the Pr.CIT's order was passed without considering the replies, leading to the decision to set aside the order and restore the matter to the Pr.CIT for a fresh revisionary order after allowing a reasonable opportunity of hearing to the assessee and considering the replies already filed. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal directed the Pr.CIT to reconsider the issues after giving the assessee a proper hearing opportunity and considering the replies already submitted. The decision highlighted the importance of due process and considering all relevant submissions before passing a revisionary order under section 263 of the Income-tax Act, 1961.