2017 (1) TMI 1831 - AT - Income Tax

Revision u/s 263 - CIT found Default in assessment completed u/s 153A - CIT directed the Assessing Officer to pass fresh assessment order as it is clear negligence of the AO ignoring the material document found and seized, which become the base for invoking the provisions of section 263 - HELD THAT - As relied on by assessee in the case of Shri V.R. Venkatachalam v. ACIT ( 2015 (7) TMI 736 - ITAT CHENNAI ), it was a fact that the AO proposed that the assessment completed u/s 153A be revised u/s 263 as the AO could not examine the issues due to paucity of time. After invoking of jurisdiction u/s 263 CIT directed the AO to pass fresh assessment order which was completed under section 153A r.w.s. 143(3) of the Act though there was no incriminating materials found during the course of search under section 132 of the Act. Therefore, after considering the entire facts of the case, and when the ld. CIT himself agreed that findings for assessment year 2006-07 having cascading effect on the subsequent assessment years i.e., from 2007-08 to 2012-13, the Tribunal annulled the orders passed u/s 263 of the Act and allowed the appeals of the assessee. The above case relied on by the ld. Counsel for the assessee has no application to the facts of the present case because, in the present case, the ld. PCIT has independently, on verification of assessment records found that the information contained in the seized document which was seized during the course of search under section 132 of the Act has been omitted by the Assessing Officer while framing the assessment under section 143(3) r.w.s. 153A of the Act dated 15.03.2014. Thus PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. We find no infirmity in the order passed by the ld. PCIT and accordingly, the ground raised by the assessee is dismissed.

Summary

Issues:
Challenging orders under section 263 of the Income Tax Act, 1961 for assessment years 2010-11, 2011-12, and 2012-13.

Analysis:
The appeals were filed against orders of the Principal Commissioner of Income Tax challenging the assessment years 2010-11, 2011-12, and 2012-13 under section 263 of the Income Tax Act, 1961. The appellant, an individual and Proprietrix of M/s. DMC Textiles, was the wife of Shri Madanlal D. Chawla. A search under section 132 of the Act led to the discovery of unaccounted jewellery and cash. The assessment under section 143(3) r.w.s. 153A of the Act was completed, assessing the appellant's income for the relevant years. However, the Principal Commissioner of Income Tax observed discrepancies related to the sale of plots in Tharamangalam Village, which were not considered in the assessment. This led to the issuance of a notice under section 263 of the Act to reassess the income arising from the sale of plots.

Further scrutiny revealed that the Assessing Officer had not considered crucial documents related to the sale of plots, leading to an incomplete assessment. The Principal Commissioner of Income Tax found the assessment order erroneous and prejudicial to revenue, invoking section 263 of the Act. The appellant responded to the notice, but the Principal Commissioner directed the Assessing Officer to redo the assessment for the relevant years. The appellant appealed to the Tribunal, citing a previous case, but the Department argued in favor of upholding the Principal Commissioner's order under section 263 of the Act.

After considering all arguments and examining the assessment details, the Tribunal analyzed whether the assessment order was indeed erroneous and prejudicial to revenue as per the requirements of section 263 of the Act. The Tribunal found that crucial information regarding the sale of plots was omitted from the assessment, justifying the Principal Commissioner's decision to invoke section 263. Comparisons to previous cases were made, and the Tribunal concluded that the Principal Commissioner's actions were justified. Consequently, all appeals filed by the appellant were dismissed, upholding the Principal Commissioner's order to redo the assessment under section 263 of the Act.

In conclusion, the Tribunal affirmed the decision to reassess the appellant's income for the relevant years based on the discrepancies related to the sale of plots in Tharamangalam Village, highlighting the importance of thorough assessments to ensure accuracy and compliance with tax laws.