2021 (8) TMI 951 - AT - Income Tax

Revision u/s 263 - AO has stated that he had examined the cash flow statement for the relevant assessment year, income expenditure statement, balance sheet, source of cash receipts, bank statements, particulars of agricultural income, agreement in respect to sale of agricultural produce, Dharma Kanta Bills, documents regarding purchase of immovable property during the relevant assessment year, cash book, bank book etc., and thereafter passed the assessment order - HELD THAT - The assessee has also stated before the ld. PCIT that he had produced the Pattadar Pass Book and other relevant documentary evidence for earning agricultural income before the ld. AO - it is evident from the Order of the Ld. PCIT that he has produced the same before him also. Similarly, as regards the Chit Bid amounts received by the assessee, the assessee has produced the bank statements and other relevant documents before the Ld. PCIT and also claimed to have produced before the Ld. AO. With respect to loan received from HDFC bank also the assessee had produced the bank statement before the Ld. PCIT and also claimed to have produced the same before the Ld. AO. In this situation, the ld. PCIT without examining the documents furnished by the assessee setting aside the order of the Ld. AO and directing the Ld. AO to re-do the assessment de novo is not appreciable. It is apparent from the order of the Ld. PCIT itself that the assessee had produced all the requisite documents before him. From the order of the Ld. PCIT and Ld. AO it is apparent that the Ld. AO has not only examined the documents produced by the assessee but also made enquiries through his inspectors and thereafter came to the conclusion that the income declared by the assessee in his return of income is in order. We are of the view that the order of the Ld. PCIT is devoid of merits. Therefore, we hereby set aside the order of the Ld. PCIT and reinstate the order of the Ld. AO. Appeal of the assessee is allowed

Summary

Issues:
1. Validity of order passed by Ld. PCIT under section 263 of the Income Tax Act for AY 2016-17.
2. Assessment order set aside by Ld. PCIT without proper verification.
3. Invocation of section 263 by Ld. PCIT deemed bad in law.
4. Ld. PCIT's findings on acceptance of agricultural income, chit bid amounts, and HDFC loan without proper verification.
5. Compliance with procedural requirements by the Assessing Officer.
6. Relevance of documents produced by the assessee before Ld. AO and Ld. PCIT.

Analysis:
1. The appeal challenged the order of the Ld. Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act for the Assessment Year (AY) 2016-17. The appellant contended that the order was ab initio void and legally flawed.
2. The Ld. PCIT set aside the assessment order dated 06/12/2018 without adequate verification, raising concerns about the validity of the decision.
3. The invocation of section 263 was challenged as being legally unsound due to alleged non-compliance with the procedural requirements by the Assessing Officer (AO) before passing the assessment order.
4. The Ld. PCIT's findings regarding the acceptance of agricultural income, chit bid amounts, and HDFC loan without proper verification were disputed by the appellant, arguing that all relevant documentary evidence had been submitted to the AO and the PCIT.
5. The AO's procedural diligence was highlighted, indicating that the AO had conducted thorough verification by examining various documents and making necessary enquiries, as evidenced by the cash flow statement, bank statements, and other financial records.
6. The documents produced by the assessee before both the Ld. AO and Ld. PCIT were deemed sufficient to support the income declared in the return, leading to the conclusion that the Ld. PCIT's order lacked merit. Consequently, the order of the Ld. PCIT was set aside, and the original assessment order was reinstated.

This detailed analysis of the judgment provides a comprehensive overview of the issues raised, the arguments presented, and the ultimate decision rendered by the Appellate Tribunal ITAT Hyderabad.