2022 (3) TMI 258 - HC - Income Tax

Revision u/s 263 by CIT - Unaccounted Income - AO had passed the original assessment order without making the required enquiry for verifying the claims made by the assessee - as per ITAT exercise of jurisdiction by the CIT (Exemptions) under Section 263 of the Act was not warranted in the present case - HELD THAT - This Court is in agreement with the findings recorded by the ITAT that since the total receipts of fees had been disclosed in the income and expenditure account the same cannot be considered as unaccounted income in the hands of the assessee. This Court is further of the view that the ITAT has correctly held that the Assessing Officer did not make any addition against the assessee on account of interest as well as cost of acquisition because the same were considered and added in the original assessment. In any event it is settled law that an appeal u/s 260A of the Act is to be entertained only when it directly and substantially affects the rights of the parties or is not free from difficulty or call for discussion of alternative views or the factual finding is perverse. It is further settled law that any interference with the finding of the fact is not warranted if it involves re-appreciation of evidence. Thus the factual findings of the ITAT are clear and cogent.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal - Original assessment order - Jurisdiction under Section 263 of Income Tax Act, 1961 - Assessment Year 2014-15 - Unaccounted income determination - Interest and cost of acquisition addition - Appeal under Section 260A - Merits of appeal.

Analysis:
1. Challenge to ITAT Order: The appeal challenged the order of the Income Tax Appellate Tribunal (ITAT) dated 14th February, 2020, concerning the original assessment order for the Assessment Year 2014-15. The Appellant contended that the Assessing Officer had erred by not conducting the necessary enquiry to verify the claims made by the assessee, rendering the assessment order erroneous and prejudicial to revenue, falling under Section 263 of the Income Tax Act, 1961.

2. ITAT Findings: The High Court reviewed the ITAT's detailed reasons for not finding the Commissioner of Income Tax (Exemptions) justified in exercising jurisdiction under Section 263 of the Act. The ITAT emphasized that the total receipts of fees were disclosed in the income and expenditure account, thus not constituting unaccounted income. Additionally, the Assessing Officer did not make any additions against the assessee for interest and cost of acquisition as these were already considered in the original assessment.

3. Legal Principles: The Court reiterated that an appeal under Section 260A of the Act should be entertained only if it significantly impacts the parties' rights, involves complexity or alternative views, or if the factual finding is perverse. It further stated that interference with factual findings is unwarranted if it necessitates re-evaluation of evidence.

4. Dismissal of Appeal: Given the clear and cogent factual findings by the ITAT, the High Court concluded that the appeal lacked merit and dismissed it. The Court emphasized that the factual findings were well-founded, and the appeal did not meet the criteria for interference under Section 260A. Thus, the judgment upheld the ITAT's decision and rejected the appeal challenging the original assessment order.