2022 (4) TMI 25 - AT - Income Tax

Revision u/s 263 - CIT revised the assessment order passed by the AO u/s.143(3) r.w.s. 153B on the ground that assessment order passed by the AO is erroneous insofar as, it is prejudicial to the interests of revenue on the issue of loan liability shown by the assessee in the name of Mr. P.Udhayashankar for the year ending 31.03.2015 - HELD THAT - We find that during the course of assessment, neither the assessee furnished necessary explanation with regard to loan liability in the name of Mr. P.Udhayashankar, nor the AO has examined the issue in light of relevant provisions of the Act. Therefore, we are of the considered view that assessment order passed by the AO u/s.143(3) r.w.s. 153B of the Act, is erroneous insofar as, it is prejudicial to the interests of revenue. As regards claim of the assessee that CIT ought not to have revised assessment order on the basis of statement of facts filed before the Income-tax Settlement Commission and confession statement of Mr. P. Udhayashankar, we find that purported lender categorically denied of having any loan transactions with the assessee. Moreover, facts brought out by the CIT clearly shows that Mr. P. Udhayashankar has not admitted loan transactions of the assessee in the application filed before the Income-tax Settlement Commission. Even before the High Court in the Writ Petition, the Hon'ble High Court noticed that the petitioner could not able to establish that he approached the settlement commission with clean hands and element of true and full disclosures as contemplated u/s.245C had not been established. Purported loan transaction of the assessee with Mr. P.Udhayashankar is not explained. AO neither examined the issue nor called for any explanation from the assessee. Therefore, there is no error in the reasons given by the CIT to hold that assessment order passed by the Assessing Officer as erroneous insofar as, it is prejudicial to the interests of revenue. Hence, we are inclined to uphold order passed by the learned CIT u/s.263 and dismiss appeal filed by the assessee.

Summary

Issues:
Delay in filing appeal - Condonation of delay petition
Revisionary jurisdiction under Section 263
Genuineness of loan transaction
Assessment order being prejudicial to revenue

Delay in filing appeal - Condonation of delay petition:
The appeal was filed against the order of the Commissioner of Income Tax, Central-1, Chennai, dated 22.03.2019 under Section 263 of the Income Tax Act, 1961, for the assessment year 2015-16. The appellant sought condonation of a 47-day delay in filing the appeal due to the assessee's medical condition, viral hepatitis, which necessitated bed rest. The delay was explained as unintentional and unavoidable. The Department opposed the condonation, arguing the reasons were not reasonable. The Tribunal, after considering the reasons, found them to be valid under the Act's provisions for condonation of delay, thereby admitting the appeal for adjudication.

Revisionary jurisdiction under Section 263:
The case involved a search operation under Section 132 of the Income Tax Act, 1961, revealing a loan liability of ?5.66 crores from Mr. P. Udhayashankar, which was not acknowledged by Mr. Udhayashankar. The Commissioner of Income Tax found the assessment order to be erroneous and prejudicial to revenue as the Assessing Officer failed to consider this loan transaction. The Commissioner set aside the assessment order and directed reexamination. The appellant challenged this revisionary jurisdiction, citing the lack of details in Mr. Udhayashankar's application before the Income-tax Settlement Commission. However, the Tribunal upheld the Commissioner's decision, noting the lack of evidence supporting the loan transaction and the failure of the Assessing Officer to address the issue.

Genuineness of loan transaction:
The dispute centered on a loan liability claimed by the assessee from Mr. P. Udhayashankar, which was not corroborated by Mr. Udhayashankar and was deemed unexplained by the Commissioner. The appellant argued that the denial of transactions by Mr. Udhayashankar did not prove the transaction's illegitimacy. However, the Tribunal found that the lack of evidence and Mr. Udhayashankar's denial raised doubts about the genuineness of the loan transaction. The Assessing Officer's failure to address this issue led to the revision under Section 263.

Assessment order being prejudicial to revenue:
The Tribunal upheld the Commissioner's decision to revise the assessment order under Section 263 due to the failure of the Assessing Officer to consider the loan transaction, which was crucial for determining the assessee's total income. The lack of evidence supporting the loan transaction and Mr. Udhayashankar's denial raised concerns about the assessment's accuracy and its impact on revenue interests. The Tribunal found no error in the Commissioner's reasoning and dismissed the appeal, affirming the revision under Section 263.

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