2022 (7) TMI 948 - AT - Income Tax

Revision u/s 263 by CIT - addition u/s 69A r.w.s. 115BBE - lack of inquiry or inadequate inquiry - Assessee argued the provisions of section 69A was not attracted, hence, section 115BBE of the I.T.Act has no application - HELD THAT - In the instant case, the assessee has offered the entire cash seized as part of the income and paid duly the taxes thereon. The A.O. had taken a conscious decision while passing the assessment order u/s 143(3) r.w.s. 153A of the I.T.Act. When two views are possible and the A.O. adopts one of the views, the PCIT cannot treat the assessment order as erroneous and prejudicial to the interest of the revenue. In support of the above proposition, we rely on the judgment in the case of CIT v. Max India Limited 2007 (11) TMI 12 - SUPREME COURT - The Hon ble Delhi High Court in the case of CIT v. Sunbeam Auto Limited 2009 (9) TMI 633 - DELHI HIGH COURT had held that lack of inquiry or inadequate inquiry by the A.O. cannot be a reason to invoke the revisionary powers u/s 263. In the instant case, on perusal of the assessment order, it is clear that the enquiry was made by the Assessing Officer, and accordingly, the assessment order was concluded. The shortfall of enquiry or inadequacy of enquiry cannot be termed as total lack of enquiry. Hence, the order of the assessment cannot be held to erroneous. On identical facts, the Pune Bench of the Tribunal in the case of Alfa Laval Lund AB 2021 (11) TMI 327 - ITAT PUNE had held that when revisionary proceedings have been triggered by the A.O. by sending a proposal to the PCIT and then the latter passing the order u/s 263 of the I.T.Act, there is jurisdictional deficit resulting into vitiating the impugned order. Thus we hold that the PCIT is not justified in passing the impugned order u/s 263 - Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Validity of PCIT's order under section 263 of the I.T. Act.
3. Applicability of section 69A and section 115BBE of the I.T. Act.
4. Direction to invoke penalty provisions under section 271AAC of the I.T. Act.

Detailed Analysis:

1. Delay in Filing the Appeal:
The Tribunal noted a delay of 24 days in filing the appeal. The order from the PCIT was received on 11.03.2020, and the appeal was filed on 03.06.2020. The Tribunal referenced the Hon'ble Apex Court's judgment in "Cognizance For Extension of Limitation" (Miscellaneous Application No.21 of 2022 dated 10.01.2022), which excluded the period from 15.03.2020 to 28.02.2022 due to the pandemic. This judgment provided a 90-day limitation period from 01.03.2022. Since the appeal was filed within this extended period, the Tribunal concluded there was no delay.

2. Validity of PCIT's Order Under Section 263:
The PCIT issued a show cause notice under section 263 to reverse the assessment order dated 27.12.2018, arguing that the cash seized (Rs. 21,70,550) should be taxed under section 69A at a rate of 60% per section 115BBE and also suggested a penalty under section 271AAC. The assessee contended that the cash was declared as unaccounted business sales and included in the return of income, which was accepted by the A.O. The Tribunal observed that the cash seized was part of the sales turnover, included in the VAT return, and the assessment was concluded post proper inquiry. Therefore, the Tribunal held that the PCIT's order was not justified as the assessment order was neither erroneous nor prejudicial to the revenue.

3. Applicability of Section 69A and Section 115BBE:
The Tribunal noted that the cash seized was part of the business income and included in the return of income. The A.O. had accepted this explanation and concluded the assessment. The Tribunal emphasized that when two views are possible, and the A.O. adopts one, the PCIT cannot treat the assessment order as erroneous and prejudicial to the revenue. The Tribunal supported this with judgments from the Hon'ble Apex Court in "CIT v. Max India Limited" and the Hon'ble Delhi High Court in "CIT v. Sunbeam Auto Limited," which state that lack of or inadequate inquiry cannot be a reason to invoke section 263.

4. Direction to Invoke Penalty Provisions Under Section 271AAC:
The Tribunal highlighted that section 271AAC gives discretionary power to the A.O. to levy or not to levy a penalty. The A.O. had exercised this discretion by not initiating the penalty. Citing the Chandigarh Bench of the Tribunal in "Amarjeet Dhall v. CIT," the Tribunal stated that the PCIT cannot direct the A.O. to initiate penalty proceedings under revisionary jurisdiction. Additionally, the Tribunal noted that the revisionary proceedings were triggered by the A.O., which is not permissible as per the Pune Bench of the Tribunal in "Alfa Laval Lund AB v. CIT." Consequently, the Tribunal quashed the PCIT's order under section 263.

Conclusion:
The Tribunal concluded that the assessment order passed by the A.O. was not erroneous and prejudicial to the interest of the revenue. The PCIT's order under section 263 was quashed, and the appeal filed by the assessee was partly allowed.