2022 (9) TMI 303 - AT - Income Tax

Revision u/s 263 by CIT - development expenses, unsecured loan and the advances unexplained - HELD THAT - Assessee failed to furnish the required documentary evidences to substantiate the issues identified by ld. PCIT. We find that Ld. PCIT has given sufficient adequate opportunities before passing his revisional assessment order. The assessee failed to provide without details of development expenses, unsecured loan and the advances despite repeated notice and reminder. We find that in absence of any details sought by PCIT, the order of Assessing Officer was revised by PCIT. Before us neither the representative have appeared despite service of notice nor filed any written submission. Therefore, in absence of any detailed requirement in support of various grounds of appeal raised by assessee, we do not find any reason to deviate from the finding of ld. PCIT. Accordingly, we confirm the order of PCIT that the assessment order is erroneous and in so far as prejudicial to the interest of revenue. In the result, the various grounds of appeal raised by the assessee are rejected.

Summary

Issues:
1. Revision proceedings under section 263 initiated by Ld. Pr. CIT
2. Assessment order set aside invoking provisions of section 263
3. Treatment of unrecorded land value under section 69
4. Claim of partner's remuneration deduction against 'on money'
5. Disproportionately high development expenses without defects in books

Issue 1 - Revision proceedings under section 263:
The appeal was against the order of Ld. Principal Commissioner of Income-Tax-Valsad dated 22.03.2018 under section 263 for AY 2013-14. The assessee challenged the initiation of revision proceedings by Ld. Pr. CIT, contending that the original assessment was not erroneous or prejudicial to revenue. The Ld. PCIT identified issues related to unrecorded land value, partner's remuneration, and development expenses, leading to the initiation of revision proceedings.

Issue 2 - Assessment order set aside under section 263:
The Ld. PCIT set aside the assessment order passed by the Assessing Officer, directing a fresh assessment after finding errors and prejudice to revenue. Despite the assessee's contentions, the Ld. PCIT held that the original assessment lacked complete inquiry on crucial issues, necessitating the revision under section 263.

Issue 3 - Treatment of unrecorded land value under section 69:
The Ld. PCIT found discrepancies in the valuation of land not recorded in the books, amounting to Rs.1,84,80,600. The failure of the Assessing Officer to treat this unrecorded value as an unexplained investment under section 69 rendered the assessment erroneous and prejudicial to revenue, leading to the revision proceedings.

Issue 4 - Claim of partner's remuneration deduction:
The Ld. PCIT questioned the deduction claimed by the appellant for partner's remuneration against 'on money' admitted during a survey. The discrepancy in the allowable remuneration amount highlighted a flaw in the original assessment, contributing to the revision under section 263.

Issue 5 - Disproportionately high development expenses:
The Ld. PCIT raised concerns about the high development expenses compared to land cost without defects in the books. Despite no invocation of section 145 by the Assessing Officer, the Ld. PCIT deemed the expenses disproportionately high, further justifying the revision under section 263.

In the absence of detailed submissions and documents from the assessee, the ITAT Surat confirmed the order of Ld. PCIT, dismissing the appeal and upholding the revision under section 263. The tribunal found no reason to deviate from the Ld. PCIT's findings, emphasizing the importance of providing necessary details to substantiate claims during assessment and revision proceedings.