9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (12) TMI 682 - AT - Income TaxRevision u/s 263 by CIT - Unexplained Cash deposited in the bank account - HELD THAT - It is not in dispute that prior to receiving the notice issued u/s. 148 the assessee had filed return of income declaring of Rs.159880/-. Only after receiving the notice u/s. 148 the assessee revised the return claiming that his income is subject to presumptive tax u/s. 44AD of the Act and treating the cash deposit as his business receipt he returned profit @ 8% u/s. 44AD of the Act. This action of the assessee was accepted by the AO without realising that provisions of section 44AD of the Act do not apply to a commission agent thereby making the assessment order erroneous in law and because of this error the AO did not examine the cash deposit making the assessment order pre judicial to the interest of the revenue. On finding these errors the CIT rightly assumed the jurisdiction cast upon him by the provisions of section 263, we do not find any error or infirmity in the findings of the Pr. CIT. The appeal of the assessee is accordingly dismissed.
Issues:
1. Jurisdiction of CIT(A) under section 263 of the Act 2. Validity of assessment framed under section 147 r.w.s. 143 (3) of the Act Issue 1: Jurisdiction of CIT(A) under section 263 of the Act The appeal was against the order of the Pr. CIT, Ghaziabad dated 18.03.2020 framed under section 263 of the Act. The assessee contended that the CIT(A) erred in assuming jurisdiction under section 263 and issuing directions to the AO against the valid assessment framed under section 147 r.w.s. 143 (3) of the Act. The Pr. CIT issued a notice citing that the AO failed to confront the assessee regarding the legal situation of opting for the presumptive scheme of section 44 AD of the IT Act, 1961. The Pr. CIT concluded that the assessment order was erroneous and prejudicial to the interest of the Revenue as it did not consider that section 44AD does not apply to commission agents. The Pr. CIT's decision was upheld, dismissing the appeal. Issue 2: Validity of assessment framed under section 147 r.w.s. 143 (3) of the Act The facts of the case revealed that the original return of income was filed declaring income of Rs.159880/-. The assessment was completed after initiating proceedings under section 147 of the Act, with the assessee explaining cash deposits in the bank account as sale proceeds of goods. The AO accepted the revised return treating the cash deposit as business receipt under section 44 AD of the Act. However, it was found that section 44AD does not apply to commission agents, making the assessment order erroneous in law. The AO did not examine the cash deposit, rendering the assessment order prejudicial to the interest of the revenue. The Pr. CIT rightfully assumed jurisdiction under section 263 of the Act, leading to the dismissal of the appeal. The judgment highlighted the importance of correct application of tax provisions and the duty of the AO to make necessary inquiries to ascertain true facts. The decision emphasized that errors in assessment orders that are prejudicial to the revenue's interest can be rectified under section 263 of the Act. The case serves as a reminder for assessing officers to diligently apply the law to avoid erroneous assessments.
|
