2023 (4) TMI 1162 - AT - Income Tax

Revision u/s 263 - Assessee Declared Income in Survey u/s 133A - As per CIT provisions of section 115BBE were applicable to the case of the assessee and the AO should have assessed the Undisclosed Income declared during the survey u/s.69, 69A and 69C - Assessee Declared Income in Survey u/s 133A - HELD THAT - Pr.CIT has himself observed that the Undisclosed Income have been rightly credited to P L A/C. Once, the ld.Pr.CIT has observed that the undisclosed income declared during survey of has been Correctly credited to P L A/c, he cannot advocate that the declaration should have been assessed u/s.69, 69A and 69C. The amounts assessed under Section 69, 69A and 69C are never part of P L A/c. Whereas in the case under consideration, the assessee has included survey declaration in P L A/c and the ld.Pr.CIT has observed it to be correct entry. In these facts and circumstances of the case, the Assessment Order cannot be said to be erroneous and prejudicial to the interest of the Revenue. Therefore, we hold the order u/s.263 as not sustainable in law. Thus, the ground of appeal number 1 5 of the assessee are allowed. CIT s observation that AO has not verified the survey disclosure - AO had verified during the scrutiny proceedings that assessee has offered the amount disclosed during the survey for taxation. The AO based on the submission has satisfied himself that the amount disclosed during the survey has been properly reflected by the assessee in the return of income. After satisfying himself, the AO passed the order under section 143(3) of the AcT Pr.CIT s observation that AO has not verified the survey disclosure is not based on facts. Therefore, the order passed by the AO is not erroneous. Once the AO takes a view on a particular issue after considering all facts, the ld.Pr.CIT may or may not agree with the view taken by the AO, but that does not mean that the assessment order is erroneous. When two views are legally possible and AO adopts one view the Assessment Order cannot be said to be erroneous for the ld.Pr.CIT to invoke jurisdiction u/s.263. Decided in favour of assessee.

Summary

Issues Involved:
1. Jurisdiction under Section 263.
2. Verification and application of relevant provisions by the Assessing Officer (AO).
3. Disallowance of expenses claimed by the assessee.
4. Applicability of Section 115BBE.

Summary:

Jurisdiction under Section 263:
The Assessee appealed against the order of the Principal Commissioner of Income Tax (Pr.CIT) invoking Section 263, which set aside the assessment order for fresh assessment, claiming it was framed without proper verification and application of relevant provisions of the Act. The Tribunal held that the assessment order was not erroneous and prejudicial to the interests of the Revenue, thus the invocation of Section 263 was not sustainable in law.

Verification and Application of Relevant Provisions by AO:
The Assessee argued that during the assessment proceedings, the AO conducted proper inquiries and adopted a permissible course of action. The Tribunal noted that the AO had verified the facts related to the disclosure made by the Assessee during the survey and confirmed that the income declared was included in the return of income. The AO's actions were found to be satisfactory and based on facts.

Disallowance of Expenses Claimed by the Assessee:
The Pr.CIT observed that the Assessee claimed expenses of Rs. 21,55,500/- against the amounts declared during the survey, which should have been disallowed by the AO under Section 115BBE. However, the Tribunal found that the Assessee had correctly credited the survey declaration amount to the profit and loss account, and thus, the assessment order could not be considered erroneous.

Applicability of Section 115BBE:
The Pr.CIT argued that the undisclosed income declared during the survey should have been assessed under Sections 69, 69A, and 69C, and subjected to tax under Section 115BBE, which disallows any deduction of expenditure. The Tribunal, however, highlighted that the Pr.CIT acknowledged the correct crediting of the undisclosed income to the profit and loss account, making the assessment order not erroneous. The Tribunal held that the AO's view was a possible one and should not be interfered with merely because the Pr.CIT had a different view.

Conclusion:
The Tribunal concluded that the order under Section 263 was not maintainable and dismissed the appeal of the Assessee. The Tribunal emphasized that when two views are legally possible, the adoption of one view by the AO does not render the assessment order erroneous.