2023 (6) TMI 174 - AT - Income Tax

Revision u/s 263 by CIT - CIT setting aside order passed u/s 143(3)/147 as erroneous in so far as it is prejudicial to the interest of the Revenue - as submitted A.O rectified his order u/s 154 and made additions to the income, based on audit objections - HELD THAT - AO had already passed the order u/s 154 of the Act on 14/02/2020 by making very same addition which was the subject matter of order impugned of the PCIT dated 15/03/2021, we are of the opinion that, the order passed by the Ld. PCIT u/s 263(1) of the Act in directing the A.O. to frame the assessment order once again will amounts to double jeopardy to the Assessee - order passed u/s 263(1) of the Act by the PCIT is quashed. Decided in favour of assessee.

Summary

Issues:
The appeal was filed against the order passed by the Office of the Pr. Commissioner of Income Tax for the assessment year 2010-11. The grounds of appeal raised by the assessee included the initiation of provisions u/s 263 of the Income Tax Act, setting aside the order passed by the Assessing Officer (A.O.), denial of liability for assessment, and procedural irregularities in the orders.

Initiation of Proceedings u/s 263:
The Principal Commissioner of Income Tax (PCIT) found discrepancies in the assessment record of the assessee related to the addition of Rs. 20,59,000 in the capital account without proper explanation. The PCIT considered the assessment order as erroneous and prejudicial to the interest of revenue, thus initiating proceedings u/s 263 of the Act. The PCIT set aside the original assessment order and directed the A.O. to conduct a fresh assessment with a specific inquiry into the aforementioned addition.

Grounds of Appeal and Arguments:
The assessee challenged the PCIT's decision, arguing that the A.O. had rectified the order by adding the same amount to the income based on audit objections. The assessee contended that invoking Section 263 and instructing a fresh inquiry by the PCIT was unjustified. The Department supported the PCIT's order, claiming the appeal lacked merit.

Judgment and Decision:
After hearing both parties and reviewing the case, it was noted that the A.O. had already rectified the initial order by adding Rs. 20,59,000 to the income u/s 154 of the Act. The Tribunal found that the PCIT's direction for a fresh assessment would impose double jeopardy on the assessee. Consequently, the Tribunal allowed the assessee's appeal, quashing the PCIT's order u/s 263(1) of the Act. As a result, the other grounds of appeal were not addressed, considering them academic. The appeal of the assessee was partly allowed, and the order was pronounced on 31/05/2023.