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2023 (9) TMI 99 - AT - Income TaxRevision u/s 263 - Undisclosed source of investment - PCIT noted that as per Form 26AS, the assessee has made an investment in mutual funds but has not disclosed the same in his balance sheet for the year under consideration - HELD THAT - A perusal of the submission filed before the Assessing Officer shows that out of the total investment the assessee explained that an amoun is on account of redemption of mutual fund. However, a perusal of the bank statement shows that although the same amounts have been credited in the bank account, however, the assessee has neither shown such investment in the balance sheet under the head investment , nor has withdrawn the same for investment. Assessee has shown only an amount from the capital account towards drawings which he is trying to explain the source of investment - AO has completely lost his sight while accepting the explanation given by the assessee towards source of investment which not only made the assessment order erroneous but also is prejudicial to the interest of the Revenue. Under these circumstances, the order passed by the Pr. CIT cancelling the assessment order passed u/s 143(3), in our opinion, is fully justified. Decided against assessee.
Issues:
The appeal concerns the order passed under section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax-1, Hyderabad for the Assessment Year 2013-14. Delay Condonation: The appeal was delayed by 50 days, but the delay was condoned after the assessee provided reasons for the delay along with an affidavit. The appeal was then admitted for adjudication. Assessment Order Set Aside: The Principal Commissioner of Income Tax-1, Hyderabad set aside the assessment order passed by the Assessing Officer under section 143(3) read with section 147 of the Income Tax Act. This decision was based on the non-verification of the investment in mutual funds and the taxability of capital gains by the Assessing Officer. Facts and Assessment: The assessee filed the return for A.Y. 2013-14 beyond the specified date, leading to a reopening of the case under section 147. The Assessing Officer completed the assessment, making additions for disallowances of expenses and differences in Form 26AS. The Principal Commissioner found discrepancies in the investment in mutual funds and set aside the assessment order for re-evaluation. Contentions and Arguments: The assessee challenged the cancellation of the assessment order, providing explanations and supporting documents to justify the investments and transactions. The Revenue argued that the Assessing Officer's acceptance of the investment in mutual funds without proper verification was erroneous and prejudicial to Revenue interests. Tribunal Decision: The Tribunal found that the Assessing Officer failed to adequately verify the source of the investment in mutual funds, leading to an erroneous and prejudicial assessment order. The Tribunal dismissed the appeal, upholding the Principal Commissioner's decision to set aside the assessment order under section 263 of the Income Tax Act. Case Precedents: The Tribunal distinguished the case precedents cited by the assessee, stating that the lack of inquiry into the source of investments rendered the assessment order erroneous and justifying the Principal Commissioner's decision. The Tribunal found the facts of the present case distinct from the cited precedents, supporting the cancellation of the assessment order. Conclusion: The Tribunal dismissed the appeal, affirming the Principal Commissioner's decision to set aside the assessment order due to the inadequate verification of the investment in mutual funds. The decision was based on the erroneous and prejudicial nature of the assessment order.
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