2023 (9) TMI 888 - AT - Income Tax

Revision u/s 263 - show-cause notice issued dated 21.12.2020 were not responded by the assessee, therefore PCIT has no material in hand to deliberate upon the issue and to consider the contentions of the assessee - HELD THAT - Since, the assessee was non-compliant before Learned PCIT and no addition was made or directed to be made by the Learned PCIT, the matter was only restored back to the files of AO which was the only option available with the PCIT, so as to comply with the principles of natural justice. Assessee was provided with the adequate opportunity to explain its case or to comment upon on the reasons recorded for revisionary proceedings wherein the issues were raised by the PCIT so as to establish that the order of AO was not erroneous so far as it is prejudicial to the interest of Revenue in view of Explanation-2 of Section 263 of the Income Tax Act but assessee chooses not to rebut on the same. Under such a scenario since the issue raised in the order under Section 263 of the Act were restored back to the file of AO and the assessee has the opportunity to explain its case and liberty to submit necessary evidence/information before the AO there was no prejudiced caused to the assessee. We, therefore, are of the considered opinion that there was no infirmity in the order of PCIT which calls for any interference. Appeal filed by the assessee is dismissed.

Summary

Issues:
The appeal challenges the order of the Principal Commissioner of Income-tax (PCIT)-1, Raipur for Assessment Year 2015-16 dated 09.03.2021, arising from the order of Income-tax Officer -2, Surguja under Section 143(3)/147 of the Income-tax Act, 1961 dated 11.12.2018.

Issue 1: Invocation of Section 263 by PCIT

The appellant contested the invocation of Section 263 by the PCIT, arguing that the assessment order was not erroneous or prejudicial to the interest of Revenue. The PCIT set aside the assessment order for fresh inquiry, citing lack of proper appreciation of facts and evidence. The appellant sought to add, amend, or modify grounds of appeal.

Issue 2: Condonation of Delay

The Registry noted that the appeal was delayed by 409 days. The appellant explained that 388 days were covered by relief due to the COVID pandemic, and the remaining 21 days were due to the illness of the appellant's counsel. Medical reports and prescriptions were submitted to support the explanation. The Tribunal found the reasons beyond the appellant's control and permitted the appeal to be heard.

Issue 3: Assessment Proceedings and PCIT's Observations

The case involved a resident assessee who had not filed the return of income for A.Y. 2015-16. The ITBA picked up the case for reassessment under Section 147 of the Act. The AO issued a notice under Section 148 based on cash transactions and payments to contractors. The assessment was completed, but the PCIT found deficiencies in verifying capital accounts and interest payments to partners. The PCIT issued show-cause notices and eventually set aside the assessment order under Section 263 for fresh inquiry.

Issue 4: Assessee's Arguments and PCIT's Order

The appellant contended that the AO had already examined the issues related to cash deposits and contract receipts, and the jurisdiction under Section 263 was not warranted. The appellant highlighted the absence of an opportunity to be heard before the revision order, citing relevant case laws. The PCIT's order was challenged for lack of direction on verifying interest payments to partners.

Final Decision:

The Tribunal upheld the PCIT's order under Section 263, noting the appellant's non-compliance with show-cause notices and the restoration of the matter to the AO for further examination. The Tribunal found no infirmity in the PCIT's order, as the appellant had the opportunity to explain their case but chose not to rebut the issues raised. Consequently, the appeal was dismissed, and the PCIT's order was sustained.

*Order pronounced on the 18th day of September 2023, in Raipur.*