2023 (10) TMI 691 - AT - Income Tax

Revision u/s 263 by CIT - additional professional income surrendered by the assessee - As per CIT AO had failed to make necessary enquiries and take note of the aforesaid statements of the assessee made during the survey action - HELD THAT - We find that the statement of the assessee as well as the said surrender letter of the assessee, are of the same date i.e. 26.09.2016, therefore, it cannot be said that the said letter issued by the assessee is an after-thought. Rather, if we read both the statement as well as letter together, the sum and substance of the entire conversation would be that the assessee had offered the said amount of Rs. 70 lacs as his additional professional income. There is no case of the Department that the assessee has any other source of income. AO during the assessment proceedings, had made adequate enquiries in this respect and accepted the explanation offered by the assessee. We, therefore, do not find any justification on the part of PCIT in holding the assessment order as erroneous and prejudicial to the interests of the Revenue. The exercise of revisionary jurisdiction u/s 263 of the Act, in this case is held to be not justified and therefore, the revision order passed u/s 263 of the Act is hereby quashed. Appeal of the assessee stands allowed.

Summary

Issues Involved:
The appeal against the order of the ld. Pr. Commissioner of Income Tax, Patiala pertaining to the 2017-18 assessment year where the invocation of revised jurisdiction by the ld. PCIT under section 263 of the Income Tax Act, 1961 was challenged by the assessee.

Summary:
The assessee, a Doctor/Medical Practitioner, had a survey action conducted by the Income Tax Department which revealed unaccounted income. The assessee surrendered an amount as additional income during the survey, attributing it to the same business/profession. The Assessing Officer (AO) accepted this explanation, but the ld. PCIT invoked section 263, deeming the assessment order erroneous for not charging the surrendered income at a higher rate under Section 115BBE. The assessee argued that necessary enquiries were made by the AO, and there was no evidence of income from sources other than the medical profession. The AO had issued a Show Cause Notice and the assessee had provided explanations and documents. The ld. PCIT relied on the statement recorded during the survey where the assessee mentioned being unable to explain certain amounts, but the assessee later clarified in writing that the surrendered income was from the medical profession. The Tribunal found that the AO had made adequate enquiries and accepted the explanation, thus quashing the revisionary order under section 263.

This judgment dealt with the issue of invoking revised jurisdiction under section 263 of the Income Tax Act, 1961 by the ld. PCIT based on the surrender of additional income by the assessee during a survey action. The Tribunal observed that the assessee had explained the source of the surrendered income as being from the medical profession, and the AO had conducted necessary enquiries before accepting this explanation. The Tribunal found no justification for deeming the assessment order as erroneous and prejudicial to the interests of the Revenue, ultimately allowing the appeal of the assessee and quashing the revision order passed under section 263.