2022 (11) TMI 1515 - AT - Income Tax

Revision u/s 263 - addition on account of unexplained money - case was reopened u/s 147 by issuing of notice u/s 148 for the reason that the cash was deposited in the appellant's Bank account - HELD THAT - We find that the issue is covered by the ratio laid down in the matter of CIT vs. Vam Resorts Hotels Ltd. 2019 (8) TMI 1418 - ALLAHABAD HIGH COURT passed by the Hon ble Allahabad High Court, and the judgment passed by the Madras High Court in the case of Smt. Renuka Philip 2018 (12) TMI 129 - MADRAS HIGH COURT . In fact, the Co-ordinate Bench, in the case of Manishbhai Laljibhai Vekaria 2022 (8) TMI 1538 - ITAT RAJKOT in the identical situation has been pleased to quash the proceeding initiated u/s 263 wherein held in the process of considering as to what relief the assessee is entitled to, the AO held that the assessee is entitled to claim deduction u/s 54F of the Act and assigned certain reasons for that. Therefore, the larger issue was pending before the Commissioner of Appeals, and in such circumstances, the Commissioner could not exercise power u/s 263 of the Act on account of the statutory bar. Therefore, on this ground also, the assumption of jurisdiction u/s 263 of the Act was wholly erroneous. Assessee appeal allowed.

Summary

Issues involved:
Appeals against common order under section 263 of the Income Tax Act, 1961 for A.Ys 2012-13 to 2015-16. Assessment under section 147 r.w.s. 143(3) for unexplained money. Validity of reassessment order. Jurisdiction under section 263 of the Act.

Detailed Analysis:

1. Assessment under Section 147 r.w.s. 143(3):
The appellant's case was reopened under section 147, and an assessment was completed assessing total income at Rs. 70,23,010, with an addition of Rs. 64,87,360 on account of unexplained money under section 69A. The appellant, a spiritual guru, had deposited a significant amount in the bank account, leading to the reassessment.

2. Reassessment Order and Jurisdiction under Section 263:
The Principal Commissioner issued a notice under section 263, deeming the assessment order as erroneous and prejudicial to revenue's interest due to unverified cash deposits claimed as cash sales. The appellant contended that the AO had considered the source of cash deposits and the issue was pending before the First Appellate Authority, rendering the PCIT's jurisdiction under section 263 premature.

3. Legal Precedents and Rulings:
The appellant relied on judgments like CIT vs. Vam Resorts & Hotels Ltd. and Smt. Renuka Philip Vs. ITO to argue against the PCIT's jurisdiction under section 263 during the pendency of the appeal. The Co-ordinate Bench and other High Court judgments highlighted that the exercise of jurisdiction under section 263 is barred when an appeal is pending before the Commissioner, emphasizing the premature nature of the PCIT's action.

4. Decision and Disposition:
After considering the arguments and legal precedents, the Tribunal found the PCIT's proceeding under section 263 unsustainable and quashed it. The Tribunal allowed the appellant's appeal, relying on the Co-ordinate Bench's order and the principles established in the cited judgments. The Tribunal emphasized that the pending appeal before the CIT(A) precluded the PCIT from invoking jurisdiction under section 263.

5. Outcome:
The Tribunal allowed all the appeals filed by the assessee against the common order under section 263 for A.Ys 2012-13 to 2015-16. The identical issue was dismissed in the subsequent appeals for the following years based on the findings in the lead case. The Tribunal's decision was pronounced on 10/11/2022, and the appeals were allowed in favor of the assessee.

This detailed analysis covers the issues involved in the judgment, the legal arguments presented, the reliance on precedents, and the ultimate decision of the Tribunal in allowing the appeals.