2024 (9) TMI 480 - AT - Income Tax

Revision u/s 263 - additional income as offered by the assessee cash was seized and certain jewellery was found from the assessee and a sworn statement was also recorded from him, on these aspects - revisional power vest with CIT to invoke the provision u/s 69 - suppressed income of the assessee has been assessed as Income from business OR u/s 68 r.w.s 115BBE HELD THAT - Cash was seized and certain jewellery was found from the assessee and a sworn statement was also recorded from him, on these aspects. The assessee admitted additional income to cover up for the shortfall in cash and jewellery in the return of income which has been accepted by AO. The said income was offered as business income since the assessee was engaged in contract work. During the course of assessment proceedings, AO issued notice u/s 142(1) along with a detailed questionnaire, inter-alia, to furnish explanation of cash seized and jewellery found during the course of search and seizure operations. The assessee furnished the requisite details and explanations vide reply dated 05-04-2021. There is no finding in the assessment order that the assessee failed to furnish any details as called for by Ld. AO. The Ld. AO also considered the sworn statement of the assessee. A finding was also rendered that some gold jewellery belonged to the three daughters of the assessee whereas the remaining Jewellery was purchased out of withdrawals, drawings of earlier years out of agricultural income, rental income and interest income. To makeup for shortfall in cash and Jewellery, the assessee offered additional business income of Rs. 70.60 Lacs. Except for business income and agricultural income, the assessee is not shown to have any other substantial sources of income. Upon these facts, it could very well be said that a plausible view was taken by Ld. AO in the matter with due application of mind. The same could not be said to be opposed to facts or law. Simply because, the revisionary authority holds a different view in the matter, the same could not be a good enough reason to invoke the powers u/s 263 which is as per settled legal position laid down by higher judicial forums. The case law in Pr. CIT vs. Dharti Estate 2024 (1) TMI 1197 - GUJARAT HIGH COURT is on identical set of facts and the same favors the case of the assessee. The case law of Jaipur Tribunal in Smt. Rekha Shekhawat 2022 (8) TMI 791 - ITAT JAIPUR is also on identical lines and supports the case of the assessee. Therefore, in our considered opinion, the revision of the order could not be upheld. By quashing the same, we allow the appeal of the assessee.

Summary

Issues:
1. Invocation of revisionary jurisdiction u/s 263 by Ld. Pr. Commissioner of Income Tax.
2. Assessment framed by Ld. AO u/s. 153C of the Act.
3. Justification of invoking Section 263.
4. Consideration of detailed submissions by the appellant.
5. Ignoring findings of AO regarding total gross income.
6. Plausible explanation by the appellant for the source of jewellery and cash.
7. Revisional power of CIT to invoke provision u/s 69 of IT Act.
8. Adequate enquiries by AO in original assessment proceedings.
9. Interpretation of two legally possible views by the AO.

Detailed Analysis:
1. The appellant challenged the invocation of revisionary jurisdiction u/s 263 by the Ld. Pr. Commissioner of Income Tax regarding the assessment framed by the Ld. AO u/s. 153C of the Act. The grounds of appeal included contentions that the order was contrary to law, facts, and principles of natural justice. The appellant argued that thorough scrutiny was conducted by the AO during the search assessment, providing ample opportunities for explanations. The appellant also highlighted that the PCIT did not consider detailed submissions filed in response to a notice u/s 142(1) and erred in passing the order without acknowledging the findings of the AO regarding the appellant's total gross income over the last 7 years.

2. The Ld. AR contested the revision of the order, emphasizing that the AO had conducted sufficient enquiries during the assessment proceedings. However, the Ld. CIT-DR argued that no enquiries were made by the AO on flagged issues, justifying the revision. Upon reviewing the case records, it was revealed that the appellant was involved in contract work with State Highways and PWD departments. Following a search action, the AO accepted the returned income of the appellant after making necessary enquiries. Subsequently, the PCIT observed discrepancies in the source of additional income, leading to the show-cause notice to the appellant.

3. The PCIT contended that the additional income should have been taxed under specific provisions of the Act, which the AO failed to do. The appellant argued that once a satisfactory explanation is provided, the income should be categorized under the appropriate head. The AO's failure to verify the source of cash and jewellery was highlighted, leading to directions for further enquiries under Sec. 69A. The appellant disputed the PCIT's allegations and emphasized that the AO had already addressed the source of income during the assessment proceedings.

4. The Tribunal's findings noted that the appellant had admitted additional income to cover discrepancies in cash and jewellery, which was accepted by the AO as business income. The AO had issued notices and questionnaires to the appellant, who provided detailed explanations and information. The Tribunal opined that a plausible view was taken by the AO, and the revisionary authority's differing opinion was not sufficient to invoke powers under Sec. 263. Citing relevant case laws, the Tribunal concluded that the revision of the order could not be upheld, thereby allowing the appeal of the assessee.

5. In conclusion, the Tribunal allowed the appeal, emphasizing that the revision of the order under Sec. 263 was not justified based on the facts, legal interpretations, and the AO's actions during the assessment proceedings. The judgment highlighted the importance of thorough enquiries, satisfactory explanations by the appellant, and the application of legal principles in tax assessments.