2024 (10) TMI 77 - AT - Income Tax

Revision u/s 263 - incriminating material in possession of the Department specifically mentioning payment as cash on-money payment towards purchase of immovable property - HELD THAT - We are of the considered view that there is apparently no lack of enquiry by the AO on the issue of on-money payment towards purchase of immovable property, and secondly the order passed u/s 263 by PCIT has not given any specific findings as to where the AO is wrong in passing the assessment order. We are of the considered view that the assessment order is not erroneous and prejudicial to the interest of the Revenue. In the recent case of PCIT v. Kaushik Nanubhai Majithia 2024 (3) TMI 1339 - GUJARAT HIGH COURT on similar facts, while ruling in favour of the assessee no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document - Appeal of the assessee is allowed.

Summary

Issues:
Appeal against order passed by Ld. Principal Commissioner of Income Tax under Section 263 of the Income Tax Act for Assessment Year 2016-17.

Analysis:
The appeal was filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income Tax, Ahmedabad-1, setting aside the assessment order dated 29/03/2022 passed by the faceless assessing officer under Section 147 r.w.s. 144B. The issue revolved around the alleged on-money payment of Rs. 55,00,000/- by the Assessee to Navratna Organisers and Developers Pvt. Ltd. for the purchase of immovable property in the scheme called "Kalhaar Blues and Greens." The PCIT observed that the Assessing Officer erred in not verifying the information and directed the faceless assessing officer to pass a fresh Assessment Order. The Assessee contended that the proceedings under Section 147 were initiated to examine the on-money payment, and sufficient enquiries were made by the Assessing Officer. The Assessee challenged the initiation of re-assessment proceedings and requested proof of the alleged payment, highlighting the lack of incriminating material supporting the claim. The Assessee's submissions emphasized the absence of evidence and relevance of an excel sheet found during the search period. The Assessee argued that there was no lack of enquiry by the Assessing Officer on the issue of on-money payment, and the order under Section 263 did not specify any errors in the assessment order.

The PCIT contended that Navratna Developers admitted to taking on-money for the purchase of immovable property, suggesting inadequacy of enquiries in the assessment order. However, the Tribunal found that the Assessing Officer had conducted sufficient enquiries into the on-money payment issue during the 147 proceedings. The Tribunal noted that the PCIT did not provide specific findings on the alleged errors in the assessment order. The Tribunal highlighted the absence of adverse incriminating material supporting the on-money payment claim and referenced a judicial precedent to support the decision. The Tribunal concluded that there was no lack of enquiry by the Assessing Officer and allowed the Assessee's appeal, setting aside the order passed under Section 263 of the Act. The judgment referenced a similar case ruling by the Gujarat High Court to support the decision.