2024 (11) TMI 915 - AT - Income Tax

Revision u/s 263 - unexplained income u/s. 69A r.w.s. 115BBE - whether the seized cash shown by the assessee under the head income from other sources will be treated as unexplained income u/s. 69A r.w.s. 115BBE of the Act or not? - HELD THAT - On perusal of section 263, it is abundantly clear that for invoking section 263 of the Act, the order of the Ld.AO should be erroneous and should be prejudicial to the interest of revenue. As per Expln.2(a) of section 263 of the Act, any order shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if the order is passed without making enquiry or verification which should had been made. In the instant case, as submitted by DR the claim of the assessee was not supported by any contemporaneous demonstrable evidences. Assessee did not provide the list of persons from whom he received the income and to whom he provided the services. AO failed to verify the same. Therefore we are of the considered view that, there was failure on the part of the AO to make necessary enquiry / verification, hence the order of the Ld. AO is erroneous in so far as it is prejudicial to the interest of revenue. Therefore, in our opinion the invocation of section 263 by the PCIT(C) is as per law. Accordingly, we dismiss this ground of appeal of the assessee.

Summary

Issues:
1. Whether the seized cash declared as income from other sources by the assessee should be treated as unexplained income under section 69A r.w.s 115BBE of the Income Tax Act.
2. Whether the invocation of revision proceedings under section 263 by the Principal Commissioner of Income Tax (Central) is valid.

Analysis:

Issue 1:
The appeal concerned the treatment of seized cash declared as income from other sources by the assessee. The Principal Commissioner of Income Tax (Central) invoked section 263 of the Act against the order of the Assessing Officer, directing the assessment of the seized cash under section 69A r.w.s 115BBE as unexplained income. The assessee contended that the seized cash represented income from services provided for real estate projects to friends and relatives. However, the Department Representative argued that the assessee failed to provide contemporaneous evidence or a list of persons involved, thus not meeting the burden of proof under section 69A. The Tribunal upheld the PCIT(C)'s order, stating that the assessee's claim lacked substantiation, leading to the seized cash being treated as unexplained income.

Issue 2:
Regarding the invocation of section 263 by the PCIT(C), the assessee argued that the Assessing Officer had considered the seized cash during assessment proceedings and had taken a valid view, thus the invocation of section 263 was unwarranted. However, the Department Representative supported the PCIT(C)'s decision. The Tribunal analyzed section 263, emphasizing that an order is deemed erroneous if passed without necessary inquiries or verifications. As the AO failed to verify the sources of the seized cash adequately, the order was considered prejudicial to revenue. Consequently, the Tribunal upheld the PCIT(C)'s invocation of section 263, dismissing the appeal.

In conclusion, the Tribunal ruled against the assessee, upholding the PCIT(C)'s decision to treat the seized cash as unexplained income and validate the invocation of revision proceedings under section 263. The appeal was dismissed, affirming the orders of the tax authorities.