9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (12) TMI 431 - AT - Income TaxRevision u/s 263 - Addition u/s 68 - as argued there is no specific allegation as to how the assessment order was erroneous and prejudicial to the interest of the revenue and reasons recorded for re-opening the assessment u/s. 147 and the very reason for re-opening the case of the assessee u/s. 147 was that the assessee was a beneficiary of suspicious transaction and the assessee was required to furnished details of unexplained credits in his bank account - HELD THAT - The first fact which we observe on reading of 263 order is that the PCIT has not recorded any satisfaction/has not given any specific finding as to how the assessment order is erroneous and prejudicial to the interest of Revenue. A perusal of 263 order shows that the only basis of issuance of notice u/s. 263 of the Act is that in case of similar labour payments to one Shri Mahindrakumar Shantilal Mathukiya for AY 2013-14 from Mr. V N Nitin and M/s. Kiran Gems Pvt Ltd. an addition was made u/s. 68 of the Act. However, in our considered view in order to invoke the provisions of section 263 of the Act, the foundation/ basis of initiation of 263 proceedings must emanate from the findings given by the AO in his assessment order of the assessee itself and 263 cannot be initiated on the basis of borrowed satisfaction (i.e on the basis of findings in assessment done in case of a third person). Therefore, in our considered view, the very basis of initiation of 263 proceeding in the present case is fallacious and for this reason u/s. 263 proceedings are liable to be set-aside. Secondly, we observe from the contents of the 263 order that the Ld.PCIT has not given any specific findings or observation nor has pointed any defect in the assessment order so as to make the assessment order erroneous and prejudicial to the interest of Revenue. Further, there is also no specific observation in 263 order that there was any lack of inquiry by the AO, during the course of assessment proceedings. From the contents of the 263 order it is seen that the Ld.PCIT has only asked the AO to make the further inquiries on the basis of additions made in the case of a third person, who had received similar payments from Mr.V Nitin and M/s.Kiran Gems Pvt. Ltd. and in the 263 order and there is no specific finding/observation as to how the assessment order is erroneous and prejudicial to the interest of Revenue. Therefore, for this reason as well, the order u/s. 263 of the Act is liable to be set-aside. Whether there is lack of inquiry on the part of the AO, while finalizing order u/s. 147? - The details of correspondence between the AO and the assessee have been reproduced in earlier part of the order. It is also observed that the assessee had also furnished various details including copy of bank statements, confirmation of ledger account from M/s. Kiran Gems Pvt. Ltd., tax audit report, copy of bank statement, copy of form 26AS which demonstrates that all payment to the assessee were subject to tax deduction at source etc. Therefore, the facts as coming from the case records itself shows that there is no lack of inquiry on the part of the AO, looking into this case. In the assessment order for M/s. Kiran Gems Pvt. Ltd. which has been produced before us for our perusal for this very assessment year 2013-14, no disallowance was made in the case of M/s. Kiran Gems Pvt. Ltd. with respect to payment made to various parties (including the assessee) towards labour charges which also lends support to the argument of the assessee that since no disallowance with respect to aforesaid payment to various parties including the present assessee, was made in the assessment of M/s. Kiran Gems Pvt. Ltd., therefore for this reason as well the order passed u/s. 147 of the Act in the case of assessee is not erroneous and prejudicial to the interest of Revenue. In view of the above discussion, we are of the considered view that the assessment order in the instant case is not erroneous and prejudicial to the interest of Revenue and hence the order passed by Ld.PCIT u/s. 263 of the Act, is liable to be set-aside. Assessee appeal allowed.
Issues Involved:
1. Validity of the order passed under Section 263 of the Income Tax Act. 2. Alleged lack of inquiry by the Assessing Officer (AO) regarding transactions with specific parties. 3. Whether the assessment order was erroneous and prejudicial to the interest of the Revenue. Issue-wise Detailed Analysis: 1. Validity of the order passed under Section 263 of the Income Tax Act: The primary issue was whether the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act was valid. The assessee contended that the order was bad in law and should be quashed. The PCIT initiated proceedings under Section 263, claiming that the assessment order was erroneous and prejudicial to the interest of the Revenue. However, the Tribunal observed that the PCIT did not record any specific satisfaction or finding as to how the assessment order was erroneous. The basis for invoking Section 263 was the addition made in a similar case involving a third party, which the Tribunal deemed as "borrowed satisfaction." It was concluded that the initiation of proceedings under Section 263 was fallacious, and therefore, the order was liable to be set aside. 2. Alleged lack of inquiry by the Assessing Officer (AO) regarding transactions with specific parties: The PCIT argued that the AO did not conduct a necessary inquiry into the suspicious transactions with M/s V. Nitin and M/s Kiran Gems Pvt. Ltd., which warranted the invocation of Section 263. The Tribunal, however, found that during the reassessment proceedings, the AO had indeed issued notices and sought explanations from the assessee regarding the credits in the bank account. The assessee provided comprehensive details, including bank statements, confirmation of ledger accounts, tax audit reports, and evidence of tax deduction at source. The Tribunal noted that the AO had considered these submissions and found no basis for making additions. Therefore, it was concluded that there was no lack of inquiry on the part of the AO. 3. Whether the assessment order was erroneous and prejudicial to the interest of the Revenue: The PCIT's position was that the assessment order was erroneous and prejudicial to the Revenue's interest because similar transactions in a third party's case had resulted in additions under Section 68. The Tribunal, however, emphasized that the assessment order in question must be evaluated on its own merits and not based on findings in unrelated cases. The Tribunal highlighted that in the case of M/s Kiran Gems Pvt. Ltd., no disallowance was made for payments to the assessee, which supported the assessee's argument that the transactions were genuine. Consequently, the Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue. Conclusion: The Tribunal set aside the orders passed under Section 263 for all the assessment years under consideration, concluding that the original assessment orders were not erroneous or prejudicial to the interest of the Revenue. The appeals filed by the different assessees were allowed.
|
