2021 (11) TMI 809 - AT - Income Tax

Revision u/s 263 by CIT - Period of limitation - Allegation of lack of adequate opportunity being provided by the ld PCIT - HELD THAT - This is clearly a case of lack of adequate opportunity being provided by the ld PCIT. We find that the show-cause notice has been issued on 26.03.2021 at the fag end of the limitation period, which was expiring on 31.03.2021, wherein the assessee has been provided effectively one working day to respond by 29.03.2021, and the order was thereafter pronounced on 31.03.2021. We understand that being a limitation period, the ld PCIT could not have granted more time but the question is what stopped the ld PCIT to atleast initiate the proceedings earlier and why the proceedings were initiated at the fag end of the limitation period - We believe that the assessee deserve a reasonable and sufficient opportunity to put forth his submissions and supporting documentation in response to the show-cause notice raised by the ld PCIT. We therefore deem it fit and appropriate that the matter be set-aside to the file of the ld PCIT to decide the matter a fresh as per law after providing reasonable opportunity to the assessee. Whether assessment order has been made subject matter of Vivad Se Vishwas Scheme, the ld. Pr.CIT cannot exercise jurisdiction u/s 263 ? - PCIT is also directed to examine the contentions so raised on behalf of the assessee in terms of exercise of jurisdiction u/s 263 in context of declaration of the assessee having been accepted under the direct taxes Vivad Se Vishwas Scheme Act, 2020 prior to the issuance of the show-cause notice u/s 263 - since the ld PCIT himself is the appropriate authority who has issued Form 3 dated 23.02.2021 in the instant case and the fact that the said contentions have been advanced for the first time before us, it is relevant to afford an equal opportunity to the ld PCIT to examine such contentions raised on behalf of the assessee challenging his exercise of jurisdiction u/s 263 of the Act. Therefore, the contentions so advanced by both the parties are left open to be examined by the ld PCIT as per law and have not been adjudicated upon by us.

Summary

Issues:
1. Jurisdiction under section 263 of the Income Tax Act regarding assessment order under Vivad Se Vishwas Scheme.
2. Adequate opportunity of being heard in passing the order under section 263.
3. Verification of unsecured loans and revisionary order under section 263.

Jurisdiction under Section 263 regarding Vivad Se Vishwas Scheme:
The appeal was filed against the order of the ld. PCIT for A.Y. 2016-17. The assessee challenged the jurisdiction of the ld. PCIT under section 263, arguing that the assessment order had been settled under the Vivad Se Vishwas Scheme. The assessee contended that the revision of the assessment order was not in line with the legislative intention of the scheme. The ld. PCIT, on the other hand, highlighted the provisions of the Direct Taxes Vivad Se Vishwas Scheme Act of 2020, emphasizing that the scheme is specific to disputed tax matters and does not preclude the Revenue from exercising jurisdiction under section 263. The Tribunal considered both arguments but left the contentions open for further examination by the ld. PCIT.

Adequate Opportunity in Passing Order under Section 263:
The assessee also challenged the passing of the order under section 263, citing lack of adequate opportunity to be heard. The first notice was issued on 26.03.2021, with the hearing scheduled for 29.03.2021, and the order was passed on 31.03.2021. The Tribunal found this to be a case of lack of adequate opportunity provided by the ld. PCIT. Despite the limitation period expiring on 31.03.2021, the Tribunal believed that the assessee deserved a reasonable opportunity to respond. The matter was set aside to the ld. PCIT for fresh consideration after providing a reasonable opportunity to the assessee.

Verification of Unsecured Loans and Revisionary Order under Section 263:
The ld. Pr. CIT observed that the assessee had taken unsecured loans during the year without fulfilling necessary requirements. The ld. Pr. CIT deemed the assessment order under section 143(3) as erroneous and prejudicial to the interest of Revenue, issuing a show cause notice under section 263. The Tribunal directed the ld. PCIT to reexamine the contentions raised regarding the exercise of jurisdiction under section 263 in light of the acceptance of the declaration under the Vivad Se Vishwas Scheme Act, 2020. The Tribunal allowed the appeal for statistical purposes.

In conclusion, the Tribunal admitted the appeal for adjudication on merits, considering the reasonable cause for the delay in filing the appeal due to the COVID-19 pandemic. The Tribunal addressed the issues of jurisdiction under section 263, adequate opportunity in passing the order, and the verification of unsecured loans, providing detailed analysis and directions for further consideration by the ld. PCIT.