2023 (2) TMI 577 - AT - Income Tax

Revision u/s 263 - deposit of cash and utilization of cash towards purchase of immovable property was never examined in the scrutiny assessment - HELD THAT - Wealth tax returns were not filed by assessee for the relevant assessment years 2014-15 and 2015-16 despite the fact that the AO issued reopening notice u/s.16 of the Wealth Tax Act. Further, the assessments were completed only on 11.03.2022 just before issuance of notice dated 24.03.2021 which is again after completion of assessment by the AO which is dated 10.12.2019 and even after issuance of showcause notice by the PCIT which is dated 22.02.2022. It means that the wealth tax assessments h ave no value to consider the explanation of the assessee. AO has neither examined the source of cash deposit and cash payment towards purchase of immovable property and in the absence of any enquiry conducted by the AO in this regard, the assessment order is rightly been held to be erroneous and prejudicial to the interest of Revenue. No infirmity in the order of PCIT revising the assessment - Decided against assessee.

Summary

Issues:
1. Revision order passed by PCIT under section 263 of the Income Tax Act regarding cash money deposited and utilized for property purchase.
2. Assessment of unexplained investment under section 69 of the Act.
3. Failure to file wealth tax returns and examination of cash deposits and property purchase.

Issue 1: Revision order passed by PCIT under section 263 of the Income Tax Act regarding cash money deposited and utilized for property purchase:
The assessee appealed against the revision order by PCIT under section 263 concerning cash deposits and property purchase. The PCIT questioned the cash deposit of Rs.86,00,000 and Rs.15,49,408 utilized for property purchase, which were not examined during the original assessment. PCIT found the assessment erroneous and prejudicial to revenue, directing the AO to redo the assessment. The Tribunal upheld PCIT's decision, emphasizing the need for proper examination and giving opportunities to the assessee.

Issue 2: Assessment of unexplained investment under section 69 of the Act:
The AO initially assessed the unexplained investment of Rs.30,00,000 under section 69, which the assessee accepted under VSVS. However, PCIT raised concerns about additional cash deposits and property purchase not scrutinized by the AO. The Tribunal noted that the AO failed to examine the source of cash deposits and property payment, leading to an erroneous assessment. The Tribunal confirmed PCIT's decision to revise the assessment.

Issue 3: Failure to file wealth tax returns and examination of cash deposits and property purchase:
The assessee did not file wealth tax returns for relevant years, despite cash declarations in those returns. The Tribunal found discrepancies in wealth tax assessments completed after the original income tax assessment. The AO's lack of investigation into cash deposits and property payment, along with delayed wealth tax assessments, rendered the original assessment erroneous. The Tribunal upheld PCIT's revision order, emphasizing the need for thorough examination during reassessment proceedings.

In conclusion, the Tribunal dismissed the assessee's appeal, confirming PCIT's revision order to set aside the original assessment and direct the AO to conduct a detailed examination of the cash deposits and property purchase. The judgment highlights the importance of proper scrutiny and adherence to legal procedures to ensure accurate assessments under the Income Tax Act.