2023 (6) TMI 1275 - AT - Income Tax

Revision u/s 263 - as per CIT(A) assessment order passed u/s 147 of the Act as erroneous and prejudicial to the interest of the revenue - As assessee company had a balance of investments in unquoted shares on which it had earned a dividend income which the assessee company had claimed as exempt income in the return filed in response to the notice u/s 148, but AO had not made any disallowance u/s 14A of the Act r.w.r. 8D - HELD THAT - Assessment was reopened on a particular issue of having received of Rs. 10,00,000/- as accommodation entry from entry provider, whose statement was recorded in a search action exercised in the case of some third party. AO examined that particular issue and made addition in respect of the said entry received by the assessee. The issue relating to any other transaction was not the subject matter of the reassessment proceedings. Assessment in this case was reopened to examine a particular issue and that issue was examined by the Assessing Officer and the addition was made and ultimately the matter was settled by the assessee by availing Vivad Se Viswas Scheme. The items/issue on which the PCIT has sought to revise the order were not the subject matter of the reassessment order, therefore, in the light of the decision of Alagendran Finance Ltd 2007 (7) TMI 304 - SUPREME COURT it cannot be said that the reassessment order passed by the AO was erroneous, therefore, the revision jurisdiction exercised by the ld. PCIT, in this case, cannot be held to be justified. Decided in favour of assessee.

Summary

Issues:
The appeal against the order of the Principal Commissioner of Income Tax (PCIT) exercising revision jurisdiction under section 263 of the Income Tax Act, 1961.

Issue 1: Condonation of Delay in Filing Appeal
The Registry noted a delay of 302 days in filing the appeal, attributed to the Covid-2019 Pandemic period. The appeal was treated as filed within the limitation period as per the directions of the Hon'ble Supreme Court.

Issue 2: Reopening of Assessment and Addition of Unexplained Cash Credits
The assessment of the assessee was reopened under section 147 of the Act based on information that the assessee had received Rs. 10,00,000/- as unexplained income, leading to the addition of the same as unexplained cash credits under section 68 of the Act.

Issue 3: Revision Jurisdiction of PCIT
The PCIT, exercising revision jurisdiction under section 263 of the Act, observed discrepancies in the assessment related to investments in unquoted shares and dividend income claimed as exempt. The PCIT deemed the assessment order as erroneous and prejudicial to the revenue's interest, directing a fresh assessment.

Judgment Summary:
The assessee appealed against the PCIT's revision order, arguing that the PCIT could not revise the assessment order under section 147 of the Act as the issues raised were not part of the reassessment proceedings. Citing precedent, the assessee contended that the reassessment order was not erroneous, and therefore, the PCIT's revision jurisdiction was unjustified. The Tribunal quashed the revision order, allowing the assessee's appeal.

This judgment highlights the issues of delay in filing the appeal, the addition of unexplained cash credits, and the exercise of revision jurisdiction by the PCIT. The Tribunal's decision focused on the scope of revision jurisdiction and the relevance of issues raised in the reassessment proceedings, ultimately ruling in favor of the assessee.