2023 (9) TMI 468 - AT - Income Tax

Revision u/s 263 - Scope of the affidavit relief upon by the AO - As per CIT assessee-company paid cash to M/s Cardio Technovention for the purpose of taking reversal of entry as commission received through proper banking channel and this issue was not thoroughly examined while completing the assessment - HELD THAT - As affidavit was filed on the directions of Ld. AO for which he had powers to call for filing an affidavit to prove the fact that cash was not received by M/s Cardio Technovention. The same could not have been left aside and inferences drawn on the basis of documents which otherwise did not have anything explicit and patent to hold different opinion. It is not self serving affidavit of the assessee but of concerned party from whom allegedly the assessee had benefited. There is no finding of Ld. PCIT as to which matter from the survey was contradicting the affidavit. The aforesaid narration of relevant queries made during re-assessment and replies of the assessee are sufficient to show that Ld. AO has asked for the affidavit, only to reaffirm that replies are supported with on oath deposition too. Ld. Pr.CIT has thus fallen in error to exercise powers u/s 263 to hold AO wrongly relied the affidavit from M/s Cardio Technovention. The impugned order u/s 263 of the Act is quashed. Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the appeal by the Assessee against the order of the CIT(A)-2, New Delhi, challenging the jurisdiction assumed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961, regarding alleged cash payment to a third party during assessment proceedings.

Jurisdictional Issue:
The main issue in the appeal was the jurisdiction assumed by the PCIT under section 263, alleging that the assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the revenue's interest due to an alleged cash payment to a third party. The Assessee contended that the issue was thoroughly examined during assessment proceedings, with no adverse findings. The Assessee provided various documents and responses to refute the allegation, showing that the payment was for a legitimate purpose and duly recorded in the books. The Assessee argued that the AO had applied due diligence in verifying the matter, as evidenced by the record of inquiries and responses submitted during the assessment process.

Legal Analysis and Decision:
The Tribunal analyzed the evidence presented and noted that the PCIT questioned the reliance on an affidavit from the third party without providing any contradictory evidence from the survey. The Tribunal highlighted that an affidavit, though not considered direct evidence, cannot be ignored without rebuttal, especially when requested by the assessing authority. The Tribunal emphasized that the PCIT erred in disregarding the affidavit and drawing conclusions solely based on impounded documents. The Tribunal found that the AO had appropriately sought the affidavit to support the Assessee's explanations, and the PCIT's decision under section 263 was deemed incorrect. Relying on legal precedents and procedural provisions, the Tribunal allowed the Assessee's appeal, quashing the PCIT's order under section 263.

Conclusion:
The Tribunal ruled in favor of the Assessee, emphasizing the importance of considering all evidence, including affidavits, in assessment proceedings. The Tribunal found that the AO had conducted a thorough examination of the issue, and the PCIT's intervention under section 263 was unwarranted. The appeal was allowed, and the order under section 263 was set aside, providing relief to the Assessee in the case.

Separate Judgment:
The judgment was delivered by Shri Anubhav Sharma, Judicial Member, and Shri Anil Chaturvedi, Accountant Member, of the Appellate Tribunal ITAT Delhi on 14th June 2023.