2023 (9) TMI 961 - HC - Income Tax

Reopening of assessment u/s 147 - AO appears to have formed the view that income which is otherwise chargeable to tax, has escaped assessment - It is the petitioner's case that he has moved from Quetta in West Pakistan. While moving to India, he brought with him cash amounting to approximately Rs.27,50,000/-, and jewellery weighing 150 grams. So far as the cash is concerned, Rs. 27,50,000 was deposited by the petitioner in Bank of India, Khanpur Branch, Delhi - as guided petitioner could take recourse to a statutory appellate remedy. HELD THAT - It is the cash and the value of the jewellery, as arrived at on 01.04.2015, that forms the income, which is said to have escaped assessment. AO has valued the jewellery at Rs.3,85,500/-, which has been added to Rs. 27,00,000/-, i.e., cash brought by the petitioner from Pakistan. Consequently, the escaped income was pegged, as noticed above, at Rs. 30,85,500/-. Since an assessment order has been passed, as indicated to Mr Shafiq Khan, petitioner, that the petitioner could take recourse to a statutory appellate remedy. Mr Khan says that u/s 251 the appellate authority will not be able to set aside the impugned assessment order dated 31.05.2023. According to us, prima facie, this is a misreading of the provision. The provision, inter alia, confers power of annulment on the appellate authority. The expression annul is wider in scope than the power to set aside. We have queried Mr Khan as to how the petitioner got Indian currency into the country, and deposited the same in the aforementioned bank. As assessee says that he will obtain instructions in that regard. List the matter on 11.09.2023.

Summary

Issues involved: Assessment order under Section 147 of the Income Tax Act, 1961 for Assessment Year 2016-17, alleged income escaping assessment due to cash and jewellery brought from Pakistan, statutory appellate remedy under Section 251 of the Act.

The judgment pertains to an assessment order passed under Section 147, read with Section 144 of the Income Tax Act, 1961, for Assessment Year 2016-17. The Assessing Officer (AO) determined that income amounting to Rs.30,85,500/- had escaped assessment. The petitioner, who had moved from Quetta in West Pakistan to India, brought cash totaling approximately Rs.27,50,000/- and jewellery weighing 150 grams. The AO valued the jewellery at Rs.3,85,500/- and added it to the cash brought from Pakistan, resulting in the alleged escaped income amount. The petitioner was advised to consider a statutory appellate remedy under Section 251 of the Act.

The petitioner's counsel contended that the appellate authority would not have the power to set aside the assessment order dated 31.05.2023. The court, however, opined that this interpretation was incorrect. Section 251 of the Act grants the appellate authority the power of annulment, which is broader than merely setting aside an order. The petitioner's counsel was also questioned regarding the process of bringing Indian currency into the country and depositing it in the bank, to which he undertook to provide further information.

In response to the petitioner's representative's request, the court scheduled the matter for the next hearing on 11.09.2023, subject to the petitioner submitting legible copies of the annexures in advance.