2024 (3) TMI 100 - AT - Income Tax

Revision u/s 263 revising assessment framed u/s 144 - unexplained cash credit addition - as per CIT conclusion taken by the AO to assess the income at the rate of 1.5% as commission income attracts the provision of Section 263 as the entire amount of credits in the bank account should have been added as unexplained cash credit - HELD THAT - We observe from the assessment order that though the assessee did not appear before the AO however, the AO while framing the assessment has taken a possible and plausible view on the basis of bank statement that was available before the AO and recorded a clear cut finding that the assessee is acting as an accommodation entry provider/pass through entity and whatever money is received in the bank account is immediately transferred out to various parties and therefore came to a conclusion that a commission at the rate of 1.5% would be reasonable to be assessed as income and accordingly the assessment was framed. AO has taken a view which cannot be said to be incorrect on the basis of facts available nor is against any provisions of the Income Tax Act, 1961. AO has taken a possible view by applying and assessing the income at 1.50% of total credits in the bank account and the ld. Pr. CIT is not allowed to substitute his view in place of AO s view for the reason that he does not agree to AO s view. The case of the assessee is squarely covered by the decision of Gabriel India Ltd. ( 1993 (4) TMI 55 - BOMBAY HIGH COURT . Taking into account these facts and circumstances and the ratio laid by various High Courts, we are inclined to quash the order passed by the Pr. CIT u/s 263 of the Act. Decided in favour of assessee.

Summary

Issues:
The only issue raised by the assessee is against the invalid exercise of jurisdiction by ld. Pr. CIT u/s 263 of the Act thereby revising assessment framed by the Assessing Officer (in short ld. 'AO') vide order dated 21.12.2018 u/s 144 of the Act.

Summary:
The appeal was filed by the assessee against the order passed by the Learned Pr. Commissioner of Income Tax for the Assessment Year 2011-12. The appeal was initially considered time-barred, but due to a Supreme Court decision related to the COVID-19 pandemic, the appeal was treated as filed within the limitation period. The main issue raised by the assessee was regarding the jurisdiction exercised by the Pr. CIT under section 263 of the Income Tax Act, concerning the revision of the assessment framed by the AO. The Pr. CIT observed errors in the assessment related to interest income and unexplained cash credits. The Pr. CIT issued a show cause notice and revised the assessment order, leading to the appeal.

The assessee argued that the AO had taken a considered view based on bank statements and evidence, assessing income at a rate of 1.5% on total credits in the bank account. The assessee contended that the Pr. CIT erred in setting aside the assessment and substituting his view. The Pr. CIT, on the other hand, argued that the assessment was erroneous and prejudicial to revenue as the entire amount of credits in the bank account should have been added as unexplained cash credit.

After considering the arguments and perusing the material, the tribunal found that the AO had examined the issue thoroughly based on bank statements and had taken a plausible view. The tribunal noted that the AO's assessment was reasonable and supported by relevant case law. The tribunal cited decisions from the Co-ordinate Bench of Delhi and the Hon'ble Allahabad High Court to support the assessee's case. Consequently, the tribunal allowed the appeal filed by the assessee and quashed the order passed by the Pr. CIT under section 263 of the Act.