2024 (6) TMI 652 - AT - Income Tax

Revision u/s 263 - AO 143(3) r.w.s.153C being erroneous and prejudicial to the interest of Revenue non-est and non-service - HELD THAT - The first contention of the AR is that the impugned order passed by the ld. PCIT is non-est and non-existence in the eye of law as the original assessment order dated 29.12.2019 passed u/s 143(3) r.w.s. 153C is unsigned and unserved on the assessee. No doubt the ld. DR placed on record the report of the AO that while passing assessment through online (ITBA) portal there is no mandatory requirement of manually sending assessment order to the assessee as it was duplication of work. DR contended that in the physical assessment record order dated 27.12.2019 was found to be signed and by mistake AO uploaded unsigned copy in the ITBA portal. PCIT rightly examined the assessment record and on his satisfaction invoked the jurisdiction under the Act. We find the contention raised by the AR whether it is unsigned copy of assessment order in ITBA portal and for non-service is immaterial for initiation of the proceedings u/s 263 as this Tribunal also found duly signed assessment order while examining the assessment records during the course of earlier hearings. On careful reading of the provisions of section 263 which explains that the PCIT/PCCIT or CCIT or PCIT or CIT may call for and examine the records of any proceedings under this Act and if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interests of the revenue he may after examining the record and by giving an opportunity to the assessee conducting such inquiry as he deems necessary and pass an order enhancing or modifying or cancelling the assessment and directing for a fresh assessment. In the present case PCIT called for record and examined the same having found the order passed by the Assessing Officer under section 143(3) r.w.s. 153C of the Act is erroneous and prejudicial to the interest of Revenue by giving an opportunity to the assessee directed the AO to verify the contentions of the assessee and pass a fresh assessment order in accordance with law relating to share amounts of profit and nowhere in the order it was mentioned the assessment order is unsigned. The argument of the ld. AR is that since the order uploaded in the portal is unsigned and for non-service vitiates the proceedings u/s 263 we note that as discussed above regarding the provisions u/s 263 of the Act nowhere it is mentioned that non-service of order and unsigned order of the AO makes the proceedings u/s 263 of the Act invalid. The requirement u/s 263 of the Act i.e. for initiating revision or assuming jurisdiction by the ld. PCIT to call for the records and after examining of the same having satisfied that it is a fit case for inquiry in enhancing the assessment. In the present case PCIT held the AO has omitted to consider share profits of the assessee in the original assessment proceedings and invoked the jurisdiction u/s 263. Therefore the contention of the that the unsigned and non-service of order vitiates the entire proceedings u/s 263 is not justified. Thus the first issue raised in this regard is dismissed. According to the PCIT the assessee did not respond to the notice issued u/s 153C and the AO has completed the assessment u/s 143(3) r.w.s. 153C making addition on account of unexplained money u/s 69A of the Act dated 27.12.2019 - As rightly pointed out by the ld. AR that the proposed addition as referred by the ld. PCIT is exempted u/s 10(2A) of the Act because the firm was assessed separately consisting share of partners in its total income. When it taxed in the hands of the firm the same cannot form part of total income of the partners. Therefore the fact of whether the proposed share of profit of assessee was assessed in the hands of the firm being part of total income is not established. Further the details of profits claimed to have been given to the assessee as loans is also not established clearly. Thus finding in order of Aiswhwarya Rai Bachan 2022 (3) TMI 524 - ITAT MUMBAI as relied on by the ld. AR is not applicable. AR raised another issue that the PCIT based on mistake of fact directed the AO the share of profit in the previous year relating to the assessment year under consideration - In this case no evidence whatsoever was brought on record to show that the share of the profit as computed by the ld. PCIT was the share of profit of earlier assessment years. We note that no reference was even made before the ld. PCIT by furnishing relevant evidence and therefore the submissions of the ld. AR are rejected. In the present case we observe that the assessee has given submissions before the ld. PCIT which were considered by the PCIT which are clear. Therefore the order of the ld. PCIT is not cryptic and has no application of ratio laid down by the Hon ble High Court of Calcutta. We find no infirmity in the order of the ld. PCIT in directing the AO to conduct fresh verification in this regard. PCIT rightly held that the order passed by the AO under section 143(3) r.w.s. 153C is erroneous as far it is prejudicial to the interest of the Revenue by giving specific finding that the Assessing Officer omitted to have added0 in the hands of the assessee. Thus the grounds concerning the merits fails are dismissed.

Summary

Issues:
1. Validity of assessment order due to lack of signature and non-service.
2. Justification of invoking jurisdiction under section 263 of the Income Tax Act, 1961.

Analysis:

Issue 1: Validity of assessment order
The appellant contended that the assessment order dated 27.12.2019 was non-est as it lacked the Assessing Officer's signature and was not served on the assessee. The appellant argued that non-service of the order rendered it invalid. However, the respondent asserted that the order was uploaded on the ITBA portal and was signed in the physical assessment record. The Tribunal verified the physical record and found the signed order, concluding that the unsigned copy on the portal was a mistake. The Tribunal held that the non-service and lack of signature did not affect the validity of invoking jurisdiction under section 263 of the Act.

Issue 2: Jurisdiction under section 263
The appellant challenged the jurisdiction of the ld. PCIT under section 263, stating that the proposed addition on profits was exempt under section 10(2A) of the Act. The ld. PCIT found that the Assessing Officer had omitted to include the share of profit in the assessment. The ld. PCIT issued a notice under section 263, and the appellant argued that the profits were already assessed in the hands of the firm. However, the Tribunal noted that the appellant failed to establish that the profits allocated as loans to partners were part of the total addition made in the hands of the firm. The Tribunal also rejected the appellant's claim that the ld. PCIT directed the assessment of profits from a previous year without evidence. The Tribunal upheld the ld. PCIT's decision to direct a fresh assessment, as the original order was found to be erroneous and prejudicial to the interest of Revenue.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the ld. PCIT's decision under section 263 of the Act.