2017 (8) TMI 1072 - HC - Income Tax

Court allows delay, dismisses revenue's appeal. PCIT must apply mind. Lack of inquiry = no jurisdiction.

Pr. Commissioner of Income Tax (Central-02) Versus Mera Baba Reality Associates Pvt. Ltd

The court condoned a 41-day delay in re-filing the appeal and dismissed the revenue's appeal against the common order by the ITAT for Assessment Years ... Exercise u/s 263 undertaken after a full-fledged exercise already been undertaken by the AO under Section 153A - Held that:- As noticed by the ITAT, following the notices issued in the course of the assessment proceedings by the AO, on more than one occasion the Assessee furnished the complete details sought. Where the Assessee has in fact furnished the details that are available with him along with explanation to the queries raised by the AO, to permit the exercise of the revisionary jurisdiction only on the ground that the AO did not have sufficient time to verify the details furnished would be unfair to the Assessee. The PCIT must be satisfied, after application of his mind, that the order of the AO was erroneous with respect to the material made available to him. No such application of mind by the PCIT is evident from the impugned order which was under challenge before the ITAT. No substantial question of law arises Issues:1. Delay in re-filing the appeal2. Appeal against the common order by the Income Tax Appellate Tribunal (ITAT)3. Assessment proceedings under Section 263 of the Income Tax Act, 19614. Jurisdiction under Section 263 of the Act by the Principal Commissioner of Income Tax (PCIT)5. Revisionary jurisdiction under Section 263 of the Act6. Application of mind by the PCITAnalysis:1. The delay of 41 days in re-filing the appeal was condoned by the court, allowing the application subject to all just exceptions.2. The revenue appealed against the common order passed by the ITAT for the Assessment Years 2008-09 to 2011-12. The appeals were filed by the Assessee against the order passed by the Principal Commissioner of Income Tax under Section 263 of the Act, revising the assessment order passed by the Assessing Officer.3. A search and seizure operation was conducted, leading to the discovery of documents related to transactions by the Assessee. The Revenue alleged that the Assessee paid interest higher than recorded and failed to explain repayments to creditors. The Assessee provided details during assessment proceedings, but the AO proposed jurisdiction under Section 263, which was later exercised by the PCIT.4. The PCIT issued a show cause notice to the Assessee, deeming the assessment order as erroneous. The ITAT concluded that the Assessee provided sufficient details, and inadequate inquiry by the AO did not warrant jurisdiction under Section 263.5. The court considered precedents where revisionary jurisdiction was justified based on incorrect facts. However, in this case, the Assessee had cooperated during assessment proceedings, and the PCIT's lack of application of mind was noted.6. The court found no substantial question of law in the ITAT's order, dismissing the appeals without costs. The judgment highlighted the importance of the PCIT being satisfied with the material available before exercising revisionary jurisdiction under Section 263.