Tribunal quashes PCIT's order, finds AO's assessment not erroneous.

Mr. Vaidyanathan Vembu Versus ACIT-CC-6 (2), Mumbai

Mr. Vaidyanathan Vembu Versus ACIT-CC-6 (2), Mumbai - TMI Issues Involved:
1. Condonation of Delay in Filing Appeal
2. Excess Appeal Fees
3. Erroneous and Prejudicial Order under Section 263
4. Assessment of Unaccounted Transactions
5. Jurisdiction of Principal Commissioner of Income Tax (PCIT)
6. Merger Doctrine and Finality of CIT(A) Order

Detailed Analysis:

1. Condonation of Delay in Filing Appeal
The assessee filed the appeal on 09.06.2020, beyond the due date of 16.05.2020, citing the pandemic situation. The tribunal condoned the delay, noting that the appeal was filed within the extended period allowed by the ordinance/notification up to June 30.

2. Excess Appeal Fees
The assessee paid Rs. 30,000 as appeal fees instead of the required Rs. 500 per appeal under section 253(6)(b) of the Act, totaling Rs. 1,500 for three appeals. The tribunal directed the Registry to refund the excess amount of Rs. 28,500 or adjust it against any outstanding demand.

3. Erroneous and Prejudicial Order under Section 263
The PCIT issued an order under section 263, considering the assessment order for AY 2016-17 erroneous and prejudicial to the interest of revenue. The PCIT based this on the Settlement Commission's findings that M/s. Ahuja Group admitted to unaccounted transactions, including undisclosed cash loans from the assessee. The tribunal noted that the AO made the assessment based on the information available at the time, which did not include the Settlement Commission's subsequent findings.

4. Assessment of Unaccounted Transactions
The AO added Rs. 3,76,50,000 as unexplained cash investment, treating the cash loan given by the assessee as 'On Money' for purchasing a flat. The tribunal observed that the AO's assessment was based on available records and submissions, and the subsequent Settlement Commission's order could not retroactively render the AO's assessment erroneous.

5. Jurisdiction of Principal Commissioner of Income Tax (PCIT)
The tribunal held that the PCIT could not review the AO's order based on subsequent events (Settlement Commission's order). The AO's assessment was made on 11.12.2017, and the PCIT initiated proceedings under section 263 on 11.04.2019, relying on the Settlement Commission's order dated 26.06.2018. The tribunal emphasized that the AO could not have anticipated the Settlement Commission's findings.

6. Merger Doctrine and Finality of CIT(A) Order
The tribunal noted that the CIT(A) had already deleted the addition made by the AO, and the department did not appeal against this order, making it final. Under section 263(1) Explanation-1(C), the PCIT's powers do not extend to matters already decided in appeal. The tribunal quashed the PCIT's order, as it pertained to the same issue adjudicated by the CIT(A).

Conclusion
The tribunal allowed the assessee's appeals, quashing the PCIT's order under section 263 for AYs 2014-15 and 2015-16. The tribunal held that the AO's assessment was not erroneous based on the information available at the time, and subsequent events could not retroactively affect the assessment's validity. The tribunal also addressed procedural issues, such as condonation of delay and refund of excess appeal fees.