2022 (9) TMI 457 - AT - Income Tax

Tribunal overturns PCIT's Section 263 order, emphasizes consistency in related party assessments.

The Tribunal quashed the PCIT's order under Section 263 of the Income Tax Act, finding that the AO conducted sufficient inquiries and applied due ... Revision u/s 263 by CIT - lack of enquiry or inadequate enquiry - unexplained purchases - reopening of assessment - HELD THAT:- PCIT has referred to a particular agreement to sell which the assessee has denied as having entered into with the seller Shri Nirmal Singh. It is also note-worthy that the said agreement to sell does not contain the signature of the assessee. In absence of her signatures, no evidentiary value can be attached to the said agreement to sell. In our considered view, based on the record before him, the AO took a conscious view after due application of mind and after deciding that no further enquires were required, he accepted the returned income of the assessee. AO took one of the possible views which he could have taken and he chose to accept the contention of the assessee. It is settled law that no assessment order would become erroneous and/or prejudicial to the interest to the revenue only because the AO has accepted the contention of the assessee. Issue of lack of enquiry and inadequate enquiry, it would be relevant to make a reference to the order of the coordinate Bench in the case of Sanjay Jain & Others [2022 (3) TMI 1189 - ITAT CHANDIGARH] wherein, the co-ordinate Bench relied upon the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] and also the judgment in the case of ITO Vs. DG Housing Projects Ltd. [2012 (3) TMI 227 - DELHI HIGH COURT] wherein High Court has ruled that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry and further if any inquiry was found to be inadequate, that would not by itself give occasion to the Commissioner to pass the order u/s 263 merely because he has a different opinion in the matter. Further, the Ld. PCIT has not pointed out as to what further inquiries were required to be made and how without those inquiries, the order of the Assessing Officer was erroneous in so far as being prejudicial to the interests of revenue. Contention of the assessee that in the case of husband, Shri Inderjit Singh, on similar facts and circumstances, 148 proceedings were filed has also to be duly considered as on the same set of facts, there cannot be two separate conclusions and further on account of consistency, the order of the ITAT Chandigarh Bench in the case of Smt. Amarjit Kaur [2019 (6) TMI 1645 - ITAT CHANDIGARH] is quite relevant. Thus both on the issue of application of mind and adequate inquiry having been made by the Assessing Officer as well as on the issue of consistency, as elaborated above, we have no hesitation to quash the order as passed by the Ld. PCIT under section 263 of the Act. Assessee appeal allowed. Issues Involved:1. Jurisdiction under Section 263 of the Income Tax Act.2. Validity of proceedings initiated under Section 263 based on audit objections.3. Adequacy of the Assessing Officer's (AO) enquiry and application of mind.4. Consistency in assessment orders between related parties.5. Condonation of delay in filing the appeal.Detailed Analysis:1. Jurisdiction under Section 263 of the Income Tax Act:The primary issue is whether the Principal Commissioner of Income Tax (PCIT) was justified in assuming jurisdiction under Section 263 of the Income Tax Act, 1961. The PCIT held that the assessment order dated 30.11.2019 was erroneous and prejudicial to the interest of the revenue. The PCIT pointed out that there was an agreement to sell dated 01.11.2010, and payments were made in the assessment year 2011-12, which the AO failed to reconcile. The PCIT concluded that there was a lack of enquiry and non-application of mind by the AO, leading to the setting aside of the assessment order for fresh consideration.2. Validity of proceedings initiated under Section 263 based on audit objections:The assessee contended that the jurisdiction assumed by the PCIT under Section 263 was invalid as it was based solely on an audit objection dated 30.11.2018. The assessee argued that the proceedings under Section 263 were void ab initio. The Tribunal noted that the AO had accepted the assessee's explanation that no payments were made towards the property purchase in the assessment year 2011-12 and that the sale deed was executed in the assessment year 2013-14.3. Adequacy of the AO's enquiry and application of mind:The Tribunal observed that the AO had taken a conscious decision to accept the returned income of the assessee after considering her submissions and verifying the facts. The AO concluded that no further enquiries were required. The Tribunal emphasized that if the PCIT doubted the assessee's contentions, he should have provided contrary evidence, which was not done. The Tribunal cited various judicial precedents, including the Hon'ble Delhi High Court's rulings, distinguishing between lack of enquiry and inadequate enquiry. It was held that inadequate enquiry does not justify revisionary proceedings under Section 263 merely because the PCIT has a different opinion.4. Consistency in assessment orders between related parties:The Tribunal highlighted the principle of consistency, noting that the reassessment proceedings in the case of the assessee's husband, who was jointly involved in the property purchase, were dropped by the AO. The PCIT did not initiate revisionary proceedings in the husband's case. The Tribunal cited the order of the ITAT Chandigarh Bench in the case of Smt. Amarjit Kaur vs. ITO, emphasizing that on identical facts, there cannot be two separate conclusions. The Tribunal ruled that the Department should have maintained consistency.5. Condonation of delay in filing the appeal:The Tribunal addressed the delay of 205 days in filing the appeal, attributing it to the country-wide lockdown due to the Covid-19 situation. The Tribunal relied on the Hon'ble Apex Court's order, which excluded the period from March 15, 2020, to March 14, 2021, from the limitation period. Consequently, the Tribunal admitted the appeal, holding that there was no actual delay in filing.Conclusion:The Tribunal quashed the order passed by the PCIT under Section 263 of the Income Tax Act, holding that the AO had made adequate enquiries and applied his mind. The appeal of the assessee was allowed, and the Tribunal emphasized the need for consistency in assessment orders between related parties. The order was pronounced on 22.08.2022.