2023 (4) TMI 1111 - AT - Income Tax

Tribunal upholds PCIT's assessment, stresses verification importance, valid revision proceedings, and substantiation necessity.

Shri Mahavir Gajraj Nagori Versus PCIT-2, Pune

Shri Mahavir Gajraj Nagori Versus PCIT-2, Pune - TMI Issues involved:The judgment involves issues related to the correctness of best judgment assessment, initiation of revision proceedings under section 263, and the sustainability of the PCIT's action under challenge.Best Judgment Assessment:The assessee challenged the correctness of the Assessing Officer's best judgment assessment, which included disallowances and additions to the income. The Assessing Officer completed the assessment due to the assessee's lack of response to notices. The PCIT upheld the assessment, citing failure to prove expenses and credits, leading to prejudice to the Revenue's interest. The PCIT's revision directions were supported by legal precedents emphasizing the need for detailed inquiries and verifications in assessments.Initiation of Revision Proceedings:The PCIT initiated revision proceedings under section 263 based on show cause notices, which the assessee contested. The assessee argued against the initiation of proceedings based on field authorities' proposals, citing legal cases. However, the tribunal found no statutory restriction on the PCIT's exercise of revision jurisdiction, emphasizing the wide interpretation of the law. The PCIT's actions were deemed valid, as there was no evidence of a lack of independent application of mind.Sustainability of PCIT's Action:The assessee contended that the PCIT's action under challenge was not sustainable due to a pending appeal before the CIT(A). Legal cases were cited to support this argument. However, the tribunal rejected this argument, stating that the exclusion clause regarding the exercise of revision jurisdiction extends to matters not considered and decided in the appeal. Since there was no indication that the CIT(A) had addressed the specific grievance, the PCIT's action was upheld. Additionally, the assessee's claim of suffering injustice due to the PCIT's directions to finalize proceedings under section 144 was dismissed, as the Assessing Officer had already made decisions based on the lack of evidence provided by the assessee.This judgment highlights the importance of thorough inquiries and verifications in assessments to avoid prejudice to the Revenue's interest. It also clarifies the jurisdiction of the PCIT in initiating revision proceedings and the impact of pending appeals on such actions. The tribunal upheld the PCIT's revision directions, emphasizing the need for proper substantiation of expenses and credits in assessments.