ITAT quashes revision order under Section 263 - AO's plausible view on commission assessment cannot be substituted

The ITAT Kolkata quashed the revision order passed by the Pr. CIT under Section 263. The CIT had challenged the AO's assessment under Section 144, where the AO assessed income at 1.5% commission on total bank credits instead of adding the entire amount as unexplained cash credit. The ITAT held that the AO had taken a plausible view based on available bank statements, concluding the assessee was an accommodation entry provider. Since the AO's assessment was neither incorrect nor against Income Tax Act provisions, the Pr. CIT could not substitute his view merely due to disagreement. The tribunal relied on Gabriel India Ltd. precedent and decided in favor of the assessee.

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Issues:
The only issue raised by the assessee is against the invalid exercise of jurisdiction by ld. Pr. CIT u/s 263 of the Act thereby revising assessment framed by the Assessing Officer (in short ld. 'AO') vide order dated 21.12.2018 u/s 144 of the Act.

Summary:
The appeal was filed by the assessee against the order passed by the Learned Pr. Commissioner of Income Tax for the Assessment Year 2011-12. The appeal was initially considered time-barred, but due to a Supreme Court decision related to the COVID-19 pandemic, the appeal was treated as filed within the limitation period. The main issue raised by the assessee was regarding the jurisdiction exercised by the Pr. CIT under section 263 of the Income Tax Act, concerning the revision of the assessment framed by the AO. The Pr. CIT observed errors in the assessment related to interest income and unexplained cash credits. The Pr. CIT issued a show cause notice and revised the assessment order, leading to the appeal.

The assessee argued that the AO had taken a considered view based on bank statements and evidence, assessing income at a rate of 1.5% on total credits in the bank account. The assessee contended that the Pr. CIT erred in setting aside the assessment and substituting his view. The Pr. CIT, on the other hand, argued that the assessment was erroneous and prejudicial to revenue as the entire amount of credits in the bank account should have been added as unexplained cash credit.

After considering the arguments and perusing the material, the tribunal found that the AO had examined the issue thoroughly based on bank statements and had taken a plausible view. The tribunal noted that the AO's assessment was reasonable and supported by relevant case law. The tribunal cited decisions from the Co-ordinate Bench of Delhi and the Hon'ble Allahabad High Court to support the assessee's case. Consequently, the tribunal allowed the appeal filed by the assessee and quashed the order passed by the Pr. CIT under section 263 of the Act.

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