TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 141
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....of Income-tax (PCIT) passed under section 263 of the I.T. Act, 1961 (the 'Act') is bad in law, facts and procedure. 2. For that on the facts and circumstances of the case, the Id. PCIT erred in considering that undisclosed business income of Rs. 3,65,933/- assessed by the Id. AO ought to have been treated and taxed by the Id. AO as per provisions of section 115BBE of the Act and assuming jurisdiction u/s 263 of the Act on that basis. 3. For that on the facts and circumstances of the case, the Id. PCIT has erred in arbitrarily and whimsically considering that the Net Profit estimated by the Id. AO on the undisclosed business turnover was without any verification and proper analysis and assuming jurisdiction u/s 263 of the Act on that basis. 4. For that the assumption of jurisdiction by the Id. PCIT in the instant case being without satisfaction of pre-requisite twin conditions of the law, the same is bad in law and consequently, the impugned order passed in pursuance thereto is liable to be cancelled. 5. For that the impugned order passed is vague, non-speaking, unreasoned and without dealing with the submissions of the appellant and hence, the impugned order is bad ....
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....tion invoking the provisions of section 263 of the Act shall tantamount to change of opinion which is not permissible under the provisions of section 263 of the Act . 8. Having gone through the above reply of the assessee, ld PCIT held that the Assessing officer had 'made some partial application of mind' relating to point no. 3(ii) mentioned above/and regarding point no. 3(i) mentioned above, the assessment order passed on 30-12-2016 u/s 143(3) of the Act was erroneous in so far as prejudicial to the interests of the revenue. Therefore, ld PCIT restored the matter back to the file of the Assessing Officer to tax the undisclosed income of Rs. 3,95,933/- as per provisions of Section 115BBE of the Income-tax Act, 1961. 9. Aggrieved by the order of the ld. PCIT, the assessee is in appeal before us. 10. Shri Sanjoy Modi, learned counsel for the assessee, has contended that Assessing Officer has examined the issue relating to undisclosed bank account during the scrutiny assessment. The ld assessing officer had worked out undisclosed business turnover to the tune of Rs. 91,48,326/- and on the said undisclosed business turnover, he worked out business income @ 4% of undisclosed....
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....ies as he deems necessary, to give the assessee an opportunity of being heard and then to pass such orders as the circumstances of the case justify. This introduces the principle of natural justice. It is open to the assessee, inter alia, to question the validity of the revision proceedings initiated by the Commissioner. It is also clear from various judicial precedents that when the order of the Assessing Officer is not erroneous, section 263 cannot be invoked to direct the Assessing Officer to hold another investigation [Infosys Technology Ltd. v. JCIT 286 ITR (AT) 211 (Bang.)] The law with regard to exercise of jurisdiction u/s.263 of the Act on the ground that the AO failed to make enquiries which he ought to have made in the given circumstances of a case is well settled. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry.....
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....s asked vide this office letter dated 08/12/2016 to explain as to why the cash deposits made in the said account shall not be treated as undisclosed sale of the assessee. On being confronted the assessee made submission on 27/12/2016 stating that out of aggregate deposits of Rs. 95,33,717/- made in the said bank account A/c No. 2195697434 Rs. 91,48,326/-was his business receipt, Rs. 3,73,870/- are maturity proceeds of daily deposit accounts and Rs. 11,521/- was interest Income on savings account. After his father's death, the assessee was started doing business using the above bank account in question, which was not reflected in his Return of income. 5. The above explanation of the assessee has been given duo consideration .The assessee's contention that the amount deposited in the bank A/c is their business income which were not reflected in their return of income. Hence, the authorized representative of the assessee was asked to submit the details of transaction made along with ledger copy of said Bank account in question and was also asked to produce original bills/vouchers of Purchases and sales in support of it. Accordingly, the authorised representative of the ass....
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....refore, one of the grounds on which the ld PCIT had exercised jurisdiction (that the net profit of Rs. 3,65,933/- considered by the Assessing officer on the undisclosed business turnover of Rs. 91,48,326/-was without any verification and proper analysis which needs to be examined properly), has been examined by the assessing officer properly. Therefore, when the order of the Assessing Officer is not erroneous, section 263 cannot be invoked to direct the Assessing Officer to hold another investigation [Infosys Technology Ltd. v. JCIT 286 ITR (AT) 211 (Bang)]. Therefore, so far this first ground is concerned, the ld PCIT was not right in exercising the jurisdiction under section 263 of the Act. 14. Next ground on which ld PCIT has exercised jurisdiction under section 263 of the Act was that the Assessing officer had failed to tax the undisclosed income of Rs. 3,65,933/- as per provisions of section 115BBE of the Income-tax Act, 1961. In order to understand whether the provisions of section 115BBE are applicable to the assessee or not, let us first go through the provisions of section 115BBE of the Act, which reads as follows: "15BBE. Tax on income referred to in section 68 or sec....
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....cer treated the undisclosed amount as undisclosed business receipts/turnover: "Accordingly, the amount of Rs. 91,48,326/-, which was not accounted for gross turnover in the profit & loss account in the Return of Income of the assessee, has been considered as undisclosed business receipt or turnover of the assessee for the financial year 2013-14 relevant to the assessment year 2014-15 o v e r & above the gross turnover declared by him. The margin of net profit has been taken @ 4% on audited gross turnover in the Return of Income filed by the assessee. Accordingly, margin of profit has been taken @ 4% on undisclosed turnover of Rs. 91,48,326/- which comes to Rs. 3,65,933/- and added back as undisclosed business income to the returned income." Since, the assessing officer has applied his mind and treated the undisclosed amount in bank account as undisclosed business receipt or turnover of the assessee, therefore provisions of section 115BBE does not apply to the assessee. 16. Even, ld PCIT while exercising his jurisdiction under section 263 of the Act treated the undisclosed amount in bank account as undisclosed business receipts/turnover, vide para No. 2 of the order of ld PCIT, ....
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....eated undisclosed amount as undisclosed business receipts/turnover. Since the Department itself accepting the undisclosed amount of assessee in his bank account as undisclosed business receipts/turnover, therefore, section 115BBE does not attract here and hence order passed by the assessing officer, after application of mind, under section 143(3) dated 30-12-2016 is neither erroneous or prejudicial to the interest of revenue. 19. We also note that ld PCIT in his order u/s 263 of the Act, vide para 5 of his order, has stated that "the Assessing officer made some partial application of mind". We note that there is no concept of "partial application of mind", it should be either application of mind or non-application of mind. The relevant para no. 5 of his order is reproduced below: "5. Considering the submission of the assessee, facts and circumstances of the case as discussed above, 1 am of the opinion that the Assessing officer made some partial application of mind relating to point no. 3(ii) mentioned above/and regarding point no. 3(i) mentioned above, the assessment order passed on 30-12-2016 u/s 143(3) of the Act was erroneous in so far as prejudicial to the interests of the ....