TaxTMI 
TaxTMI 
2023 (4) TMI 289
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....been filed and the AO accepted the explanation furnished by the assessee and get relief. However, when the PCIT has passed order u/s.263 of the Act, with a direction to the AO, the assessee felt that it is necessary to file appeal against order passed by the PCIT u/s.263 of the Act, because, it has good grounds to challenge said order. In that process, there is a delay of 275 days which is neither intentional nor wanton of any undue benefit, but purely beyond the control of the assessee. Therefore, the delay may be condoned and appeal may be admitted in the interest of natural justice. 2.1 The Ld.DR present for the Revenue opposed petition filed by the assessee and argued that reasons given by the assessee does not come under reasonable cause as provided under the Act, for condonation of delay and thus, appeal filed by the assessee should be dismissed as unadmitted. 2.2 We have heard both the parties and considered relevant contents of petition filed by the assessee for condonation of delay and we find that by not filing the appeal within the time allowed under the Act, the assessee neither gets any benefit nor derive any undue benefit. But, in fact, the assessee himself put ....
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....as to why' penalty shall not be levied for under reporting of income. 5. The case has been, subsequently, taken up for revision proceedings by the PCIT, Coimbatore, and notice u/s.263 of the Act, dated 25.02.2022, has been issued and served on the assessee. In the said show cause notice, the PCIT observed that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue on the issue of initiation of penalty proceedings u/s.270A of the Act, on the ground that the AO has omitted to record reasons for initiation of penalty. The PCIT further observed that although, there is an increase in interest income for the assessment year in consideration when compared to previous assessment year, the source of income for the deposits made with IOB & SBI, for which, interest received was not verified at the time of assessment proceedings. Therefore, the PCIT was of the opinion that the AO has completed the assessment without carrying out necessary enquiries, he ought to have been carried out, which rendered assessment order passed by the AO to be erroneous in so far as it is prejudicial to the interest of the Revenue. In response to show caus....
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....ore initiating the penalty proceedings u/s.270A of the Act, though the penalty notices were served on the assessee. In reply thereto, the assessee stated that the out of the sale proceeds of the land held by him in his capacity as Power of Attorney Holder for the nephews, who are mentally incapacitated and their parents being no more, the proceeds were deposited and interest income was received by him as he had given his PAN to the bank and hence, stated that though he accepted the addition made in the assessment order, there is no revenue loss on this account. The assessee submitted that he did not prefer any appeal against the impugned assessment order and that entire taxes were paid and hence, there is no loss on this account too. With regard to omission on the part of recording the reasons for initiation for penalty, the assessee stated that the penalty proceedings were dropped as per section 270AA(5) and the order u/s 270AA(4) is final. With regard to the above submissions, it is an admitted fact that the addition on undisclosed interest income received by the assessee was made in the assessment order and this is clearly a case of concealing his true income and the AO ought to....
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....interest income. The assessment order so made without proper investigation and collation of the facts renders it as erroneous and prejudicial to the interest of revenue. 7. In order to remedy the said error in the order of assessment in the instant case made on 13-12-2019 for the assessment year 2017-18, the recourse would be to resort to provisions of sec.263 of the Act. Accordingly, the order of the AO dated 13-12-2019 for the assessment year 2017-18 in the case of the captioned assessee is, set aside, in exercise of the powers vested in me u/s.263 of the Act. 8. The Assessing Officer, is hereby, directed to re-do the assessment afresh after verification of the facts discussed above. The assessment order is set aside to consider the issue of proper recording of the satisfaction before initiation of relevant penalty provisions and also to examine the sources for the interest income earned for the instant AY. The AO may satisfy himself in accordance with law and come to a logical conclusion in respect of the above issues and pass appropriate orders in the assessee's case. The Assessing Officer shall give adequate opportunity of being heard to the assessee in t....
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....e. Further, it is a well settled principle of law by the decision of the Hon'ble Supreme Court in the case of Daniel Merchants (P) Ltd. v. ITO reported in [2018] 95 taxmann.366 (SC) that if the AO did not make any proper enquiry while making assessment and accepting the explanation of the assessee in so far as receipt of share application money was concerned, Commissioner rightly set aside such assessment order u/s.263 of the Act. The Ld.CIT(A) had also relied upon the decision of the Hon'ble Allahabad High Court in the case of CIT v. Associated Contractors Corporation reported in [2005] 275 ITR 123 (Allahabad) and argued that non-initiation of penalty proceedings by assessing authority in course of assessment proceedings renders order erroneous and prejudicial to the interest of the Revenue, and therefore, can be subject matter of revision proceedings u/s.263 of the Act. 9. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The PCIT has invoked their jurisdiction u/s.263 of the Act, and set aside the assessment order passed by the AO u/s.143(3) of the Act, dated 13.12.2019. According to the PCIT, the asses....
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....f scrutiny assessment is to verify interest income reported in Form 26AS with return of income filed by the assessee. During the course of assessment proceedings, the AO has verified interest earned on FDs with two banks and made additions of Rs.48,62,977/- in respect of interest income received from IOB & SBI. From the above, it is very clear that the issue of FDs with two banks was in the knowledge of the AO. Although, the AO specifically did not discuss the issue of source for FDs, but, after considering the explanation of the assessee that source for FDs is out of sale proceeds of a property in the capacity of power of attorney holder and said sale of property was assessable in the hands of the original owners of the property, the AO has accepted the claim of the assessee and completed the assessment, which is evident from the fact that the AO has made additions towards interest income from very same FD, but does not made any addition towards source for said deposit. Therefore, we are of the considered view that on this issue also the assumption of jurisdictional by the PCIT fails. 12. In so far as various case laws cited by the Ld.Counsel for the assessee and the Ld.DR, we ....