2024 (8) TMI 466

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....Reg. No. 249) for the consideration of Rs. 1,92,400/- and the assessee had made unaccounted cash payment of Rs. 22,13,735/- in addition to agreement value. The assessee filed his return of income in response to notice u/s 148 of the Act. The notices u/ss. 143(2) and 142(1) of the Act were issued along with the reasons for reopening the assessment proceedings. As per the reasons for reopening, the search at the residential premises of the Accountant of group Shri Maheshbhai Dilubhai Parmar was conducted, where a pocket diary was found and seized. In the said diary there were some details, as explained by the said accountant and the partner of the group Shri Vashrambhai Talshibhai Savani, of the sale of industrial plot were recorded. 2.1. During the course of reassessment proceedings, the AO requested to furnish the source of payment made towards immovable property with documentary evidence vide notice u/s 142(1) of the Act dated 03-08-2021. In the reply to this notice, the assessee requested for the copy of reasons recorded so as to enable him to clarify the facts and raise his objections. He placed his reliance on the decision of Hon'ble Supreme Court in case of G.K.N. Driveshaf....

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....dicial to the interest of revenue. 2.5. In response to the notice, the assessee submitted detailed reply explaining the facts. The assessee contended that the AO has applied his mind after considering the reply to notices and then passed his order. He also contended that since the AO could not give any documentary evidence that he has paid any cash against the purchase of immovable property and, therefore, has accepted his returned income. The assessee further stated that any addition made without giving any evidence is bad in law and also against natural justice and placing reliance on following judicial pronouncements: 1. In the case of Kishanchand Chellaram v. CIT [1980] 125 ITR 713 (SC), where it was held that before the income tax authorities could rely upon a piece of evidence, they were bound to produce it before the assessee so that the assessee could controvert the statement contained in it by asking for an opportunity for cross examination of the person with reference to the statement made by him. 2. The Hon'ble Gujarat High Court in the case of Laxman S. Patel 174 Taxman 206 has held that the legal effect of the information received behind the back o....

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....as paid cash of Rs. 22,13,735/- against the purchase of immovable property. 3. Aggrieved by the order of the Ld.PCIT, the assessee is in appeal before us with following grounds: "(1) That on facts, and in law, the learned PCIT has grievously erred in exercising jurisdiction u/s 263 of the Act on the same issue for which on same information, reasons were recorded u/s 147 of the Act, and assessment order was framed u/s 147 of the Act and no addition was made by AO. (2) That the learned PCIT has grievously erred in law, and on facts, in setting aside the assessment order and in directing the AO to make addition of Rs. 22, 13,735/- on account of alleged cash payment made for purchase of property. (3) The appellant craves leave to add, alter, amend any ground of appeal." On the grounds 4. The Ld.Authorized Representative (Ld.AR) of the assessee explained the facts in detail. He took us through various notices issued by AO during the re-assessment proceedings and vehemently argued that the AO could not provide any documentary evidence to prove that the payment of Rs. 22,13,735/- was paid in cash against the purchase of immovable property. He also argue....

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....cepted the declared income and passed the assessment order u/s 147 r.w.s. 144 read with section 144B of the Act. 6.2. Section 263 of the Act empowers the Ld.PCIT to revise any order passed by the AO if it is erroneous and prejudicial to the interests of the revenue. An order can be considered erroneous if it is passed without proper verification, inquiry, or based on incorrect facts or law and it is prejudicial to the interests of the revenue if it results in the loss of revenue or incorrect computation of taxable income. In the present case, it is evident that even after persistent requests by the assessee, the AO could not provide the documentary evidence based on which the assessment was reopened and passed order u/s. 147 read with section 144. It is only the case where the evidence available with the Ld.PCIT gave rise to suspicion about its veracity that further scrutiny is called for. The circumstances can certainly be termed as inadequate inquiry. Therefore, in our opinion, the Ld.PCIT is not wrong in assuming jurisdiction u/s. 263 of the Act. Therefore, the first ground of the assessee's appeal is dismissed. 6.3. After assuming jurisdiction u/s. 263 of the Act, on the ....