TaxTMI 
TaxTMI 
2025 (4) TMI 25
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....IT], Central, Jaipur erred in initiating proceedings u/s.263 of the Income Tax Act, 1961. 2. That on the facts and in the circumstances of the case and in law, the appellant prays that the order of the learned PCIT passed u/s. 263 of the Income Tax Act, 1961 needs to be cancelled being void ab-initio and bad in law. 3. That on the facts and in the circumstances of the case and in law, learned Principal Commissioner of Income Tax (Central), Jaipur erred in holding that assessment order dated 20.09.2021 passed by the Assessing Officer u/s 143(3) of the Act was erroneous and prejudicial to the interest of the revenue, as all the issues raised during assessment proceeding were duly considered by the learned Assessing Officer while framing the assessment u/s 143(3) of the Act. 4. That on the facts and in the circumstances of the case and in law, the learned PCIT erred in not himself conducting necessary/proper enquiry and verification of issues mentioned in the notice issued u/s. 263 of the Act and setting aside the assessment order for a de-novo adjudication on issues mentioned therein which is wrong and contrary to the provisions of the Act, and the Rules ma....
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....und short at the time of survey was brought back and utilized as per entries in cash book produced before your good self, thus whole cash was properly accounted for. The annual accounts have been finished on the basis of entries therein.'' The AO considered the reply of the assessee carefully who perused the cash book furnished by the ld.AR of the assessee and thus noticed that the amount of Rs.1,26,874/- was shown on a/c of drawing account and the corresponding entry was not found mentioned in the capital account of the assessee. Thus according to the AO, the justification made by the assessee with regard to expenses of Rs.1,26,874/- was not found satisfactory and the AO held that the amount of Rs.1,26,874/- was unexplained expenditure in terms of provisions of Section 69C of the Act and thus added this amount of Rs.1,26,874/- to the income of the assessee and the Tax will be charged as per provisions of Section 115BBE of the 4. On culmination of the assessment proceeding ld. PCIT called for the assessment records in accordance with the provision of section 263 of the Act. While examining the assessment record ld. PCIT observed that during the survey proceedings, the assesse....
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....O had not made query in regard to the source of the investment found during the survey proceedings. Neither the assessee had given an iota of evidences that the investment was made from the undisclosed income of the assessee from business. Conclusively, the ld PCIT set aside the matter and restored to the file of the AO to verify the applicability of provisions of Section 69 and Section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act by observing as under:- ''09. Considering all the facts and circumstances of the case and for the reasons discussed above, the assessment order dated 20.09.2021for A.Y. 2019- 20 passed by the AO is held to be erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Act. The said order has been passed by the AO in a routine and casual manner without applying the applicable sections of the Act. The AO has not verified the details which were required to be verified under the scope of scrutiny. The order of the AO is, therefore, liable to revision under the explanation (2) clause (b) and clause (a) of section 263 of the Act. The assessment order is set aside to be made afresh in the light of the....
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....in F.Y. 2013-14 (b). Construction completed in F.Y. 2016-17. (c). Finishing (i.e. renovation word used) in 2017-18 (i.e. uptoMarch, 2018) (d). Estimated cost of construction including finishing was approx Rs. 1 Crore. (e). First year expenses was Rs. 35 Lakh to Rs. 40 Lakhs. (f). In Year 2016 expenses was around Rs. 20 Lakhs to Rs. 25 Lakhs. (e). Year 2017 and 2018 Rs. 20 Lakh each (iv). That further, Ld. A.O. asked question regarding the sources of construction of building in QUESTION No. 5 of Statement. (v). That in response to above question No. 5, assessee submitted detailed reply regarding the sources of construction of building (i.e. Rs. 25 Lakhs & Rs. 35 Lakhs personal loan from ICICI Bank & HDFC Bank and the sources of remaining investent was out of daily income/earning. Hence, assessee explained sources of investment in building expressly, concisely and clearly. (vi). That in QUESTION No. 6, the Ld. A.O. asked question regarding the annual income from M/s. Bharat Ultrasounds. (vii). That in response to above question No. 6, assessee submitted detailed statement regarding the annual in....
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....d by the assessee in Reply of Question No. 5 of 1st Statement recorded on 28.08.2018. The Ld. A.O. did not found any incrementing material regarding undisclosed sources of income and also did not made any adverse finding regarding the undisclosed sources of income during the survey . So, it is crystal clear that the undeclared investment was from disclosed sources of income only. 6. That assessee had filed his return of income u/s. 139(1) of the I.T. Act, 1961 on 30.10.2019, declaring total income amounting to Rs. 78,98,350/- as per audited books of accounts and Rs. 22,50,000/- declared which was on account of undisclosed investment on the basis of valuation report & surrendered. 7. That proceeding of assessment was initiated and a notice u/s. 143(2) of the I.T. Act, 1961 were issued on 23.09.2020. 8. That further, assessee received notices u/s. 142(1) of the I.T. Act, 1961 on 29.01.2021 and on this query letter the Ld. A.O. made specific query No. 1 and 2 regarding disclosure of undisclosed income in ITR filed by assessee. 9. That assessee submitted proper reply along with the required documents/details/information and the same....
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....ment that has already been made. I am only passing an order whereas applicability of the provisions of section 69 and section 36(1)(va) r.w.s. 2(24)(x) for late payment of ESI are considered. The order of the AO is, therefore, liable to revision under the explanation (2) clause (a) of section 263 of the Act. The assessment order is set aside and restored to the file of Assessing officer to verifying applicability of provisions of section 69 and section 36(1)(va) r.w.s. 2(24)(x)of the Income tax Act." 14. That the Ld. PCIT (Central), Jaipur has mentioned the incorrect facts while passing order u/s. 263 of the I.T. Act, 1961, which is as follows:- (i). The assessee had surrendered Rs. 22,62,143/- on account of unexplained investment. (ii) The assessee has shown in his return of income Rs. 22,50,000/- as unexplained investment. (iii). The Ld. A.O. has not verified the details which were required to be verified under the scope of scrutiny. (iv). The order has been passed by Ld. A.O. in a routine and casual manner without applying the applicable sections of the Act. (v). Wrong calculation of difference in Valuation report & the amoun....
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....order under section 92CA by the Transfer Pricing Officer;] (b)"record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner; (c)where any order referred to in this sub-section and passed by the Assessing Officer 92[or the Transfer Pricing Officer, as the case may be,] had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the* Principal Commissioner or Commissioner under this subsection shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (....
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.... incorrect & based on surmises, assumption & presumption. Moreover, the Ld. A.O. conduct survey & Ld. A.O. didn't find any adverse material to contravent the explanation of assessee about the source of investment. Hence, the Ld. A.O. was satisfied by considering the reply of assessee, disclosure by assessee as well as material gathered by the Ld. A.O. as the time of survey. 2. Allegations made by PCIT are factually incorrect:- (a). The difference amount in valuation report & the amount surrendered during the survey proceeding is Rs. 59,343/- whereas the PCIT took only Rs. 12,143/-. Regarding difference of Rs. 12,143/-:- (i). That there werewrong calculation of difference in Valuation report & the amount recorded in books and the amount offered for tax Rs. 12,143/-. (ii). The Surrender was based on the valuer's report. The valuation report is pure estimation. (ii). There are many defects in Valuation report as this is valuation report, not actual cost of construction. (iii). Addition can be made during the year of investment. Here, the construction work was completed in 4 years. So, there is no clear bifurcation....
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....urn u/s 139(1) shall be allowable as deduction. It was submitted that against the aforesaid decision of Hon'ble Rajasthan High Court, the SLP filed by the department before the Hon'ble Supreme Court has been dismissed on 04.07.2017 and therefore, the decision of Hon'ble Rajasthan High Court has attained finality. Further, it is submitted that the Judgment of Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd. v. CIT, having Civil Appeal No. 2833 of 2016, order dated 12.10.2022 held that "the Deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees' contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961." So, in view of the above it is submitted that:- A. The Judgment of Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd. was pronounced on 12.10.2022 was came after the reassessment proceeding. B. The Judgment of Rajasthan High Court in PCIT, Jaipur-2 vs. Rajasthan State Beverages Corporation Ltd., ITA No. 150/2016 was pronounced on 04.08.2016. C. The Judgment Rajasthan High Cour....
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....sessment after necessary inquiries with respect to the income surrendered by the assessee during the survey operation conducted u/s 133A of the Act. 14. In the order, Learned PCIT has referred to Explanation 2 to section 263 of the Act, in holding that the necessary inquiries were not carried out by the AO during the assessment proceedings. However, we find that the Ld. PCIT in the notice issued u/s 263 of the Act [ page 28-30 of paper book ] did not make any reference to the Explanation 2 to section 263 of the Act. Therefore, we hold that the Ld. PCIT erred in holding assessment order as erroneous and prejudicial to the interest of Revenue after referring to Explanation 2 of section 263 of the Act. 16. From the above, it transpires that to tax any item of income/ expenditure, unaccounted investment at the specific rate r.w.s. 115BBE of the Act, it is necessary to classify the income under the relevant head provision under section 69, 68, 69B etc. as they are penal in nature. In present case, the income surrendered was to be classified u/s 68, 69 & 69A of the Act. As per the direction of the Ld. PCIT, however, we find that the Ld. PCIT has nowher....
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....book, whose index reproduced herein below, which was filed to support his submissions containing pages 1 to 87. S.N. Particulars PageNo. 1. Copy of statement No.1 of assessee dated 2808-2018 & 29-08-2018 (During survey) 1-10 2. Copy of statement No. 2 of assesee dated 04-09-2018 (post survey) 11-14 3. Copy of Valuation report of Plot No. 1/58 & 1/57 RHB Bhiwadi, Alwar dated 31-08-2018 15-30 4. Copy of audited accounts alongwith Audit Report 31-57 5. Copy of ITR Form declared Rs.22,50,000/- (i.e. surrender as not recorded transaction) 58-63 6. Copy of ITR-V and computation of total income 64-70 7. Copy of Show Cause Notice u/s 263 of the I.T. Act dated 8-03-2024 71-72 8. Copies of query letter u/s 143(2) and 142(1) issued during assessment proceedings 73-82 9. Copy of reply submitted during assessment proceedings 83-87 (documents listed at S.No. 1 to 9 were before the lower authorities during assessment proceedings and also during revision proceedings u/s 263 of the Act.) 7. Further the ld.AR of the assessee has relied upon the following decisions as to the case of PF & ESI 1. PC....