TaxTMI 
TaxTMI 
2025 (5) TMI 1774
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....aipur-l, revising such non-est order had exceeded his jurisdiction u/s 263 of IT Act. 2. That the learned Principal Commissioner of Income-tax, Raipur-1, failed to appreciate that the first appeal of the appellant against addition made in the assessment order on impugned issue, i.e. treating credit sale as unexplained cash credit u/s 68, was pending before the Commissioner (Appeals) NFAC and therefore the order u/s 147 r.w.s. 144B could not be revised u/s 263 of the Act. 3. That the learned Principal Commissioner of Income-tax Raipur-1, erred in law as well as on the facts of the case in assuming jurisdiction u/s 263 of the Act by wrongly and incorrectly holding that the AO instead of initiating penalty proceeding u/s 271AAC initiated the penalty proceedings u/s 271(1)(c) of the Act, hence, the assessment order passed by the AO on dated 26.03.2022 u/s 147 r.w.s. 144B, erroneous and prejudicial to the interest of revenue. The very assumption of jurisdiction is contrary to the provisions of law and facts on record. Hence, the proceedings so initiated u/s 263 of the Act and the impugned order dated 13.03.2024 deserves to be quashed. 4. That on the facts and ....
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....cludes any income referred to in section, 68, 69, 69A, 69B, 69C and 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 115BBE, a sum computed at a rate of 10% of the tax payable under clause (i) of sub section (1) of section 115BBE. In other words, penalty u/s 271AAC is applicable in this case instead of penalty u/s 271(1)(c) of the Income Tax Act, 1961. As such, the assessment order passed by the Assessing Officer was held to be erroneous in so far as it is prejudicial to the interest of Revenue. 5. Considering the facts narrated in the foregoing paras which have emanated from the case record, Ld. PCIT observed that the order passed u/s 147 r.w.s. 144B of the Income Tax Act, 1961 vide order dated 26.03.2022 is erroneous in so far as it is prejudicial to the interests of revenue, in the light of section 263 of the Income Tax Act, 1961. As per Ld. PCIT, since the issues discussed supra have not been properly verified by the AO while passing the assessment order by conducting proper enquiries. 6. In view of the above facts, a show cause e-notice u/s 263 dated 09.10.2023 was issued to the assessee, incorporating the abov....
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....re, the same remain invalid / Pending for verification, therefore, a question cropped up that, whether a notice u/s 143(2) can be generated through ITBA portal in a case wherein the return filed u/s 148 was not e-verified by the assessee, to which it was submitted by the Ld. CIT-DR that a notice u/s 143(2) cannot be generated / issued by the Ld. AO through the ITBA portal, if the returned filed by the assessee is pending for verification. 10.2 In rebuttal, it was the submission by Ld. AR on behalf of the assessee that the Ld. AO has acted upon the return filed by the assessee, therefore, in absence of issuance of notice u/s 143(2), the assessment completed would be an invalid assessment. Ld. AR further come up with an alternative plea, referring the additional ground raised on 12.12.2024, that if the return filed by the assessee is to be taken as a invalid return / no return then without prejudice to the grounds taken by the assessee in form 36, the assessment framed ought to have been passed u/s 144 of the Income Tax Act, and not u/s 143(3) r.w.s. 147 r.w.s. 144B of the Act, therefore, such assessment order is unsustainable in law and liable to be quashed, consequently, the ord....
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....ce u/s 148 of the Act, however, the same was not verified by him due to which the return of income filed by him is reflecting as "Pending for verification". As the return of income was not verified by the assessee for the reasons best known to him, therefore, notice u/s 143(2) cannot be generated/issued by the AO through the ITBA portal. Thus, it is default on the part of the assessee as the return of income should have been verified by him. Further, section 144 of the Act states that order u/s 144 of the Act can be passed if either of the three conditions provided in section 144 of the Act is fulfilled. Firstly, if any person fails to make the return required under sub-section (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section. Secondly, if any person fails to comply with all the terms of a notice issued under sub-section (1) of section 142 or fails to comply with a direction issued under sub-section (2A) of that section. Thirdly, if any person having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143. The section 144 of the Act is reproduced below for kind....
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....42, the Assessing Officer, if considered it necessary or to expedient to ensure that the assessee has not under stated the income or has not computed excessive loss or has not under paid the tax in any manner, shall serve on assessee a notice requiring him either to attend or to produce or cause to be produced any evidence before the Ld. AO on which the assessee may rely in support of the return. Accordingly, for issuance of notice u/s 143(2), there is a precondition that there should be a return u/s 139 or in response to notice u/s 142(1). In the present case, the return filed by the assessee in response to u/s 148, on which the provisions of Income Tax Act shall apply, as if such return was a return required to be furnished u/s 139 of the Act, consequently, the return shall be treated as a valid return if the same is filed in accordance with the prescribed provisions of section 139. To understand and interpret that whether the returned filed by the assessee in response to notice u/s 148 shall be treated as a valid return, we have to go through the provisions of section 139, wherein it is mandatory under clause (b) of sub section (1) of section 139 that being a person other than a....
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....um addition u/s 68 in the present case, Ld. AR informed that the same is challenged by the assessee under an appeal and the same is pending before the Ld. CIT(A). In view of such facts, we find that this issue can be raised by the assessee before the First Appellate Authority, who is having powers/ entrusted with duties co-terminus with that of powers and duties of the Ld. AO, therefore, it would be premature to discuss and decide such issues, for which remedy is available to the assessee before the revenue authorities below. 10.6 In view of aforesaid facts, circumstances, and observations, we do not find substance in the contention raised by the Ld. AR, therefore, ground no. 1 of the present appeal and additional ground raised are dismissed. 11. Ground no. 2: Regarding initiating the revisionary proceedings u/s 263 by the Ld. PCIT, on an issue pending before the Commissioner of Income Tax (Appeals), NFAC 11.1 On this issue, Ld. AR submitted that as per various judicial pronouncements, the Ld. PCIT was not authorized to invoke or assume jurisdiction to initiate proceedings under the provisions of section 263, when the subject matter is pending before the First Appellate Au....
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....e or after the 1st day of June, 1988, the powers of the [Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. 11.5 The aforesaid explanation is brought into the statute with effect from 01.10.1984 which was further amended by Direct Tax Laws (Amendment) Act, 1987, subsequently, substituted by the Finance Act, 1988 w.e.f. 01.06.1988. The provisions of aforesaid explanation have been taken into consideration by the Hon'ble High Court of Allahabad in the case of VAM Resorts (supra), following the judgment by Hon'ble Madras High Court in the case of Smt. Renuka Philip (supra), wherein after considering the facts of case that the issue which is pending before the Ld. CIT(A) has been taken up as the basis by the Ld. PCIT while invoking the powers u/s 263, therefore, have held as under: 9. The second limb of argument of counsel for the assessee is that appeal before the CIT(A) was pending, as such, the CIT has no jurisdiction to revise the order, in view of Clause (c) of Explanation-1 to Section 263 of the Act, which provides that when appea....
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....ual aspect, including certain issues qua the "records", which have been raised by the assessee, Hon'ble Allahabad High Court have accorded the decision, that the Ld. PCIT had exceeded his powers by referring to Clause (b) of Explanation to Section 263 of the Act, which includes all the records relating to Section 263 proceedings available at the time of examination by the CIT only, and not in subsequent order or fresh order passed thereafter under Section 263/143(3) of the Act, which could justify the proceedings under Section 263 carried out by the CIT, which should have been taken into consideration in backdrop of the facts before them so as to draw any inference in the present case considering the facts and circumstances. The relevant observations of Allahabad High Court in the case of VAM resorts (supra), are as under: 23. In the present case, the Tribunal rightly arrived at the finding that all the material in regard to land development expenses was before the Assessing Officer who had required the assessee to produce all the documents in relation to the same and after inquiring about the details of contract and the contract executed by assessee, the bill submitted an....
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....annot be looked upon and the argument made by the counsel for the revenue for relying upon the fresh assessment order made on 7.3.2004 under Section 263/143(3) of the Act cannot be accepted in view of the above provision of law. 27. In the present case, the Tribunal had recorded specific finding of fact that the assessing authority had examined each and every aspect of the case on which the remand order hinges, as such the remand order was not sustainable in the eyes of law. 28. Considering the facts and circumstances of the case, we are of the considered opinion, that the revenue has failed to make any case for interference in the order of the ITAT, as the CIT had proceeded to remand the matter back to the assessing authority while the appeal of the assessee was pending under Section 250 and the power of exercise under Section 263 was barred by Clause (c) to Explanation 1 of Section 263 of the Act. Further, the remand order by the CIT was based merely on suspicion and presumption. 29. The appeal is devoid of merit and is hereby dismissed. The question of law is, therefore, answered against the revenue and in favour of the assessee. 11.7 After having b....
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....page no. 65 to 68 of the APB), we find that the issues i.e., (i) the addition u/s 68 to be taxed at special rate u/s 115BBE and (ii) the applicability of section 271AAC for levy of penalty effective from 01.04.2017, instead of 271(1)(c), which is no more in force for the year under consideration, are not inter alia the issues which are subject matter before the Ld. CIT(A), therefore, respectfully following the aforesaid judicial pronouncements it can be held that, the issues which are not subject matter before the First Appellate Authority, if they are causing any prejudice to the interest of revenue for the errors committed by the Assessing Officers, the same can form the basis for revision by the Ld. PCIT. In terms of aforesaid observations as the issues pending in appeal are different then the issues raised by the Ld. PCIT by invoking the provisions of section 263, therefore, there was no illegality in the proceedings-initiated u/s 263, thus, that the contention raised by the Ld. AR that pendency of an appeal before the First Appellate Authority, precludes the Ld. PCIT to exercise the powers of revision u/s 263 is found to be bereft of substance, we, therefore, are unable to per....
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....ion of academic nature, There are several other decisions cited by the Id. AR of the assessee for which no contrary decision was brought to our notice. Hence, we are of the considered view that the Id. Pr. CIT acted beyond jurisdiction in holding that the additional income was subjected to penalty u/s 271 AAC of the IT Act. Thus Ground No. 3 of the assessee is allowed. (ii) Dheeraj Singh Sisodia vs PCIT, ITAT Jaipur (ITA No. 132/JP/2022) 7. We have heard the rival contentions, perused the material available on record, assessment order and impugned order and the case laws cited before us. Admittedly, the AO has initiated penalty proceedings u/s 271 AAB(1A) with the observations that the amount of investment made by the assessee for purchase of motorcycle in cash i.e. Rs.1,25,000/- is added to his total income treated as unexplained investment u/s 69 and tax is charged as per provisions of section 115BBE of the I.T. Act. The assessee has offered Rs.1,25,000/- for taxation during search proceedings in statement u/s 132(4), however, the assessee has not included Rs.1,25,000/- in the return filed u/s 153A, therefore, penalty proceedings u/s 271AAB(1A) is initi....
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.... Ltd. (1991) 192 ITR 337 (Cal) and Gauhati in Surendra Prasad Singh and others v. Commissioner of Income Tax (1988) 173 ITR 510 (Gau.) whereas dissenting with the diametrically opposite approach of Madhya Pradesh High Court in Additional Commissioner of Income Tax v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP), Additional Commissioner of Income Tax v. Kantilal Jain (1980) 125 ITR 373 (MP) and Addl. CWT v. Nathoolal Balaram (1980) 125 ITR 596 (MP) had concluded that where the CIT finds that the Assessing Officer had not initiated penalty proceedings under Section 271 (1 )(c) of the Act in the assessment order, he cannot direct the Assessing Officer to initiate penalty proceedings under Section 271 (1 )(c) of the Act in exercise of revisional power under Section 263 of the Act. The relevant observations recorded therein read thus:- "9. Now adverting to the second limb, it may be noticed that the Delhi High Court in judgment reported in Addl. CIT vs. J.K.D. Costa (1981) 25 CTR (Del) 224 : (1982) 133 ITR 7 (Del) has held that the CIT cannot pass an order under s. 263 of the Act pertaining to imposition of penalty where the assessment order under s. 143(3) is silent in that ....
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....hat the initiation of proceedings u/s 263 for initiation of penalty is not justified. Therefore, the order u/s 263 is liable to be quashed. 12.3 Per contra, LD. CIT-DR vehemently supported the order of Ld. PCIT, submitted that in the present case, the PCIT had just noted that section of initiation of penalty was wrongly taken as 271(1)(c) by the Ld. AO, which is not in operation for the relevant year qua the additions u/s 68 of the Act, whereas the penalty should have been initiated u/s 271AAC. It was a mistake committed by the Ld. AO, causing laws of revenue to the exchequer, therefore, such error is covered by the issues to be picked up for revision by invoking the provisions of section 263, consequently, Ld. PCIT had rightly exercised his powers to correct the section of initiation of penalty. In view of such facts, it is requested to uphold the order of Ld. PCIT u/s 263. 12.4 We have considered the rival submissions, perused the material available on record and the judicial pronouncements relied upon by the parties. As per facts of the present case, ld. AO have made the addition u/s 68 and have also recorded the satisfaction to invoke provisions of section 271(1)(c) for l....
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.... on record. The proceedings u/s 263 are initiated by the Ld. PCIT, for the obvious reason that the Ld. AO failed to follow the mandatory provision of law i.e., he missed to apply the provisions of section 115BBE. On account of such error there was an apparent loss to the revenue, therefore, the order of Ld. AO has been erroneous so far as prejudicial to the interest of revenue. Further, the contention raised by the Ld. AR that the Assessing Officer had made adequate enquiries with respect to the issue of bogus sale and all the necessary evidence / document are furnished by the assessee, cannot deprive the Ld. PCIT to exercise his powers u/s 263, as there was no material on record about the issue that Ld. AO, during the assessment proceedings had enquired about the applicability of provisions of section 115BBE on the addition made u/s 68 and thereby had taken a plausible view to not apply the same in present case. Rather the provisions of section 115BBE are mandatory in nature, which essentially needs to be invoked in a case where addition is made u/s 68, this shows that it was a total failure on the part of Ld. AO due to which the revenue has the reasons to treat the order of Ld. A....
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.... Yours sincerely, For, Shri Vijay Kumar Patel(Appellant) 50. . 1 . (Sakshi Gopal Agrawal) Counsel for Appellant Place :- Raipur Date :- 12/12/2024 Document 2 BC 19/12/24 Govt. of India : Ministry of Finance : Deptt. Of Revenue OFFICE OF THE COMMISSIONER OF INCOME TAX(DR)(ITAT) B &C Wing, 5th Floor, Central Secretariat Building, Sector-24, Atal Nagar, Naya Raipur (CG) e-mail: [email protected] F. No. CIT-ITAT/RPR/REPORT/2024-25 Dated: 19/12/2024 P.O.H. 23/12/24 DB. To The Assistant Registrar, Income Tax Appellate Tribunal, Raipur. Sir, Sub: Submission of report of A.O. on Additional Ground of appeal raised by the assessee in the case of Shri Vijay Kumar Patel, ITA-212/RPR/2024 - AY 2017-18 -- reg. Kindly find enclosed herewith copy of report of A.O. in duplicate on Additional Ground of appeal raised by the assessee in the case of Shri Vijay Kumar Patel, ITA-212/RPR/2024 for AY 2017-18 with a request to kindly place on record of the Hon'ble Bench. Encl .: As above. 0 विधि और नà¥à¤¯à¤¾à¤¯ मंतà¥à¤°à¤¾à¤²à¤¯ Ministry of Law & Justice ....