GOPAL BANIK,KOLKATA V. .P.C.I.T.(CENTRAL) - 2, KOLKATA

ITA 2045/KOL/2024

AI Insights

The case involves appeals by Gopal Banik against the orders of the Principal Commissioner of Income Tax, Central-2, Kolkata, which were passed under section 263 of the Income Tax Act, 1961 for the assessment years 2018-19 and 2019-20. The PCIT had revised the assessments made under section 153A/143(3) of the Act, citing that the original assessments were erroneous and prejudicial to the interests of the revenue, primarily due to unverified cash expenses and income not disclosed in the returns. The Tribunal examined whether the PCIT was justified in revising the assessments, considering the fact that the issues raised were already addressed in the original assessments and subsequent appeals.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36494 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: Income-tax Officer vs. D.G. Housing Projects Ltd. [2012] 20 taxmann.com 587 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Document seized; Documents seized; Assessment record; Revision of order
• Section: 143(3); 263; 132; 153A; 139(1); 191; 20

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. Nos. 2044 & 2045/Kol/2024 Assessment Years: 2018-19 & 2019-20 Gopal Banik (PAN: AEGPB 1186 E) Vs. PCIT, Central-2, Kolkata Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 25.11.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 17.12.2024 For the assessee/ Ǔनधा[ǐरती कȧ ओर से Shri K K Khemka, Advocate For the Revenue/ राजèव कȧ ओर से Shri Subhendu Dutta, CITDR ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the separate orders of the Ld. Principal Commissioner of Income Tax, Central, Kolkata-2 (hereinafter referred to as the “Ld. PCIT”] dated 18.03.2024 passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the AY 2018-19 & 2019-20 respectively. 2 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 2. At the outset, we note that there is a delay in filing the appeal by the assessee by 180 days. After hearing rival contentions and perusing the condonation application including the Affidavit filed before us, we note that the assessee is suffering from heart ailments and has undergone by-pass surgery which was duly substantiated by filing the medical reports and prescriptions of the doctor. We noted that the assessee’s wife was also suffering from neurological problem since 2023 and ultimately operated upon in Appollo hospital, Chennai. We find that the assessee’s life was full of turbulence and upheaval due to illness and thus he came to know about the appellate order having been passed ex-parte on 01.10.2024. Considering these facts and reasons cited before us, we are of the view that delay is for sufficient and genuine reason and accordingly, we are inclined to condone the delay and admit the appeal for hearing. 3. The only issue raised in the various ground of appeal is against the invalid exercise of jurisdiction by the PCIT u/s 263 of the Act thereby passing order u/s 263 of the Act which is invalid in the eyes of law. 4. Facts in brief are that a search action u/s 132 of the Act was conducted on the assessee on 23.04.2019. The assessee filed the return of income u/s 139(1) of the Act on 26.12.2018 declaring total income of Rs. 4,47,480/-. Accordingly proceedings u/s 153A were initiated by issuing a notice u/s 153A which was duly complied with by filing a return of income on 21.09.2021 declaring total income of Rs. 4,47,480/- . Thereafter statutory notices were duly issued and served on the assessee and finally the assessment was framed by accepting the returned income. The assessee is engaged in the business of construction. The PCIT upon perusal of the assessment record specially page 1 and 2 of the seized diary with identification no. AGH/02 observed that the assessee was incurring expenses in cash thereby making payments in cash on construction materials, plumbing charges, electrical charges, colouring material expenses, labour expenses etc which aggregated to Rs. 16,18,979/-. The details of the said cash payments were given by the PCIT in para 2 page 1 to 3 of the revisionary order. Similarly the PCIT noted that cash expenses at page 2 of AGH/02 were 3 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 29,950/- and thus total cash expenses were amounting to Rs. 16,48,929/- (Rs. 16,18,979/- + Rs. 29,950/-). According to PCIT, the order passed u/s 153A/143(3) of the Act dated 25.09.2021 appeared to be erroneous so far as prejudicial to the interest of the revenue within the meaning of Section 263 of the Act . Finally the assessment was revised and set aside vide order dated 18.03.2024 passed u/s 263 by asking the AO to make necessary verification and enquiry and frame the fresh assessment after making proper enquiries and after affording a reasonable opportunity of hearing to the assessee. 5. The Ld. A.R vehemently submitted before us that the PCIT has not decided the ssue but directed the AO to enquire into these issues whereas the law mandates that the PCIT should have reached the definitive conclusion. The Ld. A.R vehemently submitted before us that in both these years, the assessments were framed u/s 153A of the Act. The Ld. A.R submitted that the AO framed the assessment in the impugned assessment year after after taking into account the seized material i.e. diary marked as AGH/02 and the additions were made in the assessment framed u/s 153A of the Act based on the said seized documents which were deleted by the Ld. CIT(A) in the appellate order and the revenue thereafter preferred an appeal before the Tribunal and the Tribunal vide order dated 02.09.2024 for AY 2019-20 and 2020-21 dismissed the appeals of the revenue. A copy of the said order passed by the tribunal is filed at page 182 to 190 and also that the copy of Ld. CIT(A) for AY 2019-20 is filed at page 199 to 349. The Ld. A.R submitted that the said seized documents were duly considered by the AO while passing the order u/s 153A/143(3) and only then the additions were made by the AO after taking into account all the cash payment and expenses incurred by the assessee. Therefore, the PCIT has no jurisdiction to revise the assessment u/s 263 of the Act. It is also a settled position of law that where the AO has taken a plausible view after appreciating the facts on records , the jurisdiction exercised by the PCIT order is bad in law. Besides, the PCIT has not recorded any conclusive findings on how the assessment framed by the AO is erroneous and prejudicial to the interest of the revenue and directd the AO to conduct enquiry/investigation which is against 4 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik the mandate of law. The Ld. A.R relied on the decision of Hon’ble High Court of Delhi in the case of Income-tax Officer vs. D.G. Housing Projects Ltd. [2012] 20 taxmann.com 587 (Delhi) in defense of his arguments wherein the Hon’ble Court has held that it is not open to PCIT to set aside the order for conducting enquiry. It was further held that the PCIT has to give a specific finding based on the enquiry conducted by him that the order passed by the AO is erroneous and prejudicial to the interest of the revenue. 6. The Ld. D.R relied heavily on the order of authorities below. 7. After hearing the rival contentions and perusing the material on record, we find that the issue of cash payment/cash expense as contained as AGH/02 which was the incriminating material found and seized during the course of search was already taken into account by the AO while framing the assessment and made additions based on the said material. We note that even the Ld. CIT(A) deleted the additions and the order of Ld. CIT(A) is available at page 191 to 349 of the paper book. The revenue went in appeal before the Tribunal against the order of ld CIT (A) and The tribunal dismissed the appeal of the revenue a copy of the tribunal order is available at page 160 -170 of the paper book. Therefore this is apparently and abundantly clear from the above that the AO has applied his mind and taken a plausible view on the issue on the basis of the said seized document. Therefore, the jurisdiction of PCIT is not sustainable in our opinion. Moreover, the PCIT is merely restored the issue to the file of AO for conducting enquiry and investigation without giving any specific finding as to how the assessment is erroneous and prejudicial to the interest of the revenue. Considering all the facts and legal position, we are inclined to quash the proceedings u/s 263 of the Act and also consequent order passed by 263 of the Act. The appeal of the assessee is allowed. ITA NO. 2045/Kol/2024 for AY 2019-20. 5 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 8. The only issue raised above various grounds of appeal is against the invoking the jurisdiction u/s 263 of the Act by ld PCIT invalidly without satisfying the conditions as envisaged under section 263 of the Act. 9. Facts in brief are that the assessment u/s 153A of the Act was framed vide order dated 28.09.2021 assessing the income at Rs. 2,27,86,310/-. The PCIT, upon perusal of the assessment records, observed that the assessee was engaged in the construction work and has made various payments in cash. According to PCIT a sum of Rs. 2,31,21,109/- which was on account of sale of eight flats by the assessee was received in cash as per seized diary being Identification mark AGH/02 and the assessee has only disclosed transactions through banking channel to the tune of Rs. 13,48,200/- and thus the remaining amount of Rs. 2,17,72,909/- has been received in cash which required to be added to the income of the assessee which has rendered the assessment framed as erroneous and prejudicial to the interest of the revenue. Similarly the PCIT on the basis of AGH/01 observed that there are certain transactions which were not recorded in the books of account which was given at page no. 3 of the revisionary order and aggregated to Rs. 61,42,084/- which also needed to be added to the income of the assessee. As the income of the assessee has been under assessed, therefore the assessment framed u/s 153A/ 143(3) of the Act dated 28.09.2021 for AY 2019-20 appeared to be erroneous and prejudicial to the interest of the revenue. The PCIT finally set aside the assessment with the direction to frame the assessment de novo after conducting proper enquiry vide order dated 18.03.2024 passed u/s 263 of the Act. 10. The Ld. A.R vehemently submitted before us that the observations of the PCIT are based upon the wrong appreciation of facts as contained in the diaries marked as AGH/01 and AGH/02. The Ld. A.R submitted that these documents were already taken into account by the AO at the time of assessment proceedings u/s 153A and the necessary additions were made to the income of the assessee which were deleted by the Ld. CIT(A) and the appeal filed by the revenue before the Tribunal has also been dismissed. The Ld. A.R stated by referring to the details of income disclosed by the 6 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik assessee in the return of income filed itself which included the amount of receipts from sale of 8 flats of Rs. 2,31,21,109/-. The Ld. A.R argued that income has offered to tax by the assessee in the return filed u/s 139(1) of the Act and therefore the order passed by the AO neither erroneous and nor prejudicial to the interest of the revenue and may kindly be quashed. 11. The Ld. D.R relied on the orders of authorities below. 12. After hearing the rival contentions and perusing the material on record, we find that the Ld. CIT(A) has totally misconstrued the facts as contained in assessment records. The PCIT upon perusal of the seized diaries marked as AGH/01 and AGH/02 noted that the assessee has received cash payments amounting to Rs. 2,31,21,109/- from sale of eight flats and the assessee has only disclosed Rs. 13,48,200/- which were received through banking channel and Rs. 2,17,72,909/- received through cash was not disclosed by the assessee in the return of income. Similarly the PCIT at page 3 of the revisionary order noted on the basis of AGH/1 that the assessee has not shown transactions amounting to Rs. 61,42,084/- in the books of accounts which are required to be added to the income of the assessee. We observe that the findings and observations of ld PCIT(A) were wrong and against the facts on record as the seized documents namely AGH/01 and AGH/02 were already considered by the AO while framing the assessment and made the additions based thereupon. Even on the issue of cash received by the assessee from sale of eight flats, we note that the no cash was received by the assessee. The amount stated to have been received in cash by the ld PCIT from sale of flats was in fact received by cheques and was offered to tax in the return filed u/s 139(1) of the Act . The copy of statement showing sales of flats, ITR, Balance Sheet and computation of income are extracted below: 7 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 8 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 9 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 10 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik 11 I.T.A. No.2044 & 2045/Kol/2024 Assessment Year: 2018-19 & 2019-20 Gopal Banik We note that the assessee has already offered this amount to tax in the return filed u/s 139(1) as apparent from the statement of sale of flats and computation of income and also the acknowledgment filed before us which are extracted above. Considering the facts and circumstances, we are inclined to quash the revisionary proceedings u/s 263 of the Act as well as the order passed u/s 263 of the Act. 13. In the result, both the appeals of the assessee are allowed. Order is pronounced in the open court on 17th December, 2024 Sd/- Sd/- (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) (Rajesh Kumar/राजेश क ुमार) Judicial Member/ÛयाǓयक सदèय Accountant Member/लेखा सदèय Dated: 17th December, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Gopal Banik, 20, A.P.C. Road, Kolkata-700069 2. Respondent – PCIT, Central, Kolakta-2 3. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "