DEVARAJ MAKOL SARITA ANAND , COIMBATORE V. PCIT,COIMBATORE -1, COIMBATORE

ITA 198/CHNY/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6235 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 24-03-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 56; 263; 143(3); 142(1)

Judgement Text

आयकर अपीलीय अिधकरण ‘बी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा12 एवं माननीय +ी मनोज कु मार अ7वाल ,लेखा सद: के सम2। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.198/Chny/2022 (िनधाCरण वषC / Assessment Year: 2017-18) Shri Devaraj Makol Sarita Anand 156, Parsan Trade Plaza, Ground Floor Dr Nanjappa Road, Coimbatore – 641 108. बनाम/ V s. PCIT Coimbatore-1, Coimbatore. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AX CP S -7 2 4 8 -D (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Shri N.Arjun Raj for Shri S. Sridhar (Advocate) – Ld. ARs थ की ओरसे/Respondent by : Shri Guru Bashyam (CIT) –Ld. DR सुनवाई की तारीख/Date of Hearing : 04-08-2022 घोषणा की तारीख /Date of Pronouncement : 17-08-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of this appeal, the assessee contest legality of revisional jurisdiction u/s. 263 as exercised by Ld. Principal Commissioner of Income Tax, Coimbatore-1 (Pr. CIT) vide order dated 21.02.2022 against the assessment order framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 13.11.2019. The grounds raised by the assessee read as under: 1. The order of the Principal Commissioner of Income Tax, Coimbatore - 1, Coimbatore dated 21.02.2022 vide DIN and Order No. ITBA/REV/F/REV5/2021- ITA No.198/Chny/2022 - 2 - 22/1039938836(l) for the above assessment year is contrary to law, facts, and in the circumstances of the case. 2. The PCIT erred in assumption of jurisdiction u/s 263 of the Act and consequently erred in passing the revision order by directing the Assessing Officer to invoke the provisions in section 115BE of the Act in relation to the other income as part of the computation of taxable total income without assigning proper reasons and justification. 3. The PCIT failed to appreciate that the order of revision under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 4. The PCIT failed to appreciate that the twin conditions of error and prejudice causing to the Revenue were not satisfied concurrently on the facts and in the circumstances of the case and ought to have appreciated that there was no scope for substituting the decision taken by the Assessing Officer in the revisional proceedings, thereby vitiating the revision order on various facets. 5. The PCIT erred in setting aside the scrutiny assessment order made under the limited scrutiny category of assessment by directing the Assessing Officer to invoke the provisions in section 115BE of the Act in relation to the other income thus exceeding and expanding the scope of the assessment through the impugned revision proceedings without assigning proper reasons and justification. 6. The PCIT failed to appreciate that having noticed the scope of the limited scrutiny assessment in relation to cash deposits made during the demonization period, the assumption of revisional powers under section 263 of the Act for invoking the provisions in section 115BBE of the Act in relation to other/surplus income offered under section 56 of the Act was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law. 7. The PCIT failed to appreciate that the scope of section 115 BBE of the Act was restricted to two scenarios for imposing enhanced rate of tax and ought to have appreciated that both the scenarios were absent on the on the facts and in the circumstances of the case, thereby negating the applicability of section 115BBE of the Act. 8. The PCIT failed to appreciate that in any event, substitution of one possible view would not lead to the satisfaction of twin conditions which are the essential prerequisite for assumption of jurisdiction under section 263 of the Act, thus vitiating the entire impugned proceedings. 9. The PCIT failed to appreciate that there was no proper / reasonable opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 10. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 2. The Ld. AR advanced arguments to submit that the case was selected for limited scrutiny to verify the cash deposit during demonetization period. The same was duly verified by Ld. AO during the course of regular assessment proceedings. Drawing attention to assessee’s responses during assessment proceedings (page 28 of ITA No.198/Chny/2022 - 3 - paper book), Ld. AR submitted that the assessee filed abstract of cash receipts and payments into bank and the deposits were sourced out of salary, agricultural income, tuition gees and earlier withdrawals made from bank account. The Ld. AR submitted that the verification of other income of Rs.7.55 Lacs as earned by the assessee was not the subject matter of assessment proceedings. The Ld. CIT-DR, on the other hand, submitted that no query whatsoever was raised by Ld. AO to examine the source of other income and therefore, revision was justified. Having heard rival submissions and after perusal of case records, our adjudication would be as under. 3. We find that the assessee’s return of income was picked up for limited scrutiny to examine ‘cash deposit during demonetization period’. The assessee earned income from salary and income from other sources which include bank interest, tuition fees and other income. The ‘other income’ was reflected as Rs.7.55 Lacs. One of the queries raised by Ld. AO in notice u/s 142(1) dated 03.10.2019 was to file the details of cash deposits during demonetization and source for the same. The assessee submitted sources of funds were as under: - Assessment Year Financial Year 2015-16 2014-15 2016-17 2015-16 2017-18 2016-17 Salary 3,15,000.00 3,32,000.00 3,70,250.00 Other sources Interest 45,588.00 7,456.00 34,644,.00 Tuition Fees 1,98,000.00 2,14,000.00 2,34,000.00 Commission 3,52,401.00 -- -- Other Income 87,000.00 7,09,000.00 7,55,000.00 Gross Total Income 9,97,989.00 12,62,856.00 13,93,894.00 Agricultural Income 8,41,640.00 9,98,880.00 ITA No.198/Chny/2022 - 4 - The assessee also filed abstract of cash receipts and payments into bank and the assessee arrived at closing cash in hand for Rs.13917/-. Considering assessee’s replies, the returned income was accepted. 4. Subsequently, upon perusal of case records, Ld. Pr. CIT sought revision of the order and show-caused the assessee that though it reflected income of Rs.7.55 Lacs, the source of the same / explanation for the same was not disclosed. Therefore, this income would require taxation @60% u/s 115BBE. Since the same was not verified, the order was held to be erroneous and prejudicial to revenue. 5. The assessee opposed the revision on the ground that existence of books of accounts was a condition precedent for invoking the provisions of Sec. 68. Since the income do not include any income referred to in Sec.68, the provisions of Sec.115BBE would not apply. However, Ld. Pr. CIT held that the only reason to scrutinize the return of income was to examine the cash deposit during demonetization period. The assessee, by admitting ‘other income’ did not disclose the source of earning such income and prima facie conclusion was that this income represents undisclosed income which would be taxable at special rate of 60% u/s 115BBE. The Ld. AO failed to call necessary explanation. The assessee’s explanation in the present proceedings that such income represent surplus arrived from bank deposits / withdrawals in bank passbook and opening / closing bank accounts and cash in hand are mere statement and bereft of any material evidences. Therefore, Ld. AO was directed to redo the assessment invoking the provisions of Sec. 115BBE after affording opportunity of hearing to the assessee. Aggrieved as aforesaid, the assessee is in further appeal before us. ITA No.198/Chny/2022 - 5 - 6. Upon perusal of assessee’s replies during regular assessment proceedings as placed before us, we find that the nature of other income of Rs.7.55 Lacs has nowhere been disclosed by the assessee whereas this income has been reflected in the return of income. This income was shown to be one of the sources of funds during regular assessment proceedings. However, no verification of ‘other income’ was done by Ld. AO. In fact during revisional proceedings, the assessee shifted the stand and submitted that it was surplus out of deposits and withdrawals which are contradictory to return of income. It is clear that the nature and source of Rs.7.55 Lacs was nowhere examined by Ld. AO as well as no explanation for the same was furnished by the assessee. Under such circumstances, the revision was justified. Finding no reason to interfere in the impugned order, we dismiss the appeal. 7. The appeal stand dismissed. Order pronounced on 17 th August, 2022. Sd/- (MAHAVIR SINGH) उपा12 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद: / ACCOUNTANT MEMBER चे,ई / Chennai; िदनांक / Dated : 17-08-2022 EDN/- आदेश की Vितिलिप अ 7ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु (अपील)/CIT(A) 4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF