J.SRINIVASAN, CHENNAI V. ACIT CENTRAL CIRCLE 3(2), CHENNAI

ITA 2065/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6611 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 10-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROTT
• Keywords: Principle of natural justice
• Section: 56; 263; 20

Judgement Text

आयकर अपील य अ धकरण,‘ए’ यायपीठ, चे नई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘A’ BENCH, CHENNAI ी वी .द ु गा राव, या यक सद य एवं ी जी.मंज ु नाथ, लेखा सद य के सम% BEFORE SHRI V.DURGA RAO,JUDICIAL MEMBER AND SHRI G.MANJUNATHA,ACCOUNTANT MEMBER आयकरअपीलसं./I . T. A. N os . 2 0 6 5/ Chn y/ 2 0 1 9 ( नधा रणवष / A ss e ssm en t Ye a r s : 20 1 5 - 1 6) Mr. J.Srinivasan, 12B, Thanikachalam Street, Perambur, Chennai-600 011. V s Assistant Commissioner of Income Tax, Central Circle-3(2) Chennai. P AN: A O VP S 4 4 5 6 H (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओरसे/ Appellant by : Mr. T.Banusekar, C.A यथ क ओरसे/Respondent by : Mr.Durgesh Sumrott, CIT & Mr. Sajit Kumar, JCIT स ु नवाईक तार ख/D a t e o f h e a r i n g : 10.03.2022 घोषणाक तार ख /D a t e o f P r o n o u n c e m e n t : 18.03.2022 आदेश / O R D E R PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against order of the learned Commissioner of Income Tax, Central-1, Chennai, dated 22.03.2019 passed u/s.263 of the Income Tax Act, 1961, and pertains to assessment year 2015-16. 2. At the outset, learned AR for the assessee submitted that there is a delay of 47 days in filing the appeal by the assessee for which necessary petition for condonation of delay explaining the reasons for the delay has been filed. The AR further submitted that the assessee could not file appeal 2 ITA No. 2065/Chny/2019 within the time allowed under the Act, due to the fact that the assessee was suffering from viral hepatitis and was undergoing medical treatment and he had been advised complete bed rest which caused delay of 47 days. The delay in filing appeal is neither intentional nor willful but for the unavoidable reasons, therefore, he prayed that delay may be condoned in the interest of advancement of substantial justice. 3. The learned DR, on the other hand, strongly opposing condonation of delay petition filed by the assessee submitted that the reasons given by the assessee do not come within the ambit of reasonable and bonafide reasons, which can be considered for condonation of delay and hence, appeal filed by the assessee may be dismissed as not maintainable. 4. Having heard both the sides and considered petition filed by the assessee for condonation of delay, we are of the considered view that reasons given by the assessee for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of appeal is 3 ITA No. 2065/Chny/2019 condoned and appeal filed by the assessee is admitted for adjudication. 5. The assessee has filed following grounds of appeal:- “1. For that the order of the Principal Commissioner of Income Tax is without jurisdiction, is contrary to Jaw, facts and circumstances of the case and at any rate is opposed to the principles of equity, natural justice and fair play. 2. For that the Principal Commissioner of Income Tax erred in invoking the provisions of Section 263 and assuming revisionary jurisdiction in the instant case. 3. For that the order of the Assessing Officer is neither erroneous nor prejudicial or both for invoking the provisions of Section 263. 4. For that the Principal Commissioner of Income Tax in alleging that the impugned loan transaction was not genuine merely based on the statements of Mr.Udayashankar that no such transaction has taken place. 5. For that the Principal Commissioner of Income Tax erred in assuming that the statements made by Mr.Udayashankar may lead to a situation that the assessment be erroneous and prejudicial to the interests of the revenue.” 6. Brief facts of the case are that the assessee is in the business of money lending, construction of apartments and chit fund business. A search & seizure operation u/s.132 of the Income Tax Act, 1961, was conducted in the case of the assessee on 28.01.2015 and consequent to search, assessment has been completed u/s.143(3) r.w.s. 153B(1)(b) of the Income Tax Act, 1961 on 29.12.2016 and determined total income at Rs.4,03,75,278/-. The case has been 4 ITA No. 2065/Chny/2019 subsequently taken up for revision and consequently, notice u/s.263 of the Act dated 14.08.2018 was issued to the assessee requiring him to explain as to why assessment order passed by the Assessing Officer u/s.143(3) r.w.s. 153B of the Act, dated 29.12.2016 shall not be revised. The learned Commissioner of Income Tax proposed to revise the assessment order on the ground that the assessee has shown loan liability of Rs.5.66 crores received from Mr. P.Udhayashankar for explaining undisclosed income found during the course of search. However, in the Income-tax Settlement Commission proceedings in the case of Mr. P.Udhayashankar, said amount of Rs.5.66 crores was not shown as amount due from the assessee. Further, Mr. P.Udhayashankar has categorically denied loan transactions with the assessee in the statement of facts filed before the Income-tax Settlement Commission. Therefore, the learned CIT opined that loan liability claimed to have taken from Mr. P.Udhayashankar is unexplained credit u/s.68 of the Act. The Assessing Officer while completing assessment u/s.143(3) r.w.s. 153B did not consider the above, which rendered the assessment order as erroneous insofar as it is prejudicial to 5 ITA No. 2065/Chny/2019 the interests of revenue. Hence, show-cause notice was issued to the assessee and called upon the assessee to explain as to why assessment order shall not be revised u/s.263 of the Income Tax Act, 1961. In response to show-cause notice, the learned AR for the assessee appeared and filed written submissions on 28.07.2018 and 12.03.2019 and claimed that Mr. P.Udhayashankar denying transactions cannot mean that transaction is not genuine. The assessee further claimed that there is no evidence to suggest that statement of Mr. P.Udhayashankar is correct and further requested for copies of facts submitted to Income-tax Settlement Commission in the case of Mr. P.Udhayashankar. 7. The learned CIT after considering relevant submissions of the assessee and has also taken note of various facts, opined that the assessment order passed by the Assessing Officer u/s.143(3) r.w.s 153B order is erroneous, insofar as it is prejudicial to the interests of revenue, because the Assessing Officer has failed to consider the above issue while completing assessment, even though balance sheet for the year ended 31.03.2015 prepared on the basis of seized documents indicated loan transaction of Rs.5.66 crores from 6 ITA No. 2065/Chny/2019 Mr. P.Udhayashankar. Since, the Assessing Officer has failed to examine the issue in light relevant provisions which caused prejudice to the interests of revenue and thus, set aside the assessment order passed by the Assessing Officer and directed the Assessing Officer to reexamine the issue in respect of loan transactions of the assessee with Mr. P.Udhayashankar. Aggrieved by the learned CIT order passed u/s.263, the assessee is in appeal before us. 8. The learned A.R for the assessee referring to order of the Hon'ble High Court of Madras in the case of the assessee in W.P.No.20141 of 2018 submitted that the Hon’ble High Court has noticed that Mr. P.Udhayashankar has not filed his application before the Income-tax Settlement Commission with clear details and thus, on the basis of statement of facts filed before I.T. Settlement Commission and statement of Mr. P.Udhayashankar, the learned CIT ought not to have revised assessment order passed by the Assessing Officer. Therefore, he submitted that the issue may be set aside to the file of learned CIT to give another opportunity to the assessee to explain his case. 7 ITA No. 2065/Chny/2019 9. The learned DR, on the other hand, supporting order of the learned CIT submitted that the Assessing Officer neither examined the issue nor the assessee filed necessary details to explain loan transactions with Mr. P.Udhayashankar. Therefore, there is no error in the finding given by the learned CIT to term the assessment order passed by the Assessing Officer as erroneous insofar as, it is prejudicial to the interests of revenue. 10. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The learned CIT revised the assessment order passed by the Assessing Officer u/s.143(3) r.w.s. 153B on the ground that assessment order passed by the Assessing Officer is erroneous insofar as, it is prejudicial to the interests of revenue on the issue of loan liability shown by the assessee in the name of Mr. P.Udhayashankar for the year ending 31.03.2015. We find that during the course of assessment, neither the assessee furnished necessary explanation with regard to loan liability in the name of Mr. P.Udhayashankar, nor the Assessing Officer has examined the issue in light of relevant provisions of the Act. Therefore, we are of the considered view 8 ITA No. 2065/Chny/2019 that assessment order passed by the Assessing Officer u/s.143(3) r.w.s. 153B of the Act, is erroneous insofar as, it is prejudicial to the interests of revenue. As regards claim of the learned A.R for the assessee that learned CIT ought not to have revised assessment order on the basis of statement of facts filed before the Income-tax Settlement Commission and confession statement of Mr. P. Udhayashankar, we find that purported lender categorically denied of having any loan transactions with the assessee. Moreover, facts brought out by the learned CIT clearly shows that Mr. P. Udhayashankar has not admitted loan transactions of the assessee in the application filed before the Income-tax Settlement Commission. Even before the High Court in the Writ Petition, the Hon'ble High Court noticed that the petitioner could not able to establish that he approached the settlement commission with clean hands and element of true and full disclosures as contemplated u/s.245C of the Act had not been established. From the above, what is clear is that purported loan transaction of the assessee with Mr. P.Udhayashankar is not explained. The Assessing Officer neither examined the issue nor called for any explanation from the assessee. Therefore, we are of the 9 ITA No. 2065/Chny/2019 considered view that there is no error in the reasons given by the learned CIT to hold that assessment order passed by the Assessing Officer as erroneous insofar as, it is prejudicial to the interests of revenue. Hence, we are inclined to uphold order passed by the learned CIT u/s.263 of the Income Tax Act, 1961 and dismiss appeal filed by the assessee. 11. In the result, appeal filed by the assessee is dismissed. Order pronounced in the open court on 18 th March, 2022 Sd/- Sd/- (वी. द ु गा राव) (जी.मंज ु नाथ) (V.Durga Rao) (G.Manjunatha) #या यक सद&य /Judicial Member लेखा सद&य / Accountant Member चे#नई/Chennai, )दनांक/Dated 18 th March, 2022 DS आदेश क त+ल,प अ-े,षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आय ु .त (अपील)/CIT(A) 4. आयकर आय ु .त/CIT 5. ,वभागीय त न2ध/DR 6. गाड फाईल/GF.