Shri Mahavir Gajraj Nagori, Pune V. Principal Commissioner of Income-Tax -2, , Pune

ITA 316/PUN/2022

AI Insights

The case involves Shri Mahavir Gajraj Nagori, the appellant, contesting the revision order passed by the PCIT-2, Pune, under Section 263 of the Income Tax Act, 1961, for the assessment year 2017-18. The original assessment by the Assessing Officer was a best judgment assessment under Section 144, which was later challenged by the PCIT on grounds of being erroneous and causing prejudice to the Revenue. The Tribunal examined the validity of the PCIT's revision proceedings, the adequacy of the Assessing Officer's enquiries, and the legal basis for the PCIT's actions, ultimately upholding the revision order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137282 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2023
• Appeal Filed By: Assessee
• Order Result: DismissedDismissed
• Bench Allotted: A
• Next Hearing Date: 27-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 08-05-2022
• Other Referred Cases: Hindustan Level Ltd vs. CIT (2011) 335 ITR 108 (Cal), Om Prakash Agarwal vs. PCIT in ITA No.204/JP/2022, Alfa Laval Lund AB vs CIT in ITA No.1287/PUN/2017, Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC), CIT vs. Pavelli Projects Pvt. Ltd. (2023) 149 taxmann.com 115 (SC), Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC), Gee Vee Enterprise vs. CIT (1975) 99 ITR 375 (Del), CIT vs. Shri Arbuda Mills Ltd. (1998) 231 ITR 50 (SC) (FB)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 263; 144; 154; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA No.316/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Shri Mahavir Gajraj Nagori Room No.10, Elphinstone Road, New Khadki Bazar, Pune – 411003 PAN : ACKPN0394E Vs. PCIT-2, Pune Appellant Respondent आदेश / ORDER PER S.S. GODARA, JM : This assessee’s appeal for AY 2017-18 arises against the PCIT-2, Pune’s order dated .03.2022 passed in case No.Pn/PCIT- 2/263/Nagori/2021-22/2313 in proceedings under Section 263 of the Income Tax Act, 1961, in short ‘the Act’. Heard both the parties. Case file perused. 2. We advert to the basic relevant facts so far as the assessee’s sole substantive ground challenging the correctness of PCIT’s Assessee by Ms Ruchi M Rathod Revenue by Shri Keyur Patel, CIT Date of hearing 28-03-2023 Date of pronouncement 25-04-2023 ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 2 revision directions in issue terming the Assessing Officer's corresponding section 144 best judgment assessment dated 20.12.2019 is concerned, there is hardly any dispute that he is assessed as an individual. He had filed his return on 14.02.2018 declaring total income of Rs.36,95,000/-. The Assessing Officer took up scrutiny. He issued section 143(2) notice dated 21.09.2018 as well as various other such correspondences. The assessee does not seem to have responded to the same. This compelled the Assessing Officer to complete his section 144 best judgment assessment dated 20.12.2019 inter-alia, disallowing / adding assessee’s expenses debited in P & L account to the extent of Rs.20 lacs, sundry creditors of Rs.30 lacs out of total sum claimed to the tune of Rs.9,05,88,090/-, cash deposits made during demonetization of Rs.46,04,000/-, other credits to bank accounts of Rs.27,70,201/- and unsecured loan of Rs.33,23,470/-; respectively. The assessee claims to have filed appeal against the same on 31.01.2020 which is stated to be pending till date. 3. Next comes the issue of initiation of PCIT section 263 revision proceedings. He issued his twin section 263 show cause ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 3 notices dated 27.01.2022 and 21.02.2022 inter-alia, affording opportunities of hearing to the assessee before holding the Assessing Officer’s section 154 assessment dated 20.12.2019 as an erroneous one causing prejudice to the interest of Revenue. The assessee claims before us that he had strongly contested the PCIT’s said show cause notices which stand rejected in the impugned revision directions as follows: ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 4 ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 5 ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 6 ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 7 ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 8 ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 9 4. Learned counsel vehemently argued at the outset that the impugned revision proceedings have been initiated on the basis of audit party and the Assessing Officer’s proposal which is not sustainable in law as per Hindustan Level Ltd vs. CIT (2011) 335 ITR 108 (Cal), Om Prakash Agarwal vs. PCIT in ITA No.204/JP/2022, dated 29.08.2022 and Alfa Laval Lund AB vs CIT in ITA No.1287/PUN/2017, dated 02.11.2021. We find no force in assessee’s instant first and foremost legal argument as there is no such embargo in section 263 regarding exercise of revision jurisdiction on the basis of any proposal coming from the field authorities. Learned counsel at this stage invited our attention to page 294 in the assessee’s paper book that the above stated field authorities had submitted their revision proposal(s) to the PCIT so as to invoke the impugned revision proceedings. We further note that there is no indication either in the PCIT’s section 263 twin show cause notices (supra) or in his detailed discussion that he had simply accepted the proposal than applying his independent mind on the facts and circumstances of the case. Coming to the assessee’s foregoing judicial precedents, it is noticed that the hon’ble Calcutta high court had nowhere settled the issue that the ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 10 Assessing Officer could not submit the proposal as the relevant facts therein sufficiently indicated that there was no occasion to exercise section 263 revision jurisdiction or any justification on part of the field authorities. The situation is hardly different in the remaining twin decisions wherein the field authorities’ proposals had been found to have been accepted without any independent application of mind. Be that as may, we are of the opinion that once there is no statutory restriction placed in exercise of section 263 jurisdiction at the prescribed authorities’ instance, we must adopt stricter construction going by Commissioner of Customs vs. Dilip Kumar & Co. (2018) 9 SCC 1 (SC) (FB) to interpret the impugned jurisdiction in wide terms only. The assessee fails in his instant first and foremost argument. 4.1. We find from the perusal of case files that the learned counsel could not place any material before us during the course of arguments that the Assessing Officer had carried out all his details enquiries whilst disallowing/adding the relevant heads of expenses and credits (supra) in part than in entirety once it was a fit case wherein he had already held this taxpayer to have failed in proving ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 11 identity, genuineness and creditworthiness by way of filing cogent evidence. We note from a perusal of para 10 at page 4 of the assessment order that the Assessing Officer added sundry creditors of Rs.30 lacs only despite concluding that the assessee had failed to justify the entire claim of Rs.9,05,88,090/-. The factual position is hardly different regarding the remaining issues as well. We deem it appropriate at this stage to quote section 263 Explanation (2) (a) and (b); inserted by the Finance Act, 2015 w.e.f. 01.06.2015 that such a failure on the Assessing Officer’s part in framing his assessment without due enquiries and verification and allowing relief without enquiry into the claim are deemed to be of an instance of the same being an erroneous one causing prejudice to the interest of Revenue. Various landmark judicial precedents – Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC), CIT vs. Pavelli Projects Pvt. Ltd. (2023) 149 taxmann.com 115 (SC), Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC) and Gee Vee Enterprise vs. CIT (1975) 99 ITR 375 (Del) have unanimously held that such an assessment framed without carrying out detailed enquiries and verifications is indeed an erroneous one causing prejudice to the interest of Revenue which duly entitles the ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 12 prescribed authority to assume its section and pass necessary orders thereupon as it thinks fit. We thus uphold the PCIT’s revision directions herein in the given facts and circumstances of the case. 5. Learned counsel further argued that once the assessee has already filed his appeal before the CIT(A) on 31.01.2020 against Assessing Officer’s section 144 assessment dated 20.12.2019, the PCIT’s action under challenge assuming the jurisdiction is not sustainable u/s 263 Explanation (1) (c). He has quoted CIT vs. Vam Resorts and Hotels Pvt. Ltd. (2019) 418 ITR 723 (All) and Renuka Philip vs. ITO (2018) 409 ITR 567 (Mad) in support. We find no merit in the assessee’s instant last argument as well in light of hon’ble apex court’s decision in CIT vs. Shri Arbuda Mills Ltd. (1998) 231 ITR 50 (SC) (FB) that the above exclusion clause regarding prescribed authority exercising section 263 revision jurisdiction does extends to “such matters as had not been considered and decided in such appeal”. We make it clear that there is no material before us which could indicate the CIT(A) to ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 13 have considered and decided the assessee’s grievance to this extent. We thus reject the assessee’s instant argument as well. 6. Learned counsel vehemently submitted before concluding her arguments that the PCIT has wrongly directed the Assessing Officer to finalise proceedings u/s 144 only whilst passing his consequential order. Her case therefore is that the assessee has suffered grave injustice in light of PCIT’s foregoing directions. We find no substance in the assessee’s instant concluding arguments as well once it has come on record that the Assessing Officer had himself decided all these corresponding issues after holding that the assessee had failed to prove genuineness and creditworthiness of all these heads of expenses and credits; as the case may be, by filing cogent supportive evidence. We therefore hold that there is no prejudice caused to the assessee in light of PCIT’s directions to the Assessing Officer u/s 144. The assessee fails in all her arguments thereof. The PCIT’s revision order under challenge is upheld. 7. This assessee’s appeal is dismissed in the above terms. ITA No.316/PUN/2022 Shri Mahavir Gajraj Nagori 14 Order pronounced in the Open Court on 25 th April, 2023. Sd/- Sd/- (G.D. PADMAHSHALI) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; ᳰदनांक Dated : 25 th April, 2023 GCVSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order is forwarded to: 1. अपीलाथᱮ / The Appellant; 2. ᮧ᭜यथᱮ / The Respondent; 3. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, पुणे “A” / DR ‘A’, ITAT, Pune 4. गाडŊ फाईल / Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune