Anil Kumar Singh, Ambedkar Nagar, U.P. V. Pr. CIT, , Gorakhpur

ITA 8/ALLD/2021

AI Insights

The case involves an appeal by Mr. Anil Kumar Singh against a revisionary order passed by the PCIT, Gorakhpur, which cancelled a reassessment order previously made by the Assessing Officer (AO). The reassessment had added undisclosed receipts as part of the assessee's turnover, which were not initially reported in the Income Tax Return (ITR). The PCIT's revisionary order held that the AO had not conducted necessary inquiries regarding these receipts, thus the reassessment was prejudicial to the interests of the revenue. The Tribunal found that the PCIT had not provided adequate opportunity for the assessee to be heard before passing the revisionary order and noted that the order was passed within a short period following the issuance of a show cause notice, which did not allow sufficient time for the assessee to respond.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 108359 (ITAT-ALLAHABAD)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2022
• Assessment Year: misc
• Appeal Filed On: 03-06-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHUDHURI
• Keywords: Unexplained cash credit; Revision of order; Opportunity of being heard; Period of limitation; Time period of passing order; Set aside
• Section: 147; 68; 263; 2; 143(3); 48; 2(A)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.08/Alld./2021 Assessment Year: 2010-11 Mr. Anil Kumar Singh, Shastri Nagar, Akbarpur, Ambedkar Nagar-224122, U.P. v. Pr. Commissioner of Income Tax, Gorakhpur U.P. PAN:ABOPS0242H (Appellant) (Respondent) Appellant by: Shri. Praveen Godbole, C.A. Respondent by: Shri. Rabin Chudhuri CIT D.R. Date of hearing: 06.12. 2022 Date of pronouncement: 06.12.2022 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No.08/Alld./2021, is directed against an revisionary order dated 23.03.2021 passed by learned Principal Commissioner of Income-tax, Gorakhpur ( DIN & Order No. ITBA/REV/F/REV5/ 2020-21/1031669128(1) ) (hereinafter called "the Pr. CIT"), for assessment year(ay):2010-11, wherein ld. PCIT cancelled the reassessment order dated 29.12.2017 passed by learned Assessing Officer u/s 147 read with Section 143(3) of the Income-tax Act, 1961(hereinafter called “the Act”) and directions were issued by ld. PCIT to the learned Assessing Officer(hereinafter called “the AO”) to ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 2 make fresh assessment denovo as per law after giving due opportunity to the assessee and after investigating complete facts. 2. The assessee has raised following grounds of appeal in memo of appeal filed with Income Tax Appellate Tribunal, Allahabad Bench, Allahabad, U.P. (hereinafter called “ the tribunal”), in ITA no. 08/Alld./2021 for ay: 2010-11, which reads as under:- “1. That the learned Principal Commissioner of Income-tax erred in law and on facts in passing the order on 23-03-2021 u/s 263 of the Income-tax Act, 1961, after expiry of two years from the end of the financial year 2017-18 in which the order (dated 29-12- 2017) sought to be revised was passed i.e. 31-03-2020 and the impugned order u/s 263 of the I.T. Act, 1961 is barred by limitation as per mandatory provision under subsection 2 of section 263 of the I.T.Act, 1961. The aforesaid order is illegal ab-initio and liable to be quashed as such. 2. Without prejudice to the ground of appeal no.1, it is submitted that the learned Principal Commissioner of Income-tax erred in law and on facts in assuming jurisdiction u/s 263 of the Income-tax Act, 1961, on the basis of presumption, surmises and conjectures and arbitrarily holding that the assessment order dated 29-12-2017 passed by Income Tax Officer u/s 147/143(3) of the I.T. Act, 1961, for the assessment year 2010-11, is erroneous in so far as prejudicial to the interests of the revenue, failing to consider that the AO has thoroughly examined the bank account and has made the requisite enquiry before accepting the sum of Rs 48,31,350/- as part of the receipts of contract business as mentioned in the judicious assessment order passed u/s 147/143(3) of the Act, 1961. Therefore the impugned order u/s 263 of the I.T. Act, 1961 is illegal and liable to be quashed. 3. That the learned Principal Commissioner of Income-tax erred in law and on facts in failing to give the assessee an adequate opportunity of being heard and without making any inquiry to prove that the deposits were not related to receipts of contract business and the impugned order u/s 263 of the Income-tax Act, 1961, is illegal as such. 4. That the appellant craves permission for amending the aforesaid grounds of appeal and/or for raising fresh grounds of appeal.” 3. We have observed that this appeal is filed late beyond the time prescribed u/s 253(3) of the 1961 Act. The revisionary order dated 23.03.2021 passed by ld. PCIT u/s 263 was stated to be received by the assessee on 30.03.2021 , while the appeal was filed by the assessee with tribunal on 08.07.2021. The appeal as per provisions of Section 253(3) ought to have been filed within sixty days of the date ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 3 on which order sought to be appealed against is communicated to the assessee . The appeal ought to have been filed by the assessee on or before 29.05.2021, but the appeal was filed by assessee with tribunal on 08.07.2021. We have observed that Hon’ble Supreme Court suspended the limitation period , between 15th March, 2020 to 28th February, 2022 , keeping in view health crisis faced by Country due to Covid-19 pandemic. Reference is drawn to the recent directions of Hon’ble Supreme High Court in Suo-motu writ petition(C) No. 3 of 2020 vide order dated 10 th Jan., 2022, wherein Hon’ble Supreme Court held that for the purposes of computing limitation, period from 15 th March 2020 till 28 th February, 2022 , shall be excluded. Thus , the aforesaid delay in filing this appeal by the assessee with tribunal is covered by the period of suspension of limitation as directed by Hon’ble Supreme Court. Thus, keeping in view health crises faced by Country due to Covid-19 pandemic situation as was prevailing in the country and various lockdowns imposed by Central/State Government from to time crippling the normal functioning , and also keeping in view that limitation was suspended by Hon’ble Supreme Court for the period from 15.03.2020 to 28.02.2022, we condone the delay in filing of this appeal by assessee with tribunal late beyond the time prescribed under Section 253(3) of the Income Tax Act, 1961. Thus, this assessee’s appeal is admitted by condoning the aforesaid delay in filing of this appeal beyond the time prescribed u/s 253(3) , and now we will proceed to adjudicate this appeal on merits in accordance with law. 3. The brief facts of the case are that the reassessment order dated 29.12.2017 was passed by the AO u/s 147 read with Section 143(3) of the 1961 Act, wherein the AO made additions towards extra profits to the tune of Rs. 3,86,508/- being net profit computed @ 8% on undisclosed receipts to the tune of Rs. 48,31,350/-. The show cause notice(SCN) dated 18 th March, 2021 was issued by ld. PCIT under Section 263 of the 1961 Act to the assessee , wherein the assessee was show ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 4 caused w.r.t. reassessment order passed by AO dated 29.12.2017 under Section 143(3)/147 for assessment year 2010-11 , that from perusal of the case records, it was noticed by ld. PCIT that the assessee has declared net profit @8% on total turnover of Rs. 1,23,10,670/- , while total receipts in the bank account totaled at Rs. 1,71,42,020/- . The ld. PCIT observed that the AO has taken the differential of Rs. 48,31,350/- as undisclosed turnover and added this amount in turnover. Since, the said amount of Rs. 48,31,350/- was not disclosed by the assessee while reporting his turnover in the ITR, it was imperative that whole amount should have been treated as unexplained cash credit as per provisions of Section 68 of the 1961 Act . The ld. PCIT observed that during the course of reassessment proceedings , the AO has not examined/enquired the details of facts of the case and hence the reassessment order is prejudicial so far as erroneous to the interest of Revenue keeping in view Explanation 2 to Section 263 of the 1961 Act. The date of hearing was fixed for 22.03.2021, but the assessee did not gave any reply on the aforesaid date of hearing nor any one attended. It is stated in the revisionary order dated 23.03.2021, that the case was refixed, but no reply was given by the assessee. The Ld. Pr. CIT in his revisionary order dated 23.03.021 observed that the AO has without any reasons and documentary evidences considered Rs. 48,31,350/- as part of turnover and applied Net Profit rate of 8% on that while the entire amount of Rs. 48,31,350/- should have been considered as undisclosed income of the assessee and this issue was not examined by the AO. Thus , ld. PCIT was of the view that the AO has not conducted necessary enquiry in this regard and the reassessment order dated 29.12.2017 passed by AO u/s 147 read with Section 143(3) of the 1961 Act was held by ld. PCIT to be erroneous so far as prejudicial to the interest of Revenue as per explanation 2(a) of the Section 263 of the 1961 Act. Thus, the ld. PCIT vide revisionary order dated 23.03.2021 passed u/s 263 cancelled the reassessment order dated 29.12.2017 passed by AO u/s 143(3) read with Section 147 , and directions were issued by ld. PCIT to AO to ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 5 make fresh assessment denovo as per law after giving due and reasonable opportunity to the assessee and after investigating complete facts. 5. When this appeal came for hearing before the Bench, the Ld. Counsel for the assessee raised the preliminary objection, that the revisionary order dated 23.03.2021 passed by ld. PCIT u/s 263 is beyond the time stipulated under Section 263 of the Act. Further on merits also, the Ld. Counsel for the assessee submitted that the appeal against the reassessment order dated 29.12.2017 passed by AO under Section 143(3)/147 is pending before Ld. CIT (A) . It is claimed that the same issue of chargeability to tax of undisclosed receipt of Rs. 48,31,350/- was duly considered by the AO and a view was taken by the AO to bring to tax net profit computed @ 8% of undisclosed income , which was a plausible view and now the ld. PCIT cannot invoke Section 263 where the AO has taken one of the plausible view. It was submitted that in any case when the issue is pending with ld. CIT(A) in the first appeal filed by the assessee, now in view of provisions of Section 263 Explanation 1(c), the ld. PCIT could not interfere u/s 263. 5b. In rebuttal the Learned CIT DR submitted that there was Covid-19 pandemic prevailing in India , and there was an extension of limitation by Hon’ble Supreme Court from 15.03.2020 to 28.02.2022. It was also brought to our notice by ld. CIT- DR , that relaxation was provided with respect to various compliances to be made under the provisions of Income Tax Act, 1961 owing to Covid-19 pandemic , due to following legislations passed during Covid 19 pandemic( copies filed in paper book filed by department, which is part of record in appeal file) : Sr. No. Particulars Page No. of Paper Book filed by department 1 The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (No. 2 of 2020) published in the Gazette of India. (Extraordinary/Part II-section I) vide No. 21 dated 31.03.2020 1-6 ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 6 2 The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No. 38 of 2020) published in the Gazette of India (Extraordinary/Part II-section I) vide No. 63 dated 29.09.2020 7-46 3 Notification S.O. 3906(E) [No. 88/2020/F.No. 370142/35/2020-TPL], dated 29.10.2020 47 4 Notification S.O. 4805(E) [No. 93/2020/F.No. 370142/35/2020-TPL], dated 31.12.2020 48 The Ld. CIT DR has filed a paper-book containing 48 pages which is placed on record in appeal file . The Ld. CIT DR submitted that the AO erred in assessing undisclosed income of Rs. 48,31,350/- @8% , while infact it was the undisclosed income of the assessee , which ought to have been tax fully as part of total income by the AO by invoking provisions of Section 68. 5c. The show cause notice(SCN) was issued on 18 th March, 2021 by ld. PCIT u/s 263 , fixing date of hearing to be 22.03.2021. The assessee did not appear before ld. PCIT on 22.03.2021 nor any reply was filed. It is mentioned in the revisionary order that the case was refixed , but no date was given in the order, and rather the revisionary order passed by Ld. Pr. CIT u/s 263 within five days, on 23 rd March, 2021 . Both the parties before us concurred that the revisionary order was passed by ld. PCIT within five days of SCN and the matter can be restored to ld. PCIT for passing revisionary order afresh. 6. We have considered rival contentions and perused the material on record. We have observed that the reassessment order dated 29.12.2017 was passed by the AO u/s 147 read with Section 143(3) of the 1961 Act, wherein the AO made additions towards extra profits to the tune of Rs. 3,86,508/- being net profit computed @ 8% on undisclosed receipts to the tune of Rs. 48,31,350/-. The show cause notice(SCN) dated 18 th March, 2021 was issued by ld. PCIT under Section 263 of the 1961 Act to the assessee , wherein the assessee was show caused w.r.t. reassessment order passed by AO dated 29.12.2017 under Section 143(3)/147 for assessment year 2010-11 that from perusal of the case records, it is noticed that ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 7 the assessee has declared net profit @8% on total turnover of Rs. 1,23,10,670/- , while total receipts in the bank account totaled at Rs. 1,71,42,020/- . The ld. PCIT observed that the AO has taken the differential of Rs. 48,31,350/- as undisclosed turnover and added this amount in turnover. Since, the said amount of Rs. 48,31,350/- was not disclosed by the assessee while reporting his turnover in the ITR, it was observed by ld. PCIT that it is imperative that whole amount should have been treated as unexplained cash credit as per provisions of Section 68 of the 1961 Act . The ld. PCIT observed that during the course of reassessment proceedings , the AO has not examined/enquired the details of facts of the case and hence the reassessment order is prejudicial so far as erroneous to the interest of Revenue keeping in view explanation 2 to Section 263 of the 1961 Act. The date of hearing was fixed for 22.03.2021, but the assessee did not gave any reply on the aforesaid date of hearing. It is stated in the revisionary order dated 23.03.2021, that the case was refixed, but no reply was given by the assessee. The ld. PCIT did not gave any date on which the above case was refixed in his revisionary order dated 23.03.2021 passed by ld. PCIT u/s 263 of the 1961 Act. Any how we have observed that on the very next date i.e. 23.03.2021 revisionary order was passed by ld. PCIT u/s 263 of the 1961 Act, which is within five days of issue of first SCN dated 18.03.2021. Thus, in our considered view, proper and effective opportunity of being heard was not provided by ld. PCIT to the assessee before passing the impugned revisionary order u/s 263 .It appears that ld. PCIT passed revisionary order on 23.03.2021 keeping in view limitation period expiring on 31.03.2021. The Ld. Pr. CIT in his revisionary order dated 23.03.2021 observed that the AO has without any reasons and documentary evidences considered Rs. 48,31,350/- as part of turnover and applied Net Profit rate of 8% on that , while that the entire amount of Rs. 48,31,350/- should have been considered as undisclosed income of the assessee and this issue was not examined by the AO. Thus , ld. PCIT was of the view that the AO has not conducted necessary enquiry in this regard and the ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 8 reassessment order dated 29.12.2017 passed by AO u/s 147 read with Section 143(3) of the 1961 Act was held by ld. PCIT to be erroneous so far as prejudicial to the interest of Revenue as per explanation 2(a) of the Section 263 of the 1961 Act. Thus, the ld. PCIT vide revisionary order dated 23.03.2021 passed u/s 263 cancelled the reassessment order dated 29.12.2017 passed by AO u/s 143(3) read with Section 147 , and directions were issued by ld. PCIT to AO to make fresh assessment denovo as per law after giving due and reasonable opportunity to the assessee and after investigating complete facts. Thus, in our considered view, proper and effective opportunity of being heard was not provided by ld. PCIT to the assessee before passing the impugned revisionary order.It appears that ld. PCIT passed revisionary order on 23.03.2021 (within five days of issue of first SCN on 18.03.2021), keeping in view limitation period expiring on 31.03.2021. The assessee has raised issue of limitation in invoking revisionary powers by ld. PCIT as is stipulated u/s 263, to which ld. CIT-DR rebutted that owing to covid-19 pandemic there were legislation enacted to extend limitation period of compliances , the same are extracted by us in this order in the preceding para’s of this order. The assessee has also raised objections on merits of the issue including raising an issue that once the said addition is part of addition made during reassessment , the same cannot be subject of revisionary proceedings keeping in view Explanation 1(c) to Section 263 . The ld. CIT-DR has relied on Explanation2(a) to Section 263. In our considered view keeping in view entire facts and circumstances of the case and keeping in view the principal of natural justice and in the fitness of the things and fair play, it will be appropriate that revisionary order passed by ld. PCIT u/s 263 be set aside and the matter is to be restored back to the file of ld. PCIT to pass fresh revisionary order u/s 263 denovo, on merits in accordance with law after giving proper and adequate opportunity of being heard to the assessee. The Ld. Pr. CIT is directed to decide all the issues and contentions raised by the assessee vide its grounds of appeal filed before us ITA No.08/ALLD/2021 Assessment Year: 2010-11 Anil Kumar Singh v. Pr. CIT, Gorakhpur 9 including limitation for issuing the notice under Section 263 , so that we have the benefit of the reasons / speaking order passed by ld. PCIT in case the same is challenged in second round of litigation by the assessee . Thus, the revisionary order dated 21.03.2021 passed by Ld. Pr. CIT u/s 263 is set aside and the matter is restored to the file of Ld. Pr. CIT for passing fresh revisionary order under Section 263 denovo. We order accordingly. 7. In the result, appeal filed by the assessee in ITA no. 08/Alld/2020 for ay: 2010-11 is allowed for statistical purpose. Order pronounced on 06/12/2022 at Allahabad in open Court on the conclusion of hearing and reduced to writing and signed on the date mentioned hereunder. Sd/- Sd/- Sd/- SdSd [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/12/2022 Kd Azmi Copy forwarded to: 1. Appellant – Anil Kumar Singh, Sastri Nagar, Akbarpur, Ambedkar Nagar, 224122, U.P.. 2. Respondent – Pr. Commissioner of Income Tax, Gorakhpur U.P. 3. CIT(A) –Aayakar Bhawan, Civil Lines, Allahabad, U.P. 4. CIT, Allahabad, U.P. 5. The ld. Sr. DR. ITAT, Allahabad, U.P. By Order P.S.