JUNAGADE HEALTHCARE PVT LTD,NASHIK V. PRINCIPAL COMMISSIONER OF INCOME TAX NASHIK 1, INCOME TAX DEPARTMENT

ITA 1083/PUN/2024

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The case involves Junagade Healthcare Pvt. Ltd., which faced an appeal by the PCIT, Nashik-1 against the order of the Assessing Officer (AO) regarding the tax rate applied to additional income disclosed during a survey. The AO had taxed the additional income at the normal rate, considering it as business income, whereas the PCIT argued it should be taxed at a higher rate under section 115BBE. The Tribunal examined whether the AO's decision was erroneous and prejudicial to the interests of the Revenue. After reviewing the submissions and relevant case laws, the Tribunal concluded that the AO had correctly assessed the income and applied the normal tax rate, thus setting aside the PCIT's order under section 263.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315834 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: Ashokkumar Kesherchand Pande vs. ACIT, Yash Construction Company vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: NIKHIL S. PATHAK
• Keywords: Set aside; Business income; Revision of order
• Section: 143(3); 154; 263; 69C; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1083/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2019-20 Junagade Healthcare Pvt. Ltd., Lotus Hospital, Gangapur Road, Bhavik Nagar, Nashik- 422013. PAN : AACCJ4095K Vs. PCIT, Nashik-1. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 19.03.2024 passed by Ld. PCIT, Nashik-1 for the assessment year 2019-20. 2. The appellant has raised the following grounds of appeal :- “1. The Hon, PCIT, Nashik - 1 has erred in invoking the provisions of Sec. 263 and therefore-the Order passed U/s 263 is bad in law. Assessee by : Shri Nikhil S. Pathak Revenue by : Shri Amol Khairnar Date of hearing : 20.02.2025 Date of pronouncement : 16.05.2025 ITA No.1083/PUN/2024 2 2. The Learned AO (ACIT, Central Circle 2, Nashik) before passing the order u/s 143(3) has made all the necessary enquiries, checked the books of accounts and all the supporting documents. This being a Survey case-and on this point only - the Learned AO had done all the checking and then formed his opinion that everything was in order. 3. Learned AO also initiated Penalty Proceedings U/s 270A for Underreporting/Misreporting But the same was also dropped by him vide order dated 28/03/2022. This showed the intention of Learned AO-that he was satisfied with the records produced and hence tax was levied at regular rate and not higher rate. 4. Further ACIT, Circle 1, Nashik (Regular Assessing Officer of Jurisdiction) initiated proceedings u/s 154 vide notice dated 05/01/2024 regarding same issue that Tax on Rs.5.34 Lacs should have been charged as per provisions of 115BBE (@60%) and not regular rate of 25%. Detailed reply was submitted on 24/01/2024, The ACIT dropped the Sec 154 proceedings vide his order dated 08/02/2024. 5. The Hon. PCIT has given the reason that the Learned AO has completed the assessment without making due verification and inquiries which were required. It seems that Hon. PCIT has missed out on the questionnaire issued to assessee by Learned AO. All the relevant issues were raised by Learned AO and detailed enquiries were made during assessment. Books of Accounts along with supporting documents were verified by him. 6. After being satisfied - the Learned AO has completed assessment and charged regular rate of tax-as he found everything in order. This was a Survey Case. It is not that the Learned AO was not aware of provisions of Sec.115BBE. 7. Appellant craves leave to add, alter, amend, modify and / or delete any of the grounds appeal.” 3. Facts of the case, in brief, are that the assessee is a private limited company engaged in the business of healthcare services i.e. ITA No.1083/PUN/2024 3 running a hospital and has furnished its return of income on 31-10-2019 by disclosing total income of Rs.25,81,190/-. A survey action u/s 133A of the IT Act was conducted for 22.02.2019 at the business premises of the assessee company i.e. at Lotus Hospital, Nashik. During the course of survey, the director of the assessee company admitted to disclose Rs.5,34,060/- as an additional income on account of difference in the expenses and the same was disclosed in the return of income and due taxes were paid by the assessee company. The assessment was completed vide order dated 17.06.2021 on the same income as returned by the assessee and no addition was made in the assessment order, however penalty proceedings u/s 270A of the IT Act were initiated. Subsequently, a notice u/s 154 of the IT Act was issued on 05.01.2024 proposing to rectify the mistake of imposing of normal rate of tax i.e. 30% on additional income of Rs.5,34,060/- declared during the survey by the assessee company instead of at the rate of 60% u/s 115BBE r.w.s. 69C of the IT Act. However, after considering the reply of the assessee, the proceedings initiated u/s 154 of the IT Act were dropped. Subsequently, on 07.02.2024 Ld. PCIT, Nashik- 1 initiated proceedings u/s 263 of the IT Act and after considering the ITA No.1083/PUN/2024 4 reply of the assessee company, Ld. PCIT, Nashik- 1 passed order u/s 263 of the IT Act by observing as under :- “07. In the light of the detailed discussion made hereinabove, I am of the considered opinion that the assessment order passed u/s.143(3) of the Act for Assessment Year 2019-20 on 17.06.2021 by the then AO, is erroneous in so far as it is prejudicial to the interests of Revenue, because the assessment has been made not only without proper verification but also without applying the relevant provisions of the Act properly. Therefore, the provisions of section 263 of the I.T. Act, 1961 are hereby invoked and assessment order passed by the AO on the above issue is hereby set aside as mentioned in para 03 above. The AO is directed that the assessment order be framed afresh as per the provisions of law, after considering proper facts and submissions of the assessee on the issue set-aside herein above, after affording proper opportunity to the assessee within the time allowed under the Income- tax Act, 1961.” 4. It is this order against which the assessee is in appeal before this Tribunal. 5. Ld. AR appearing from the side of the assessee submitted before us that the order u/s 263 passed by Ld. PCIT Nashik-1 is unjustified. Ld. AR submitted before us that the Assessing Officer duly considered the statement recorded during the survey proceedings and the same was also reproduced in the body of assessment order, secondly the issue of additional income was discussed in detail and then only the Assessing Officer came to the conclusion that the additional income disclosed by assessee does not ITA No.1083/PUN/2024 5 fall in the category of income u/s 69C of the IT Act. Ld. AR further submitted that the expenses were duly recorded in the books of accounts and since there was difference in the expenses equal income was offered to tax as an additional income under the head business income. Accordingly, Ld. AR submitted before us that the finding of Ld. PCIT, Nashik- 1 that the assessment order is erroneous insofar as it is prejudicial to the interest of Revenue is not correct. In support of its contentions, Ld. AR relied on the decision passed by Coordinate Bench of this Tribunal in the case of Ashokkumar Kesherchand Pande vs. ACIT passed in ITA No.389/PUN/2023 order dated 31-07-2023 wherein it was held that the additional income offered during the survey was derived from business and therefore such income was not liable to be taxed under the provisions of section 115BBE of the IT Act. Ld. AR further relied on the decision passed in the case of Yash Construction Company vs. ACIT, ITA No.676 & 677/PUN/2024 order dated 31.07.2024 wherein identical issue was involved i.e. regarding assessee failed to prove sources of the expenditure which was declared during survey and the Assessing Officer made the addition u/s 69C r.w.s. 115BBE of the IT Act, however Coordinate Bench of ITA No.1083/PUN/2024 6 this Tribunal decided in favour of assessee and hold that income offered during survey was business income and required to be taxed at normal rate of tax. Accordingly, Ld. AR prayed before the Bench to set-aside the order u/s 263 of the IT Act passed by Ld. PCIT, Nashik-1. 6. Ld. DR appearing from the side of the Revenue relied on the order passed by Ld. PCIT, Nashik- 1 and requested to confirm the same. 7. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book and copy of case laws furnished by the assessee. In this regard, we find that the solitary issue before us is that whether Ld. PCIT, Nashik-1 was justified in initiating proceedings u/s 263 of the IT Act and directing the Assessing Officer to treat the additional income declared during survey u/s 69C r.w.s. 115BBE of the IT Act. In this regard, we find that the Assessing Officer dealt with the issue in the assessment order and came to the conclusion that the additional income was declared under the head business income and accordingly taxed the same at normal rate of tax instead of special rate u/s 115BBE of the IT Act. We also find that the proceedings u/s 154 of the IT Act ITA No.1083/PUN/2024 7 were also initiated on the same ground and after considering the reply of the assessee, the Assessing Officer dropped the 154 proceedings. However, we are not saying that if the proceedings u/s 154 were dropped on the same issue, Ld. PCIT, Nashik-1 cannot initiate proceedings u/s 263 of the IT Act but it is also fact that the Assessing Officer has applied his mind to the facts of the case and taken a decision which may not be correct according to Ld. PCIT, Nashik-1. Accordingly, we find that it is not the case that the Assessing Officer has not applied his mind to the facts of the case, admittedly the Assessing Officer has applied his mind and came to the decision. Therefore, we are of the considered opinion that Ld. PCIT, Nashik- 1 erred in holding that the Assessing Officer has not verified the facts of the case and has not applied his mind to the facts of the case. We further find that Ld. AR relied on the decisions passed by the Coordinate Bench of this Tribunal in the case of Yash Construction Co. (supra) & Ashokkumar Kesherchand Pande (supra) wherein it was held that the additional income disclosed during the survey was business income and was required to be taxed at normal rate instead of special rate as prescribed u/s 115BBE of the IT Act. Considering the totality of the facts of the ITA No.1083/PUN/2024 8 case and material produced before us and in the absence of any adverse material produced by Ld. DR, we are of the considered opinion that the order passed by the Assessing Officer cannot be said to be erroneous insofar as it is prejudicial to the interest of the Revenue, accordingly the order under section 263 of the IT Act passed by Ld. PCIT, Nashik- 1 is set-aside. Thus, grounds raised by the assessee are allowed. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 16th day of May, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 16th May, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT, Nashik-1. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "