Principal Commissioner of Income Tax 2 V. Shree Gayatri Associates

TAXAP/270/2018

AI Insights

The case revolves around the revisionary powers of the Commissioner of Income Tax under Section 263 of the Income-tax Act, 1961, concerning an assessment order passed by the Assessing Officer (AO) after a search operation on Shree Gayatri Associates, a real estate developer. Following the search, unaccounted income was disclosed, which the AO assessed. The Commissioner later found this assessment to be erroneous and prejudicial to the interests of the Revenue, leading to a revision under Section 263. However, the Tribunal reversed this decision, noting that the AO had indeed conducted detailed inquiries, contrary to the Commissioner's claims. The High Court upheld the Tribunal's decision, dismissing the appeal by the Commissioner.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 817229 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 03-04-2018
• Assessment Year: misc
• Other Referred Cases: Deniel Merchants Private Limited & Ors. vs. ITO & Ors., Malabar Industrial Co. Limited [243 ITR 83]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: MAUNA BHATT
• Keywords: Assessment Order; Income Tax; Jurisdiction; On-money receipts; Revision
• Section: 263; 268

Judgement Text

"C/TAXAP/270/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 270 of 2018 ============================================================= PRINCIPAL COMMISSIONER OF INCOME TAX 2 Versus SHREE GAYATRI ASSOCIATES ============================================================= Appearance : Mrs MAUNA M BHATT, Advocate for the PETITIONER ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 3rd April 2018 ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad Bench dated 31st August 2017 raising following questions of law : [1] “Whether the order of the Appellate Tribunal cancelling the order of CIT under Section 268 of the Act is per verse as it has relied on irrelevant material and ignored relevant material and by assuming wrong fact that the AO had fully examined the impounded material ?” [2] “Whether the Appellate Tribunal was justified in law and on facts in holding that the Principal CIT cannot assume jurisdiction under Page 1 of 4 C/TAXAP/270/2018 ORDER Section 263 of the Act, if there was any inquiry conducted by the Assessing Officer on an issue, even if the inquiry so made was inadequate and/or not proper ? The issue is no more re integra in view of the decision of Apex Court in the case of Deniel Merchants Private Limited & Ors. vs. ITO & Ors. [SLP No.23976/2017] ?” [3] “Whether the Appellate Tribunal erred in law and on facts by not appreciating the fact that the AO had passed the said assessment order without application of mind, and therefore, CIT had correctly assumed jurisdiction under Section 263 of the Act and such decision of PCIT is fortified by the decision of Supreme Court in the case of Malabar Industrial Co. Limited [243 ITR 83] ?” As can be seen from the questions framed, the issue pertains to exercise of power by the Commissioner under Section 263 of the Income-tax Act, 1961 [“the Act” for short] revising the order of the Assessing Officer. Assessee is a developer of real estate and was subjected to search operations, during which certain unaccounted income was disclosed. This disclosure was persisted in the return filed by the assessee, pursuant to such search operations. The Assessing Officer passed an order of assessment dated 26th March 2013 for AY Page 2 of 4 C/TAXAP/270/2018 ORDER 2010-2011, assessing assessee’s total income at Rs. 1.69 Crore [rounded off] as against the returned income of Rs. 85.16 lacs [rounded off]. The Commissioner, however, was of the opinion that such order of assessment was erroneous and prejudicial to the interest of Revenue. He, therefore, exercised power of revision flowing from Section 263 of the Act. Under such revision order, he held and observed that the Assessing Officer had failed to carry out proper inquiries with respect to assessee’s on-money receipts. The assessee carried the issue before the Tribunal. The Tribunal, by the impugned judgment, reversed the order of Commissioner. In such judgment, the Tribunal observed that in the order of assessment, the Assessing Officer had raised multiple queries calling upon the assessee’s response. The Tribunal was of the opinion that the Assessing Officer had carried out detailed inquiries. The Commissioner was incorrect in holding that no inquiries were carried out. The revisional powers, therefore, could not have been exercised. We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Page 3 of 4 C/TAXAP/270/2018 ORDER Officer had carried out detailed inquiries which includes assessee’s on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 4 of 4 "