PRITHVIRAJ SANWATRAJ KANKARIYA (HUF),AHMEDABAD V. THE PCIT, AHMEDABAD -1, AHMEDABAD

ITA 1786/AHD/2024

AI Insights

The case revolves around an appeal by Prithviraj Sanwatraj Kankariya (HUF) against the order of the Principal Commissioner of Income Tax, Ahmedabad-1, which revised the assessment order for the Assessment Year 2017-18. Initially, the National Faceless Assessment Centre accepted the income declared by the assessee. However, the PCIT later invoked Section 263, claiming the assessment was erroneous and prejudicial to the interest of the revenue, primarily due to unverified on-money transactions related to property purchases. The Tribunal's decision highlighted the lack of proper examination and consideration of the documents and evidence presented by the assessee during both the original assessment and the subsequent proceedings under Section 263.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312500 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. NANDAKUMAR
• Assessee Lawyers: VARIS ISANI
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained investment; Principle of natural justice
• Section: 147; 148; 263

Judgement Text

"ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF) vs. PCIT Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF), 102, New Cloth Market, Outside Raipur Gate Sarangpur, Kalupur, Ahmedabad – 380 002. [PAN – AABHK 2862 D] Vs. The Principal Commissioner of Income Tax, Ahmedabad -1. Aaykar Bhavan, Income Tax Circle, Navrangpura, Ahmedabad – 380 014. (Appellant) (Respondent) Assessee by Shri Varis Isani, Advocate Revenue by Shri V. Nandakumar, CIT-DR Date of Hearing 13.03.2025 Date of Pronouncement 01.05.2025 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER: This appeal is filed by the Assessee against order dated 19.03.2024, passed by the Principal Commissioner of Income Tax, Ahmedabad-1 for the Assessment Year (A.Y.) 2017-18 2. The Assessee has raised the following grounds of appeal: “1. The Lrd. Principal Chief Commissioner of Income Tax Ahmedabad-1 (for short \"Assessing Officer - A.O.\")- has erred in passing the order u/s. 263 of the Income Tax Act wherein there was no error in the order passed by the assessing ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF) vs. PCIT Page 2 of 6 authority u/s.147 r.w.s. 144B of the Income Tax Act for A.Y. 2017-18 the assessing officer, National Faceless Assessment Centre, New Delhi added income of Rs.51,14,000/-, 2. The Lrd. Principal Chief Commissioner of Income Tax Ahmedabad-1 has grievously erred in law in non-accepted the assessment order passed u/s. 147 r.w.s 144B by the National Faceless Assessment Centre Delhi and erroneously exercised powers u/s. 263 of the Income Tax Act added amount of Rs.51,14,000/- in return of income.3. 3. The Lrd. Principal Chief Commissioner of Income Tax Ahmedabad-1 has grievously erred in law in not considering the assessment order passed by the National Faceless Assessment Centre Delhi and rejected all documents and evidences present before the assessing authority (NFAS- Delhi) and written submission made during the course of proceedings u/s.263 of the Income Tax Act and added total income of Rs.51,14,000/- by passing the order u/s.263 of the Income Tax Act in the assessment order is highly unjustifiable, unwarranted and bad in law. 4. The Lrd. Principal Chief Commissioner of Income Tax Ahmedabad-1 erroneously issued the notice u/s.263 for revision of the assessment proceedings is without any legal stand and bad in law. In absence of any erroneous order and iota of evidence which is prejudicial to the interest of revenue, the action of the Lrd. PCIT for issuing notice and proceeding u/s.263 of the Income Tax Act is highly unjustifiable and unlawful. 5. The Lrd. PCIT has erred in fact and in circumstances of the case and in law in holding that the Lrd. AO has not verified the details pertaining to the amount paid towards purchase of property and hence the assessment order is erroneous and prejudicial to the interest of revenue. The action of the Lrd. PCIT is unwarranted and bad in law. 6. The order passed by the Lrd. PCIT may please be held as in violation of principle of natural justice as no proper opportunity of being heard was given to the assessee before passing the order. ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF) vs. PCIT Page 3 of 6 7. The appellant craves leave to add, alter, vary, omit, withdraw or amend any of the grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal so as to enable the Hon’ble ITAT to decide this appeal according to law.” 3. The return of income for the Assessment Year (A.Y.) 2017-18 was filed on 04.10.2017 declaring total income of Rs.26,34,830/-. The case was reopened and notice under Section 148 of the Income Tax Act, 1961 was issued to the assessee on 30.03.2021. The order under Section 147 read with Section 144B of the Act has been passed on 26.03.2022 determining total income at Rs.26,34,830/- by accepting the income declared in the return of income. The Assessing Officer observed that the assessee paid cash of Rs.51,14,000/- in the form of on-money to M/s. Navratna Organizers & Developers Private Limited. Despite specific reason for reopening, the faceless Assessing Officer has not made any addition as per the observation made by the PCIT. Therefore, a notice under Section 263 of the Act dated 14.02.2024 was issued to the assessee, requiring the assessee to show cause as to why the order under Section 147 read with Section 144B of the Act dated 26.03.2022 should not be revised. The assessee submitted the reply. The PCIT observed that the assessee has paid on-money of Rs.51,14,000/- to M/s. Navratna Organizers & Developers Private Limited against the purchase of immovable property over and above the document value during the year under consideration. The total amount has been found as unaccounted money and the Assessing Officer should have made addition of Rs.51,14,000/- treating as unexplained investment. The PCIT thus invoked the revisionary powers under Section 263 of the Act held that the Assessing Officer has erred in making addition of Rs.51,14,000/- being unexplained investment paid to Navratna Group in the form of on- ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF) vs. PCIT Page 4 of 6 money and the Assessment Order passed under Section 147 read with Section 144B of the Act is erroneous and prejudicial to the interest of Revenue and, therefore, set aside the said order dated 26.03.2022 and directed the Assessing Officer to pass a fresh Assessment Oder. 4. The assessee was aggrieved by the order under Section 263 of the Act and thus filed the present appeal. 5. There is a delay of 49 days in filing the present appeal for which the assessee has filed condonation of delay application thereby explaining that local Consultant of the assessee was not aware about further proceedings against the order passed by the PCIT and kept the order for almost 4 months. The reason appears to be genuine and hence the delay is condoned in filing the present appeal. 6. The Ld. AR submitted that the PCIT rejected all the documents and evidences presented before the Assessing Officer and has not taken cognizance of the said documents during the proceedings under Section 263 of the Act. The assessee is HUF and filed original return of income on 04.10.2017 declaring total income of Rs.26,34,830/- and the assessee filed necessary documents and evidences before the Assessing Officer and submitted documents for purchase of property as well as payment made of Rs.51,14,000/- to the Developers. The Assessing Officer at the stage of assessment under Section 147 of the Act has verified all the documents and evidences and, after verifying the said documents and evidences as well as submissions of the assessee, has accepted the addition and the Assessing Officer also accepted the same. Though the PCIT held that the Assessing Officer passed the Assessment Order without making proper examination of the issues in the assessee’s case, the Assessing Officer has taken cognisance of the purchase of property ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF) vs. PCIT Page 5 of 6 documents as well as copy of payments to the Developers during the assessment stage (proceedings under Section 147 of the Act). Thus, the Assessment Order is passed properly and no prejudice is caused to the Department. The Ld. AR further submitted that the assessee claimed that all the documents made to M/s. Navratna Organizers & Developers Private Limited were through cheques, out of total payment of Rs.1,09,80,739/- paid sum of Rs.14,45,899/- during the Financial Year 2016-17 by cheque and out of which the assessee got refund of Rs.5,10,000/- by cash but no cash payment was made to M/s. Navratna Organizers & Developers Private Limited. Thus, the Ld. AR submitted that the invocation of Section 263 of the Act is not justifiable. 7. The ld. DR submitted that the Assessing Officer should have asked the details of the amount paid by the assessee at the time of booking of property purchase. But, the purchase of immovable property over and above the document value during the year under consideration was not at all asked by the Assessing Officer and hence the Assessment Order is prejudicial to the interest of the Revenue and is erroneous. The Ld. DR relied upon the order of the PCIT passed under Section 263 of the Act. 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee, at the time of assessment, has given the details of the payment schedule to M/s. Navratna Organizers & Developers Private Limited and ledger with supporting invoice as well as Bank statement and sale deed. The Assessment Order has categorically mentioned in paragraph no.2.4 that the assessee’s claim that the assessee made payment to M/s. Navratna Organizers & Developers Private Limited through cheques and got refund of Rs.5,10,000/- in cash. These documents were before the Assessing ITA No.1786/Ahd/2024 Assessment Year: 2017-18 Prithviraj Sanwatraj Kankariya (HUF) vs. PCIT Page 6 of 6 Officer. The assessee has categorically submitted these documents before the PCIT as well, upon which, the PCIT has not commented. Therefore, the PCIT ignored the factual aspect related to the payment made to M/s. Navratna Organizers & Developers Private Limited and has not demonstrated on what basis the same forms on-money transaction and which part of the sale transaction was not verified by the Assessing Officer. Thus, invocation of Section 263 of the Act itself is not justifiable and hence appeal of the assessee is allowed. 9. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 1st May, 2025. Sd/- Sd/- (DR. BRR KUMAR) (SUCHITRA KAMBLE) Vice President Judicial Member Ahmedabad, the 1st May, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "