RAJPAL SINGHAL,KARNAL V. PRINCIPAL COMMISSIONER OF INCOME TAX, ROHTAK

ITA 1565/DEL/2024

AI Insights

The case involves Rajpal Singhal, the appellant, who was accused of receiving accommodation entries totaling Rs.1,94,00,000 from M/s. Parth International, Prop. Shri Anuj Kumar Gupta. Initially, the AO reopened the case under section 148 of the Act and issued notices under section 142(1) for detailed enquiries. Although the AO accepted the assessee's explanations and made no additions to the income, the PCIT later invoked revisional powers under section 263, deeming the AO's order as erroneous and prejudicial to the revenue. The Tribunal supported the PCIT's decision, emphasizing the need for thorough verification in such cases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47110 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Other Referred Cases: PCIT vs. Shri P.Narasimha Reddy in ITTA No.97 of 2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: AJAY KUMAR JAIN; CHARTERED ACCOUNTANT
• Keywords: Reassessment proceedings; Accommodation entries; Prejudicial to interest
• Section: 147; 148; 143(3); 142(1); 143(2); 263; 2(A)

Judgement Text

" आयकर अपीलीय अिधकरण िदʟी पीठ “एफ”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं डॉ मीठा लाल मीना, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & DR. MITHA LAL MEENA, ACCOUNTANT MEMBER आअसं.1565/िदʟी/2024(िन.व. 2013-14) ITA No .1565/DEL/2024 (A.Y.2013-14) Rajpal Singhal, 361, Diwan Colony, Karnal, Haryana 132001 PAN: AGOPS-0904-P ...... अपीलाथᱮ/Appellant बनाम Vs. Principal Commissioner of Income Tax, Aayakar Bhawan, Rohtak, Haryana 124001 ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : Shri Ajay Kumar Jain, Chartered Accountant, ŮितवादीȪारा/Respondent by : Ms. Harpreet Kaur Hansra, Sr.DR सुनवाई कᳱ ितिथ/ Date of hearing : 08/01/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 07/04/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Principal Commissioner of Income Tax, Rohtak (hereinafter referred to as 'the PCIT') dated 28.03.2024, passed u/s. 263 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’). 2. Shri Ajay Kumar Jain, appearing on behalf of the assessee submits that the case of assessee was reopened u/s. 148 of the Act to examine alleged accommodation entry aggregating to Rs.1,94,00,000/- taken by assessee from M/s. Parth International, Prop. Shri Anuj Kumar Gupta. During assessment 2 ITA NO.1565/DEL/2024 (A.Y.2013-14) proceedings u/s. 147 r.w.s. 148 of the Act, the Assessing Officer (AO) had issued notice u/s. 142(1) of the Act dated 22.02.2022 along with questionnaire making specific enquiries with regard to receipts of Rs.1,94,00,000/- from M/s. Parth International. The assessee furnish detailed reply to the said notice on 10.03.2022. The Assessing Officer after being satisfied with the reply furnished by the assessee, made no addition in the assessment order. Thereafter, the PCIT invoked revisional powers u/s. 263 of the Act to re-examine the issue, which was already examined by the Assessing Officer in reassessment proceedings. Once the issue has been examined in proceedings u/s. 148/147 of the Act, it is not open for re-examination under revisional proceedings. To support his contention, the AR of the assessee placed reliance on the decision in the case of PCIT vs. Shri P.Narasimha Reddy in ITTA No.97 of 2019 decided on 15.03.2019 by Hon’ble Telangana and Andhra Pradesh High Court. 2.1. The ld. AR submitted that the assesse is engaged in trading of rice. During the period relevant to assessment year under appeal the assessee sold rice through commission agent M/s. Parth International, Prop. Anuj Gupta. The assessee has declared sales in his books of account, once the income from sale of rice has been offered to tax, no further addition can be made. The ld. AR further submitted that the PCIT without making enquiries has referred the matter to AO for passing a fresh assessment order, which is against the spirit of section 263 of the Act. The power to initiate revisional proceedings can be exercised only if twine conditions of: (i) the order passed by the AO is erroneous and; (ii) prejudicial to the interest of revenue, are satisfied. In the instant case PCIT has failed to show that the assessment order passed u/s. 147 r.w.s. 144B of the Act is erroneous. Hence, the ld. AR prayed for quashing of the impugned order. 3 ITA NO.1565/DEL/2024 (A.Y.2013-14) 3. Per contra, Ms. Harpreet Kaur Hansra representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR pointed that a perusal of the assessment order dated 29.03.2022 would show that the AO vide notice u/s. 142(1) dated 20.12.2021 had requisitioned various documents from the assessee. The assessee furnished partial information. Since, the assessment was approaching time-barring period, the AO completed the assessment admitting the returned income. The assessment order has been passed without proper enquiries and is a fit case for PCIT to exercise revisional jurisdiction u/s. 263 of the Act. 4. Both sides heard, orders of the authorities below examined. Undisputedly, the case of the assessee for impugned assessment year was reopened to examine alleged accommodation entries received by the aassessee from M/s. Parth International, Prop. Anuj Kumar Gupta. A perusal of the documents placed on record by the assessee shows that the Assessing Officer had issued notice u/s. 142(1) of the Act on 22.02.2022 asking the assessee to furnish (i) ledger account of M/s. Parth International as appearing in his books for Financial Years 2011-12, 2012-13 and 2013-14; (ii) evidences, bills, weigh bills, transportation bills, etc. to support the claim that the assessee sold rice to M/s. Parth International; (iii) VAT returns for Financial Year 2011-12, 2012-13 and 2013-14; (iv) details of bank account held by the assessee; (v) bank account statements of assessee for Financial Year 2012-13 and (vi) assessee ledger account as appearing in the books of M/s. Parth International for Financial Years 2011-12, 2012-13 and 2013-14. The assessee has placed on record reply dated 10.03.2022 whereby following documents were purportedly furnished by the assessee to AO:- 4 ITA NO.1565/DEL/2024 (A.Y.2013-14) 1. Copy of ledger account of M/s Parth International in the books of the assesse for FY 2012-13 relevant to AY 2013-14 are enclosed. 2. Copy of sale bills, vouchers and weigh bills raised by the assesse against consignment sale are enclosed. The transaction is duly recorded in the books of account and proper stock register is being maintained for this purpose. 4. Copy of VAT return of the asessee for FY 2012-13 Copy of assessment order for FY 2012-13. 5. Copy of bank statement of M/s Sheeba International for FY 2012-13. 6. That the copy of ledger account of M/s Parth International in the books of the assesse for FY 2012-13 has already been submitted in para 1 above. 5. However, no documentary evidence was furnished by the assessee to substantiate that the reply dated 10.03.2022, along with documents mentioned in the said reply were uploaded/furnished by the assessee before the AO. Here, it would be relevant to mention that the AO in the assessment order dated 29.03.2022, has categorically observed that the assessment is being completed in the absence of complete documents, the assessee has not uploaded complete books of account and bank account statement. The relevant extract of the findings of the AO reads as under:- “4. Notices u/s.142(1) / 143(2) were issued and assessee partly uploaded information. The information requisitioned u/s.142(1), dt.20-12-2021; but, not completely submitted includes the following :- a) the assessee was required to upload books of account. However, he uploaded some of the ledger accounts only but complete books not uploaded; b) part period bank account statements were sent. 5 ITA NO.1565/DEL/2024 (A.Y.2013-14) 5 Further, the assessee sought cross-examination of witness; which could not be provided due to paucity of time and technicalities as this is a time barring assessment, by 31-3-2022. 6 The assessment is completed u/s. 143(3) r.w.s.147 / 144B, on an income of Rs. 14,52,070/- as admitted in the return of income (as this is time barring assessment)” 6. Thus, from a bare perusal of assessment order it is evident that the complete details/documents as requisitioned by the Assessing Officer were not made available to him by the assessee. In the absence of relevant documents the AO failed to make necessary enquiries/verifications which he ought to have made before passing the assessment order, yet he accepted the income returned by the assessee. It is a well established principle that revisionary powers u/s. 263 of the Act can be involved only, if the twin conditions set out in section 263 of the Act are satisfied i.e. (i) order of the AO is erroneous, and (ii) must also be prejudicial to the interest of the Revenue. In the instant case we find that the CIT(A) has rightly exercised revisional powers, as both the conditions are satisfied. The AO on one hand is writing that complete documents were not furnished by the assessee and on the other accepted returned income without verification of documents. This makes the order erroneous and prejudicial to the interest of revenue. The CIT(A) while passing the order u/s. 263 of the Act has invoked the provision of section 263 read with explanation 2 inserted by the Finance Act 2015 w.e.f. 01.06.2015. Explanation 2(a) in an unambiguous manner states that where the order is passed without making enquiries or verification which should have been made, the same shall be deemed to be erroneous and in so far as it is prejudicial to interest of revenue. Considering entire facts of the case and documents on record, we find no infirmity in the impugned order. The PCIT has 6 ITA NO.1565/DEL/2024 (A.Y.2013-14) exercised revisional jurisdiction in a valid and justified manner. Hence, impugned order is upheld and appeal of the assessee is dismissed being devoid of any merit. Order pronounced in the open court on Monday the 07th day of April, 2025. Sd/- Sd/- (DR. MITHA LAL MEENA) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी / Delhi, ᳰदनांक/Dated 07/04/2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "