SHANMUGAM DHANALAKSHMI,RASIPURAM V. .ACIT, CENTRAL CIRCLE, SALEM

ITA 1533/CHNY/2024

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The case involves an appeal by Shanmugam Dhanalakshmi against the order of the PCIT, Chennai, which was passed under Section 263 of the Income-tax Act, 1961. The PCIT's order was based on findings from a survey operation under Section 133A conducted at the business premises of Dhanalakshmi, where undisclosed investments were admitted. The original assessment by the A.O did not fully address the sources of these investments, leading the PCIT to direct a re-assessment. The Tribunal dismissed the appeal, agreeing with the PCIT that the original assessment was lacking in necessary enquiries regarding certain gifts and savings claimed by the assessee, and that the undisclosed income should be taxed under Section 115BBE of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107058 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 21-05-2024
• Other Referred Cases: Varadharajaperumal Pradeepkumar v. ITO, Yogesh Kumar vs. PCIT, Smt. Renuka Philip vs. ITO, Intellinet Technologies India P. Ltd vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NILAY BARAN SOM
• Assessee Lawyers: T.S. LAKSHMI VENKATARAMAN
• Keywords: Gift; Revision of order; Prejudicial to interest
• Section: 263; 68; 69B; 133A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0019ी मनु क ुमा र िग\u001eर, \u0011ा ियक सद! एवं \u0019ी जगदीश, लेखा सद! क े सम' BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1533/Chny/2024 िनधा 9रण वष9 /Assessment Year: 2018-19 Shanmugam Dhanalakshmi, 4/210, Namakkal Road, Goundamapalayam, Rasipuram, Tamil Nadu – 636 002. Vs. The Asst. Commissioner of Income Tax, Central Circle, Salem. [PAN: ASLPD 1960D] (अपीलाथ\u0007/Appellant) (\b\tयथ\u0007/Respondent) अपीलाथG की ओर से/ Appellant by : Shri T.S. Lakshmi Venkataraman, FCA IJथG की ओर से /Respondent by : Shri Nilay Baran Som, CIT सुनवाई की तारीख/Date of Hearing : 18.09.2024 घोषणा की तारीख /Date of Pronouncement : 11.12.2024 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee is against the order of Learned Principal Commissioner of Income Tax, Chennai-2 [hereinafter “PCIT”] dated 27.02.2024 passed u/s. 263 of the Income- tax Act, 1961 (hereinafter “the Act”). 2. There is a delay of 24 days in filing the appeal by the assessee. The assessee has filed condonation petition/affidavit stating the ITA No.1533/Chny/2024 :- 2 -: reasons for delay in filing the appeal. We have considered the petition of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is condoned accordingly. 3. The only effective ground of appeal in this appeal of assessee is against the order of Ld. PCIT holding the order passed by the A.O erroneous and prejudicial to the interest of revenue and directing the A.O to modify the assessment order u/s. 263 of the Act . 4. The brief facts of the case are that the assessee is an individual and partner in M/s. Shri Rasi Mahal and M/s. Sree Balaji Enterprises. A survey operation u/s. 133A of the Act was conducted in the business premises of M/s. Shri Rasi Mahal and M/s. Sree Balaji Enterprises on 31.01.2018. The assessee during survey has admitted undisclosed investment in cash of Rs. 1.10 Cr in M/s. Shri Rashi Mahal. However the assessee in the return of income filled on 26.10.2018 admitted undisclosed income of Rs.64,00,000/- only. The A.O in the assessment order passed u/s 147 has made addition of Rs.35,90,000/- of gift from her husband u/s. 69B of the Act and assessed total income at Rs. 1,02,55,390/-. The Ld. PCIT has called ITA No.1533/Chny/2024 :- 3 -: for the record and found that the assessee has made cash investment of Rs. 1.10 Cr. in M/s. Shri Rasi Mahal and explained the source of investment as unexplained income of Rs. 64,00,000/- admitted in the return of income, Rs. 12,00,000/- from own savings, gift of Rs.3,21,450/- from her father and gift of Rs. 35,90,000/- from her husband. The A.O in the assessment order has only made addition of gift from husband of Rs 39,50,000 u/s 69B of the Act and has not made any enquiry in respect of gift of Rs. 3,21,450/- from her father and her own savings of Rs.12,00,000/-. The A.O has also not computed the tax on admitted undisclosed income of Rs. 64,00,000/- as per Section 115BBE of the Act. The Ld. PCIT therefore, held the order erroneous and prejudicial to the interest of revenue and directed the A.O to modify the assessment by making necessary enquiry and verification and apply the provisions of Section 68 r.w.s 115BBE of the Act and tax the assessed income as per deeming provisions. 5. The Ld. Authorized Representative (A.R) of the assessee before us has submitted that the Ld. PCIT has not specified the provision for taxing of Rs.64,00,000/- and has not stated any justification for invoking provisions of Section 68 of the Act. The Ld. AR also submitted that the assessee does not maintain books of accounts ITA No.1533/Chny/2024 :- 4 -: therefore, mandatory requirement for Section 68 of the Act is not satisfied and relied on the decision of Hon’ble Jurisdictional High Court in the case of Varadharajaperumal Pradeepkumar v. ITO in WP No.10721 of 2021 dated 06.03.2024 (Mad.). The Ld. AR has also relied on the order of ITAT, Delhi Bench in the case of Yogesh Kumar vs. PCIT in ITA No.589/Del/2022 for A.Y 2017-18 dated 30.08.2023 (Del-Trib.). The Ld. AR has further submitted that appeal has been filled before the Ld. CIT(A) against the assessment order being revised therefore, the Ld. PCIT does not have jurisdiction u/s. 263 of the Act while larger matter is pending before first appellate authority and relied on the decision of Hon’ble Madras High Court in the case of Smt. Renuka Philip vs. ITO 409 ITR 567 (Mad.). 6. The Ld. Departmental Representative (DR), on the other hand, relied on the order of Ld. PCIT and argued that the A.O has not made necessary verification in respect of certain income disclosed during survey therefore, as per Explanation 2 to Section 263 of the Act, the order of Assessing Officer is erroneous and prejudicial to the interest of revenue. ITA No.1533/Chny/2024 :- 5 -: 7. We have heard the rival submissions, and perused the materials available on record. The assessee has made cash investment of Rs.1.10 Cr. in M/s. Shri Rasi Mahal and admitted the same as undisclosed income during survey proceeding u/s 133A of the Act. The assessee during assessment proceeding has explained the source of cash investment as Rs.12,00,000/- from her own savings, gift of Rs.3,21,450/- from her father and gift of Rs. 35,90,000/- from her husband and Rs. 64,00,000/- as unexplained income offered in the return of income filed on 13.08.2018. The A.O has made addition of gift of Rs. 35,90,000/- received from her husband u/s. 69B of the Act and accepted the explanation of own savings of Rs.12,00,000/- and gift from her father of Rs.3,21,450/-. The Ld. PCIT found that the A.O has not made enquiry and verification about gift of Rs.3,21,450/- from her father about genuineness and capacity of donor. The Ld. PCIT has also found that A.O has not made enquiry about savings of Rs.12,00,000/-, therefore held the order passed by A.O erroneous and prejudicial to the interest of revenue. As regard to unexplained income of Rs. 64,00,000/- offered in the return of income, the Ld. PCIT has held that the same should be taxed under the provisions of section 115BBE of the Act. ITA No.1533/Chny/2024 :- 6 -: 8. As per Explanation 2 to Section 263 of the Act, an order passed by the A.O shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Pr. Commissioner or Commissioner, the order is passed without making enquiry or verification which should have been made. The Ld. PCIT in respect of gift from her father of Rs.3,21,450/- and own savings of Rs.12,00,000/- has found that the assessment order was passed without making enquiries or verification which should have been made and therefore, held the order erroneous and prejudicial to interest of revenue. We do not find any infirmity in the order of Ld. PCIT in these respects. As regard to the jurisdiction issue u/s 263 of the Act and the arguments of the Ld. AR that the assessee has filed an appeal against the assessment order and the same is pending before Ld CIT(A), we find that the issues for which assessment order has been held to be erroneous, are not subject matter of appeal before Ld. CIT(A). Therefore, as held by Special Bench of ITAT, Bengaluru in the case of Intellinet Technologies India P. Ltd vs. ITO 5 ITR (Trib.) 96 (Bang.), the Ld. PCIT has jurisdiction u/s. 263 of the Act. The case laws relied on by the assessee are not applicable to the facts of the present case. We accordingly, uphold the order of Ld. PCIT holding the order of A.O erroneous and prejudicial to the interest of revenue. In view of the ITA No.1533/Chny/2024 :- 7 -: above, the Ld. A.O is directed to pass assessment order as per the provisions of Act after making necessary enquiry and verification as directed by the Ld. PCIT. 9. In the result, the appeal filed by the assessee is dismissed. Order pronounced on 11th December, 2024. Sd/- Sd/- (मनु क ुमार िग\u001eर) (Manu Kumar Giri) \u0011ाियक सद! / Judicial Member (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 11th December, 2024. EDN/- आदेश क\u0019 \bितिल\u001cप अ\u001dे\u001cषत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b\tथ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "