SHILPA TANUJ PUGALIA,AHMEDABAD V. THE PR. CIT, CENTRAL, AHMEDABAD

ITA 741/AHD/2024

AI Insights

The case involves an appeal by Shilpa Tanuj Pugalia against the order of the Principal Commissioner of Income Tax (PCIT), which was passed under Section 263 of the Income-tax Act, 1961. The PCIT had revised the assessment order for the Assessment Year 2014-15, claiming it was erroneous and prejudicial to the interest of the revenue because the Assessing Officer had not made necessary additions related to accommodation entries received by the assessee. The Tribunal, however, found that the assessee had not been properly notified of the hearing, leading to a violation of the principles of natural justice, and thus allowed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126628 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.N. DSOUZA
• Assessee Lawyers: TUSHAR HEMANI
• Keywords: Revised return; Accommodation entries; Revision of order; Grounds of appeal; Principal; HRA; Commissioner; Commissioner of Income Tax; Deleted; Department; Explanation; Legal and bad in law
• Section: 147; 148; 263

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No. 741/Ahd/2024 (Assessment Year: 2014-15) Shilpa Tanuj Pugalia, D-1004, Asavari Towers, B/h. Karnawati Bunglows, Nr. Ramedevnagar Chokdi, Ahmedabad-380015 [PAN : AHFPP 6298 P] Vs. Principal Commissioner of Income Tax, (Central), Ahmedabad (Appellant) .. (Respondent) Appellant by : Shri Tushar Hemani, Sr. Advocate & Shri Parimalsinh B. Parmar, AR Respondent by: Shri R.N. Dsouza, CIT(DR) Date of Hearing 13.03.2025 Date of Pronouncement 23.04.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal filed by the assessee is directed against the order passed by the learned Principal Commissioner of Income-Tax, (Central), Ahmedabad [herein-after referred to as “PCIT”] dated 29.03.2024, in exercise of her revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year (AY) 2014-15. 2. The Assessee has taken following grounds of appeal :- “1. The Ld. PCIT has grossly erred in law and on facts in assuming jurisdiction u/s.263 of the Act on the erroneous ground that the ITA No. 741/Ahd/2024 Shilpa Tanuj Pugalia Vs. PCIT Asst. Year : 2014-15 - 2– impugned assessment order is erroneous in so far as it is prejudicial to the interest of the revenue. 2. The Ld. PCIT has grossly erred in not appreciating that in order to invoke s.263, two conditions must be fulfilled viz. the impugned assessment order must be erroneous and that error must be prejudicial to the interest of the revenue. In the present case, Ld. AO has passed the reasoned assessment order after analyzing all details and therefore there was no error in the impugned assessment order so as to justify action u/s.263 of the Act. Under the circumstances, the very assumption of power u/s.263 of the Act is unjustified and bad in law and therefore, order u/s.263 of the Act deserved to be quashed. 3. The subject order u/s. 263 passed by the Ld. PCIT is illegal and bad in law in absence of any finding of Ld. PCIT how the alleged error of AO has resulted in loss of revenue particularly when the identity and creditworthiness of the lenders and genuineness of the transaction has been duly established during the assessment proceedings. 4. The Ld. PCIT has further erred in law and on facts in not appreciating that the view taken by the Ld. AO is a possible view and hence the proceedings are illegal and bad in law. 5. The Ld. PCIT has further erred in law in not coming to any concrete conclusion and without conducting any inquiry or investigating the issue, merely directed the AO to frame the assessment order afresh. Without there being any positive finding about order being erroneous and prejudicial to the interest of the revenue, the action of Ld. PCIT is without jurisdiction and illegal and hence deserves to be deleted. 6. The Ld. PCIT has erred in not considering various facts, submissions, explanations and clarifications as given by the ITA No. 741/Ahd/2024 Shilpa Tanuj Pugalia Vs. PCIT Asst. Year : 2014-15 - 3– appellant and further erred in not appreciating the facts and law in their proper perspective.” 3. The brief facts of the case are that the assessee, who is an individual, filed her return of income for the year under consideration on 31.07.2014 declaring total income of Rs. 63,21,444/-. The case was reopened u/s. 147 of the Act. Pursuant to reopening under section 147 of the Act, the assessee filed a revised return on 16.08.2021 declaring Rs. 63,21,450/-, and the assessment was completed on 18.03.2022 accepting the returned income. 4. The Ld. PCIT noted that based on the information available on record, the assessee had received accommodation entries amounting to Rs. 72,00,000/- from the Ashish Begwani Group and its associates, and had allegedly paid Rs. 2,10,000/- in cash @ 3% as commission to the entry provider. The Ld. PCIT also observed that the Assessing Officer had made no additions and accepted the return of income as filed by the assessee. He, therefore, issued a show-cause notice dated 16.03.2024 u/s 263 of the Act which reads as under:- “1. In this case Return of Income for A.Y. 2014-15 was filed on 31/07/2014 declaring total Income of Rs. 63,21,444/-. On the basis of information available with the Department, the case was reopened and notice under Section 148 was issued. Assessment under Section 147 was completed on 18/03/2022 by the Assistant Commissioner of Income-tax, Central Circle-1(3), Ahmedabad at Rs. 63,21,450/- i.e. accepting the returned Income. ITA No. 741/Ahd/2024 Shilpa Tanuj Pugalia Vs. PCIT Asst. Year : 2014-15 - 4– 2. As per the information available on record, the assessee was found to be a beneficiary of Rs. 72,00,000/- for accommodation entry taken from Ashish Begwani Group and its associates. It was also found that the assessee had paid Rs. 2,10,000/- i.e. at 3% as commission in cash to the accommodation entry provider. These amounts were required to be added to the income of the assessee. However, the AO has made no addition and accepted the Returned Income. 3. In view of the above, the assessment order passed u/s 147 of the IT Act, 1961 dated 18.03.2022 passed by the AO is prima facie both erroneous as also prejudicial to the interest of the revenue. Hence, revision proceedings u/s 263 of the Act are being initiated with a view to pass a suitable order. 4. Vide this letter, you are hereby given an opportunity to submit your reply, if any, through ITBA/email on or before 22/03/2024. In case you wish to avail personal hearing, you may attend in person or through your authorized representative on 22/03/2024 at 11.00 AM in my office at Room No. 317, Aayakar Bhawan, Ashram Road, Ahmedabad.” 5. Since the assessee failed to appear before the Ld. PCIT and did not file any submission or reply in response to the show-cause notice, the Ld. PCIT proceeded to pass an order u/s 263 of the Act holding that the assessment order passed by the Assessing Officer on 18.03.2022 was erroneous and prejudicial to the interests of the Revenue, as it was completed without conducting the necessary ITA No. 741/Ahd/2024 Shilpa Tanuj Pugalia Vs. PCIT Asst. Year : 2014-15 - 5– examination, verification, or enquiries regarding the accommodation entries received by the assessee. 6. Aggrieved by the order of the Ld. PCIT, the assessee is now in appeal before the Tribunal. 7. The Ld. AR submitted that the assessee has not received any notice of hearing purportedly issued by Ld. PCIT, Central, Ahmedabad on 16.03.2024 and an alert has been received on mobile only on 28.03.2024 (2:57 pm) and sought adjournment vide email dated 28.03.2024 (4:47 pm). The order u/s 263 has been passed on 29.03.2024. The facts reveal that the assessee was not in receipt of the notice issued. The Revenue could not bring any evidence contra. Hence, the order passed by the Ld. PCIT u/s 263 of the Act is hereby treated as nullity. 8. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 23.04.2025 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 23/04/2025 btk ITA No. 741/Ahd/2024 Shilpa Tanuj Pugalia Vs. PCIT Asst. Year : 2014-15 - 6– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …22.04.2024….. 2. Date on which the typed draft is placed before the Dictating Member …22.04.2024 3. Other Member… ……22.04.2024……………… 4. Date on which the approved draft comes to the Sr.P.S./P.S … ….22.04.2024…………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …23.04.2024... 6. Date on which the fair order comes back to the Sr.P.S./P.S …….23.04.2024……………. 7. Date on which the file goes to the Bench Clerk ….…23.04.2024…….…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "