PCIT Vs NYA International (Supreme Court of India)
Factual Background and Proceedings Before the High Court
M/s. Nya International filed its return of income for Assessment Year 2012-13 on 16.08.2012 declaring total income as NIL. The case was selected for scrutiny and an assessment order was passed under Section 143(3) of the Income Tax Act, 1961 on 25.03.2015. Information was subsequently received from DDIT (Ivn) Unit-7(2), Mumbai that the assessee maintained bank account no. 550011032480 with ING Vysya Bank containing credit entries of Rs.70,13,43,319/-, which had not been disclosed in the return. The assessee had also claimed exemption under Section 10AA of Rs.87,21,44,414/-. The case was reopened under Section 147 by issuing notice under Section 148, and an order was passed on 31.12.2019 making a disallowance of Rs.87,21,44,414/-.
Read HC Judgment in this case: Subjective Difference Insufficient for Section 263 Revision: Gujarat HC
The Principal CIT (Surat), exercising powers under Section 263, noticed that the assessee maintained three bank accounts, two with Allahabad Bank and one with ING Vysya Bank, which were not disclosed in the ITR for AY 2012-13. The Principal CIT considered that the Assessing Officer had not made the necessary inquiry and treated the assessment order as erroneous insofar as it was prejudicial to the interests of the Revenue. After issuing a show cause notice, the order dated 31.12.2019 was set aside with a direction to the Assessing Officer to reframe the assessment. The assessee challenged the revisional order dated 18.02.2022 before the Tribunal.
High Court Reasoning and Ruling
The Income Tax Appellate Tribunal, Surat held that the Assessing Officer had examined the two issues raised in the reopening under Section 147, namely the credit entry of Rs.70,13,43,319/- in the ING Vysya Bank account and the disallowance of deduction under Section 10AA of Rs.87,21,44,414/-. It found that the Assessing Officer had the bank statement when reopening the assessment, had examined the entries, considered the assessee’s reply and applied his mind while framing the assessment. The Tribunal therefore quashed the Section 263 order.
