Case Law Details
The Chhattisgarh High Court recently delivered a significant ruling in ACIT Vs Sun and Sun Inframetric Pvt. Ltd., examining the revisionary jurisdiction of the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act. The central point of discussion was whether the PCIT can exercise its jurisdiction based on material not confronted to the assessee.
Analysis:
The court observed that Section 68, invoked by the PCIT, is applicable for sums credited in the books of an assessee in a specific previous year and can be charged as income if the assessee cannot explain the source or if their explanation is unsatisfactory. However, it was found that the amount in question was received in earlier assessment years and not the year under consideration.
The court also pointed out that the order by the PCIT suffered from a lack of opportunity for the assessee to present their case, indicating a violation of the principles of natural justice. The PCIT had made observations without providing the assessee a chance to counter them, rendering the process defective.
Further, the Tribunal found no evidence to question the correctness of the assessee’s books of account. They maintained that the transactions were recorded properly, and no anomalies were identified to doubt the entries or the valuation, leading them to rule in favor of the assessee.
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