Shhlok Triton Associates Vs PCIT (ITAT Surat)
ITAT Surat held that revisionary order passed by PCIT under section 263 of the Income Tax Act without providing adequate opportunity to the assessee to file relevant material evidences and documents before him is liable to be remanded back for fresh consideration of the matter.
Facts- Scrutiny assessment of the assessee firm u/s 143(3) of the Act was finalized on 09.12.2016 accepting the returned income shown by the assessee firm.
Later on, Ld. PCIT exercised his jurisdiction u/s 263 of the Act. On perusal of the scrutiny records, it was observed by ld PCIT that one of the reasons for selection of case under scrutiny was unsecured loans from the persons who have not filed their returns of income. During the year under consideration the assessee firm had obtained unsecured loans from the various parties.
It was noticed by ld PCIT that assessee-firm during the course of assessment proceedings had not furnished required documents and details and non-furnishing of requisite details and corroborative evidences indicates that the loan of Rs.77,00,000/- as above obtained from the above tabulated three parties cannot be considered as genuine. AO has not examined the genuineness of the loan transaction. Therefore, ld.PCIT issued a notice u/s 263 of the Act to the assessee. PCIT rejected the contention of the assessee and observed that assessment order passed u/s 143(3) of the Act for A.Y. 20 14-15 on 30.11.2016 is erroneous and prejudicial to the interest of revenue and therefore ld PCIT directed AO to recompute and determine the correct total income of the assessee-firm after making necessary disallowances of wrong claims made by the assessee-firm. Therefore, the assessment order u/s 143(3) was set-aside by ld PCIT with the direction to Assessing Officer to frame the assessment de novo.
Aggrieved, by the order of ld PCIT, the assessee has preferred the present appeal.
Conclusion- Held that PCIT has not provided adequate opportunity to the assessee to file relevant material evidences and documents before him during the revision proceedings and hence the revision order u/s 263 of the Act was passed by ld PCIT in hurry. Besides, ld PCIT has directed the Assessing Officer to frame the entire assessment afresh which is not acceptable, as the issue identified by ld PCIT was unsecured loan, and direction would have been given by ld PCIT only for examination of unsecured loan.
We note that assessee has not given sufficient opportunity of being heard and could not plead his case successfully before the ld. PCIT, hence it is a violation of principle of natural justice. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, we deem it fit and proper to set aside the order of the ld. PCIT and remit the matter back to the file of the ld. PCIT to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed.
FULL TEXT OF THE ORDER OF ITAT SURAT
By way of this appeal, the assessee has challenged the correctness of the order passed by the Learned Principal Commissioner of Income Tax-1,Surat (in short “ld. PCIT”] dated 26.03.2019, under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for assessment year 20 14-15.
2. Grounds of appeal raised by the assessee are as follows:
“1. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax has grievously erred in initiating the proceedings u/s 263 of the Act, 1961.
2. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax has grievously erred in assuming jurisdiction u/s263 of the Act, 1961.
3. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax has erred in violating the principles of natural justice by not the mentioning the grounds for initiating action u/s 263 of Income Tax Act, 1961 in the show cause notice issued. As such the order passed u/s 263 is void ab-initio. The action of the Ld. CIT was wholly unreasonable, uncalled for the bad in law.
4. On the facts and in the circumstances of the case as well as law on the subject, that the order of u/s 263 is merely ‘change in opinion’. The order u/s 143(3) of the Income Tax Act passed by the Ld AO does not in any way represent erroneous order. The action of the Ld. CIT was wholly unreasonable, uncalled for and bad in law.
5. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax has grievously erred in assuming that the Assessing Officer had not verified the unsecured loans during the course of proceeding and not made proper inquiry or verification finalized the order of assessment u/s 143(3) of the I.T. Act is contrary to the fact of the case.
6. On the facts and in the circumstances of the case as well as law on the subject, the entire proceedings are bad-in-law and invalid as assessment order u/s 143(3) of the Act for the same year were framed, wherein due inquiry was made.
7. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax has grievously erred in setting aside the assessment order framed u/s 143(3) of the I. T. Act without pointing out as to how the order is erroneous and prejudicial to interest of revenue.
8. It is therefore prayed that the above proposed proceedings may please be revoked as learned members of the Tribunal may deem it proper.
9. Appellant craves liberty to add, alter, or delete any of the ground(s) either before or in the course of the hearing of the appeal.”
3. Succinctly, the factual panorama of the case is that assessee before us is a firm and had filed return of income for A.Y. 2014-15 on 27.11.2014 declaring total income of Rs.2,32,06,770/-. During the year under consideration, the assessee firm was engaged in the business of builder, developers and construction activities. Scrutiny assessment u/s 143(3) of the Act was finalized on 09.12.2016 accepting the returned income shown by the assessee firm.
4. Later on, Ld. PCIT exercised his jurisdiction u/s 263 of the Act. On perusal of the scrutiny records, it was observed by ld PCIT that one of the reasons for selection of case under scrutiny was unsecured loans from the persons who have not filed their returns of income. During the year under consideration the assessee firm had obtained unsecured loans from the various parties including following
