No revision u/s 263 can be done on debatable Issue on applicability of provision of Section 115BBE of the Act to the relevant assessment year – ITAT
ABCAUS Case Law Citation:
ABCAUS 3810 (2023) (10) (ITAT
Important Case Laws relied upon by parties:
Balvinder Singh vs. PCIT
Yogesh Kumar vs. PCIT
In the instant case, the assessee had challenged the invocation by the Pr. CIT of revisionary provision of Section 263 of the Income Tax Act, 1961 (the Act) and applying the provisions of Section 115BBE of the Act.
A survey operation was held at the assessee’s business wherein the assessee voluntarily surrendered an amount and included the same in the return of income for The relevant Assessment Year.
The return of income was accepted by the Assessing Officer (AO) by assessment order passed u/s 143(3) of the Act.
However, PrCIT was of the view that the income surrendered by the appellant, during the survey proceedings shall not be considered as normal business income and is required to be taxed as per the special provisions.
Accordingly, using revisionary powers u/s 263, the PrCIT taxed the amount surrendered u/s 115BBE of the Act.
Before the Tribunal, the case of the assessee was that since the provision of Section 115BBE of the Act was brought into statue was introduced by way of Taxation Laws (Second Amendment) Act, 2016 and has become effective after the date of survey, therefore, the issue had become debatable and on debatable issue, the PCIT was not empowered to invoke revisionary provision of Section 263 of the Act.
It was also submitted that the AO had not made any addition either u/s 68 or u/s 69 of the Act. Therefore, provision of Section 115BBE of the Act charging higher rate of tax could not be applied to the surrendered amount of assessee, which was included in the return of income and taxes were also paid thereon.
It was argued that the assessment order on debatable issue cannot be alleged as erroneous and prejudicial to the interest of the Revenue.
The Tribunal observed that the sole basis of revising assessment order taken by the PCIT u/s 263 of the Act was that AO was failed to apply the provision of Section 115BBE of the Act on the surrendered amount. As per PCIT, the AO should have charged tax at maximum tax rate of 60% as prescribed u/s 115BBE of the Act on the amount surrendered during the survey proceedings.
The Tribunal further noted that it was also not undisputed that the AO had not made any addition either u/s 68 of the Act or Section 69 of the Act with respect to the surrendered amount which was already included by the assessee in his return of income. Also, PCIT had not specified any specific charging section under which charging section the AO should have treated the surrendered amount.
The Tribunal pointed out that nothing has been stated either in the pre-amended or in the post-amended provisions of section 115BBE of the Act that where the assessee surrendered undisclosed income during search action for the relevant year, the tax rate has to be charged as per provisions of Section 115BBE of the Act.
In view of the above, the Tribunal opined that the applicability of the amended provision of section 115BBE of the Act, which prompted the PCIT to assume jurisdiction u/s 263 of the Act is highly debatable issue, and therefore, the PCIT wrongly assumed jurisdiction u/s 263 of the Act and thus, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the Revenue by way of picking up the debatable issue.
Further the Tribunal opined that the facts and circumstances of the present case were quite similar and identical to the facts and circumstances of the findings of Co-ordinate Bench of ITAT relied upon by the assessee.
The Tribunal held that he PCIT was not correct and justified in invoking revisionary provision of Section 263 of the Act on debatable issue and the assessment order passed u/s 143(3) of the Act cannot be alleged as erroneous and prejudicial to the interest of Revenue.
Accordingly, the order of PCIT was quashed and grounds of assessee were allowed.
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