Plausible view taken by AO on surrender made by assessee not open to revision u/s 263 of the Income Tax Act – ITAT
In a recent judgment, ITAT Jaipur has held that plausible view taken by Assessing Officer of surrender made by assessee not open to revision u/s 263 for not making addition under Section 68, 69 & 69A of the Income Tax Act, 1961.
ABCAUS Case Law Citation:
4200 (2024) (08) abcaus.in ITAT
Important Case Laws relied upon:
Hema Raman vs. PCIT
In the instant case, the appellant assessee(s) had challenged the order passed by the Principal Commissioner of Income Tax (PCIT) u/s 263 of the Income Tax Act, 1961 (the Act).
The assessee was engaged in the business of Wholesale and retail trading of tiles and sanitary items. A Survey action u/s 133A of the Act was carried out at the business premises of the assessee firm. Later, the case was selected for compulsory scrutiny, being a survey case, as per prevalent CBDT guidelines for selection of cases under compulsory scrutiny.
The assessee cooperated in the assessment proceedings, attended, and filed requisite details. During survey, the assessee surrendered amount on account of valuation of excess construction in the show room, excess stock and unaccounted receipts.
While completing the assessment, the AO made additions to the income towards the amount surrendered.
After completion of the assessment proceedings, the PCIT called for assessment records for examination as per provisions of section 263 of the Act. On verification of the assessment records, it was found that the income offered by the assessee / added in the assessment proceeding were in the nature of 69 and 69A of the Act and should have been brought to tax at special rate specified u/s 115BBE of the Act.
Thus, PCIT held that the assessment was framed u/s 143(3) of the Act without verification with respect to undisclosed income offered by the assessee, covered by the provisions of section 69 & 69A r.w.s. 115BBE of the Act, and as such erroneous and causing prejudice to the interest of revenue.
The Tribunal observed that the Assessing Officer had asked the assessee to give details of the disclosure made by the assessee and get the same verified from the income tax return filed by the assessee. The Assessing Officer not only verified the details of that amount disclosed by the assessee, but had also went on examining the correctness of the disclosure.
The Tribunal further noted that there were three disclosure statements made by the assessee. In one of the surrender the addition was made of enhanced amount whereas, in two cases, addition was made of lesser amount. Therefore, exchange of information by the assessee and its verification by the Assessing Officer did appear in the body of the assessment order.
The Tribunal opined that there was application of mind by the AO during the assessment proceedings. Accordingly, it cannot be said that the assessment has been framed by the AO without conducting inquiries. The AO in the assessment also examined all the aspects of the disclosure, made variations and after examination referred to provisions of section 68, 69 & 69A of the Act, but at the same time, did not levy higher tax as per provision of section 115BBE of the Act. As such, the Tribunal held that the AO framed the assessment after necessary inquiries with respect to the income surrendered by the assessee during the survey operation conducted u/s 133A of the Act.
The Tribunal held that that there was due application of mind by the AO during the assessment proceedings, the assessment cannot be held as erroneous in so far prejudicial to the interest of revenue on account of levy of higher tax as per provision of section 115BBE of the Act.
Accordingly, following the decision of the Co-ordinate Bench, the Tribunal held that the AO had taken one of the plausible view by treating the income offered during survey operation as income under the head of business and profession. Therefore, PCIT could not substitute the view taken by AO as per his understanding of facts of the case.
In view of the above, the Tribunal held that the order passed u/s 263 of the Act was not sustainable. Accordingly, the Tribunal quashed the same.
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