Case Number: ITA 659/DEL/2021
Appellant: Aman Growth Fund Pvt Ltd, New Delhi
Respondent: Pr.CIT, Delhi
Assessment Year: 2015-16
Case Filed On: 2021-06-04
Order Type: Final Tribunal Order
Date of Order: 2023-08-31
Pronounced On: 2023-08-31
This article provides a detailed analysis of the case ITA No. 659/DEL/2021, where Aman Growth Fund Pvt Ltd, New Delhi, filed an appeal against Pr.CIT, Delhi, concerning the assessment year 2015-16. The appeal was allowed due to jurisdictional issues regarding the application of Section 263 of the Income Tax Act, 1961.
Aman Growth Fund Pvt Ltd, a private limited company based in New Delhi, filed its return of income on 28.09.2015, declaring an income of Rs. 8,940/-. The assessment was completed under Section 143(3) by the ACIT, New Delhi, on 28.08.2017, accepting the returned income.
The Principal Commissioner of Income Tax (Pr.CIT), Central-2, Delhi, invoked Section 263 of the Income Tax Act, 1961, to revise the assessment order. The Pr.CIT directed a de novo assessment, citing the non-examination of the applicability of Section 56(2)(viia) concerning investments in unlisted equity shares during the assessment year.
The appellant, represented by Shri Sahil Sharma, Adv., and Shri Saurav Nandy, Adv., argued that the Pr.CIT erred in assuming jurisdiction under Section 263. They contended that the original assessment was carried out with due diligence and that the Assessee had provided all necessary details, including the fair market value (FMV) of investments. The appellant also emphasized that the Pr.CIT’s order was based on a change of opinion rather than any actual error in the assessment.
The respondent, represented by Shri Kanv Bali, Sr. DR, supported the Pr.CIT’s order, arguing that the assessment was erroneous and prejudicial to the interests of the revenue due to the non-examination of Section 56(2)(viia) issues.
The tribunal, comprising Shri G.S. Pannu, President, and Shri Anubhav Sharma, Judicial Member, reviewed the case. They found that the Pr.CIT had shifted its stance and issued multiple show-cause notices, which reflected a mere change of opinion rather than any substantial error in the assessment. The tribunal noted that the Assessee had provided all required details during the original assessment, and the Assessing Officer (AO) had conducted a due inquiry within the limited scrutiny parameters.
Income Tax Appellate Tribunal, Delhi Bench ‘A’, New Delhi
Before: Shri G.S. Pannu, President & Shri Anubhav Sharma, Judicial Member
Order:
This appeal filed by the assessee for the assessment year 2015-16 is directed against the order of Pr.CIT(Central)-2, Delhi dated 31.03.2021. The grounds raised by the assessee are centered around the assumption of jurisdiction by the Pr.CIT under Section 263 of the Income Tax Act, 1961.
After hearing the arguments of both parties and perusing the material available on record, the tribunal found that the Pr.CIT had failed to establish that the original assessment was erroneous and prejudicial to the interests of the revenue. The tribunal emphasized that the AO had made detailed inquiries during the assessment process and had duly considered the FMV of the investments.
The tribunal relied on several judgments, including the Hon’ble Supreme Court’s decision in Malabar Industrial Co. Ltd. vs. CIT, which clarified that the assumption of jurisdiction under Section 263 requires the satisfaction of both conditions – the order being erroneous and prejudicial to the revenue. Since the AO had applied his mind and conducted due inquiries, the tribunal held that the Pr.CIT’s invocation of Section 263 was not justified.
The tribunal quashed the order passed by the Pr.CIT under Section 263 and allowed the appeal filed by Aman Growth Fund Pvt Ltd.
Order Pronounced and Signed in Open Court on 31.08.2023.
Signed:
Shri G.S. Pannu, President
Shri Anubhav Sharma, Judicial Member
Date: 31st August 2023
This case underscores the importance of proper jurisdictional application in tax assessments and the necessity for tax authorities to base their revisionary powers on substantial errors rather than mere changes of opinion.
Aman Growth Fund Pvt Ltd vs. Pr.CIT Delhi: Appeal Allowed on Jurisdiction Issues 2023
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