Assessment Year: 2014-15
This case analysis discusses the appeal by Rekha Gupta against the revision order by Pr.CIT-12, New Delhi, under section 263 of the Income Tax Act for the assessment year 2014-15, questioning the validity of the revision based on the lack of adequate inquiry.
Rekha Gupta, an individual taxpayer, filed her income tax return declaring a net taxable income predominantly from trading in gold bars. The return underwent scrutiny resulting in acceptance by the assessing officer (AO) without adjustments. However, Pr.CIT invoked revisionary powers suspecting inadequate inquiry particularly regarding unsecured loans and discrepancies in sales and purchase details reflected in the financial statements.
The Pr.CIT noted discrepancies between declared transactions and financial records, specifically in the handling of unsecured loans and the reporting of sales and purchases. A show cause notice was issued to Gupta questioning the authenticity of her financial disclosures and the completeness of the AO’s assessment.
Gupta argued that all necessary documentation and clarifications were duly provided, including tax returns of the loan creditor and bank statements substantiating the transactions. The Tribunal analyzed the submissions and evidence, ultimately finding that the AO had conducted sufficient inquiry into the relevant aspects of Gupta’s tax return. It was concluded that the Pr.CIT’s order under section 263 was not justified as it failed to specify what additional inquiries were required and how the initial assessment was erroneous.
The Tribunal quashed the revision order, holding that the initial assessment by the AO was not erroneous and did not prejudice the revenue’s interest. This case highlights the necessity for tax authorities to provide clear grounds for invoking revisionary powers under section 263 and the importance of a detailed initial assessment by the AO.
The decision reinforces the procedural requirements for tax revisions and the burden on tax authorities to substantiate their claims with specific findings when challenging the adequacy of an AO’s investigation.
Order pronounced openly in court, underscoring the transparency and judicial reasoning behind the Tribunal’s decision.
ITA No. 1007/DEL/2019 – Rekha Gupta vs. Pr.CIT-12, New Delhi
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