Appeal in ITA No. 1090/DEL/2022 Against Order Passed Under Section 263 for Assessment Year 2017-18

Appeal in ITA No. 1090/DEL/2022 Against Order Passed Under Section 263 for Assessment Year 2017-18: A Comprehensive Analysis

The appeal of ITA No. 1090/DEL/2022 marks a significant development in the legal precincts of tax assessments and appeals within the Income Tax Appellate Tribunal (ITAT) jurisprudence. It brings into focus the application of Section 263 of the Income Tax Act, 1961, juxtaposed against the backdrop of the assessment year 2017-18. The appellant, Om ENT Hospital And Research Centre Private Limited, represented by its advocate Akhilesh Kumar, contested the order passed by the Principal Commissioner of Income Tax (Pr. CIT), Ghaziabad.

This case emanated from a survey operation under Section 133A conducted on the director of M/s. Om ENT Hospital and Research Centre Pvt. Ltd on September 20, 2016. Following this, the assessee e-filed its return of income, declaring a total income of Rs. 1,00,58,322 for the Assessment Year 2017-18. The case was selected under compulsory manual scrutiny, leading to the issuance of notices under Section 143(2) of the Act.

In response to the notices, the assessee filed its reply along with documents. The assessment was completed under Section 143(3), with the Assessing Officer assessing the income at Rs. 1,00,58,322. However, the Pr. CIT, upon review, invoked Section 263, setting aside the assessment order with directions for re-computation under section 115BBE of the Act, focusing on the Rs. 80 lakh income surrendered during the survey.

The assessee contended that Section 115BBE was not applicable as the surrendered income did not represent any unexplained income under sections 68 or 69 of the Act. The assessee argued that it pertained to additional business income agreed upon during the survey. Despite these assertions, the Pr. CIT found the claims unsatisfactory, highlighting that the surrendered income originated from undisclosed payments received from patients and thus necessitated taxation under Section 115BBE.

In the final judgment, the Income Tax Appellate Tribunal, comprising Shri Anil Chaturvedi, Accountant Member, and Shri N. K. Choudhry, Judicial Member, deliberated on the nuances of the case. It critically analyzed the application of Section 263, the role of the survey findings, and the implications of Section 115BBE of the Income Tax Act. Considering the facts and judicial precedence, the Tribunal found that once a decision has been consciously made by the Assessing Officer, based on the unique facts and circumstances of the case, it cannot be substituted merely by the opinion of the Pr. CIT. Consequently, the Tribunal set aside the order passed by the Pr. CIT, thereby allowing the appeal filed by the assessee.

The verdict pronounced on December 28, 2022, underscores the Tribunal’s commitment to procedural fairness and the necessity of a meticulous examination before invoking the provisions of Section 263. This favorable outcome for Om ENT Hospital and Research Centre Private Limited not only signifies a vital precedent on the applicability of Section 115BBE post-surveys but also reaffirms the principle that the Assessing Officer’s discernment, grounded in factual analysis, should stand unless proven categorically erroneous and prejudicial to the interest of the revenue.

Appeal in ITA No. 1090/DEL/2022 Against Order Passed Under Section 263 for Assessment Year 2017-18