Case Summary of ITA No.1012/DEL/2022: Hema Raman vs. AO Ward-1, Panipat

Income Tax Appellate Tribunal Judgment Summary

ITA No.1012/DEL/2022: Hema Raman vs. AO Ward-1, Panipat

Case Number: ITA No.1012/DEL/2022

Parties: Hema Raman, Haryana (Appellant) vs. AO Ward-1, Panipat (Respondent)

Assessment Year: 2017-18

Final Judgment Date: 12 May 2023

Judgment: Allowed

Judges: CHANDRA MOHAN GARG, JUDICIAL MEMBER & PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER

Summary

The appellant, Hema Raman from Haryana, filed an appeal against the order passed by the Principal Commissioner of Income Tax, Rohtak, pertaining to the Assessment Year 2017-18. The appeal was made against the revisional order issued under Section 263 of the Income Tax Act, 1961, by the respondent, AO Ward-1, Panipat.

The case revolves around the appellant’s contention that the assessment order under revision was neither erroneous nor prejudicial to the interest of the Revenue, thus challenging the jurisdiction of the Pr.CIT under Section 263 of the Act.

The appellant derives income from business operations related to healthcare service and trading in medicine. During the contested assessment year, a survey operation under Section 133A was carried out at the appellant’s business premises, leading to the admission of undisclosed income of Rs.40 lakh. The income was surrendered as normal business income in the appellant’s ITR. Following this, the case was put under compulsory scrutiny, resulting in the e-return being accepted without any adjustments.

However, the Pr.CIT later issued a show cause notice under Section 263, questioning the nature of the surrendered income and suggesting a possible re-computation under Section 115BBE of the Act, which could attract a higher tax rate. The appellant argued that the income surrendered was directly related to business operations and accordingly, should not fall under the provisions attracting the penal rate of tax under Section 115BBE.

The Tribunal, upon hearing the arguments and examining the facts, allowed the appeal in favor of the appellant. It concluded that the Assessing Officer had taken a legally plausible view, and the order was not erroneous in so far as prejudicial to the interest of the revenue. Furthermore, the judgment clarified the applicability of Section 115BBE, considering the timing of the income and the survey operations, supporting the appellant’s stance.

Conclusion

The appeal by Hema Raman was allowed, quashing the revisional order under Section 263 regarding the Assessment Year 2017-18. The judgment emphasizes the importance of the specific nature and context of income in determining tax liability and reinforces the constraints on the revisional powers under Section 263 of the Income Tax Act, 1961.

Case Summary of ITA No.1012/DEL/2022: Hema Raman vs. AO Ward-1, Panipat