Income Tax Appeal Case No. ITA 1198/DEL/2022: Challenge by Ravindera Hira Purchase and Finance Pvt. Ltd. against Pr. CIT, Faridabad

Income Tax Appellate Tribunal Decision: Ravindera Hira Purchase and Finance Pvt. Ltd. vs. Pr. CIT, Faridabad – ITA No. 1198/Del/2022

Case No: ITA 1198/DEL/2022
Appellant: Ravindera Hira Purchase and Finance Pvt. Ltd., Haryana
Respondent: Pr. CIT, Faridabad
Assessment Year: 2013-14
Result: Allowed

In an unprecedented ruling, the Income Tax Appellate Tribunal’s Delhi bench delivered a landmark judgment in favor of the appellant, Ravindera Hira Purchase and Finance Pvt. Ltd., challenging the order passed by the Pr. Commissioner of Income Tax (Pr. CIT), Faridabad under Section 263 of the Income Tax Act, 1961. This comprehensive analysis explores the crux of the matter, the proceedings, and the consequential judgment that has set a precedent for similar cases.

Introduction

The case revolves around the challenge posed by Ravindera Hira Purchase and Finance Pvt. Ltd. against the Pr. CIT, Faridabad, regarding the assessment year 2013-14. At the heart of the dispute was the order passed by the Pr. CIT under Section 263 of the Income Tax Act, deeming the original assessment to be erroneous and prejudicial to the interests of the revenue. The primary contention of the appellant centered around the validity of the Pr. CIT’s jurisdiction to revise the assessment, the adequacy of the evidence provided related to share application money, and the overall legality of the order.

Background

Ravindera Hira Purchase and Finance Pvt. Ltd. is engaged in the business of finance and hire purchase. For the assessment year 2013-14, the company filed its return declaring an income of Rs.2,06,380. However, during the assessment, certain expenses claimed by the company were disallowed, and additional income was determined by the Assessing Officer (AO). Subsequent to this, the Pr. CIT initiated proceedings under Section 263 arguing that the original assessment was erroneous as it did not adequately examine the genuineness of share application money amounting to Rs.1,90,50,000 received from various parties.

The appellant raised multiple grounds challenging the Pr. CIT’s order, including the validity of invoking Section 263 without the necessary conditions being satisfied, the failure to properly address the genuineness and creditworthiness of the transactions related to share application money, and the appropriateness of setting aside the matter for fresh assessment without conclusive findings.

Proceedings and Analysis

The tribunal meticulously examined the records, submissions, and arguments presented by both sides. It was noted that the show cause issued by the Pr. CIT bore a striking resemblance to the observations made by the ITO in his letter, casting doubts on the independent application of mind by the Pr. CIT. The appellant convincingly argued that they had fulfilled their burden of proving the identity and creditworthiness of the shareholders and the genuineness of the transactions. Moreover, the tribunal identified that there was no proper application of mind by the Pr. CIT in issuing the show cause notice, rendering the order passed under Section 263 void ab initio.

Conclusion

Ultimately, the tribunal sided with the appellant, setting aside the order passed by the Pr. CIT and allowing the appeal. This judgment underscores the importance of careful scrutiny by tax authorities before passing orders that significantly impact the assesses. It also highlights the need for the authorities to exercise their powers judiciously and with an independent application of mind. The outcome of this case paves the way for a more equitable approach to assessment and review procedures in income tax matters.

Order Pronounced in the Open Court on 07/03/2023

Income Tax Appeal Case No. ITA 1198/DEL/2022: Challenge by Ravindera Hira Purchase and Finance Pvt. Ltd. against Pr. CIT, Faridabad