The Tribunal ruled that the Principal Commissioner of Income Tax erred in invoking section 263, as the assessment order was neither erroneous nor prejudicial to revenue interests.

ORDER

PER K.M. ROY, A.M.

This appeal by the assessee is emanating from the impugned order dated 23/03/2024, passed by the learned Principal Commissioner of Income Tax, Nagpur–1, Nagpur, [“learned PCIT”], for the assessment year 2014–15.

2. Following grounds have been raised by the assessee:–

“1. On the basis of the facts and circumstances of the case, the Pr. Commissioner of Income-tax is not justified in invoking the provisions of section 263 of the Act.

2.On the basis of the facts and circumstances of the case, the Pr. Commissioner of Income-tax is not justified in invoking the provisions of section 263 of the Act by considering the assessment order passed u/s. 144 r.w.s. 144B by the Assessing Officer as erroneous & prejudicial to interest of the revenue when the impugned assessment order was passed by AO with the approval of National Faceless Assessment Centre (NFAC) as per guidelines issued by Board in view of provisions of section 144B(1)(xvi) (a) of the Act and more particularly when the Pr. CIT has not pointed our any error in the approval granted NFAC.

3. On the basis of facts and as per law, the Pr. CIT is not justified in exercising the jurisdiction u/s. 263 in respect of the assessment order which itself is invalid because the notice u/s. 143(2) was not issued by the AO.

4. The appellant craves for the addition to, deletion, alteration, modification of the above grounds of appeal.”

3. Initially, the assessee did not file its return of income. The Assessing Officer received information from the Asstt. Director of Income Tax (Inv.), Akola, that the assessee, during the year under consideration, had entered into high value transaction in his bank account available with ICICI Bank to ‘ the tune of 2,16,86,186. Hence, the assessee’s case was re–opened under section 147 of the Income Tax Act, 1961 ("the Act") by issuing notice under section 148 of the Act. Notices were also issued under section 142(1) of the Act which were served upon the assessee. The assessee, in response to the notice under section 148 of the Act, filed his return of income on 28/12/2021, which was treated as invalid by the Assessing Officer. The assessee submitted that the nature of business of the assessee is agro based industries. As stated by the Assessing Officer, the assessee was provided enough opportunities. However, the Assessing Officer held that the assessee failed to provide the details called for and hence the Assessing Officer was constrained to invoked the provisions of section 144 of the Act and estimating the income of the Appellant @2% of the credits in the assessee’s bank account and treated the ‘ ‘ same as business income which worked out to 4,33,724 (2% of 2,16,86,186).

4. Meanwhile, the learned PCIT invoked his jurisdiction under section 263 of the Act keeping in view the assessment order passed by the Assessing Officer which, according to the learned PCIT, was erroneous and prejudicial to the interests of Revenue. The learned PCIT set aside the impugned assessment order dated 30/03/2022, passed by the National Faceless Appeal Centre, passed under section 147 r/w section 144B of the Act, and restored the entire matter to the file of the Assessing Officer to make the assessment restricted and limited to the issue of credits in the bank account of the assessee as discussed herein below:–

“5.3 It is seen that the Assessee while pointing out an error in the bank account no. has not denied the deposits. Thus, the fact remains that the total deposits in the bank account of the assessee is at Rs 2,16,86,186/-. He merely has denied that Rs.3,50,000/- deposited in Bank A/c no. 145305500006 does not pertain to him, without any clarification.

5.4 Further, it is evident from the details filed i