Gopal Soundararaj v. PCIT (2023) The Chamber’s Journal – May -P. 111 . Chennai )( Trib)

. 263 : Commissioner – Revision of orders prejudicial to revenue -Mismatch of interest income – Enquiries were made – No discussion in the assessment order – Order is not erroneous – Revision is not valid . [ S. 143(3) , 26AS ]

The case of the assessee was selected for scrutiny under CASS for mismatch in interest income offered to tax and reported in form 26AS. The assessment order was passed u/s. 143(3) by making some addition of interest income on Fixed Deposits. The cash deposited was also discussed in the assessment order. Penalty notice was also issued u/s. 270A for under reporting of income after passing the assessment order. Notice u/s. 263 was issued by PCIT to assesssee on the grounds that since AO has not recorded any reasons for initiation of penalty u/s. 270A, the order. is prejudicial to the interest of revenue. The penalty later on was not levied u/s. 270A. Another reason quoted was that the source of fixed deposit was not examined.  On appeal the Tribunal held that the AO has not mechanically issued notice u/s. 270A without recording reasons in the assessment order and second that the source of Fixed deposits with two banks was not questioned upon during the assessment. It was held by the ITAT that on grounds of penalty u/s. 270, the notice was very clear so as to mention as to why there should be no penalty levied for under -reporting of income. Therefore, it could not be said that there was no proper satisfaction in initiating the penalty proceedings. On the second issue for source of FDs, it was held that very purpose of assessee was to verify interest income. The AO has verified the interest income and made addition on interest income. Though the AO has not specifically not discussed about the source of fixed deposits in its assessment order, however the details of source were submitted during the assessment proceedings and the same were accepted by the AO. There was abundant enquiry made by the AO, only the same not being recorded in the assessment order, cannot be reason to presume jurisdiction u/s. 263 to invoke revisionary provisions.  Revision order was quashed .  (ITA No. 181/Chny/2023) dt .6-4 -2023 )  AY. 2017 -18  )

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