2019 (6) TMI 1694 - AT - Income Tax

Tribunal overturns IT Commissioner's order under section 263, ruling in favor of assessee

Dharmapal Contractor Hot Mix Plant Versus Pr. Commissioner of Income Tax, Bathinda

Dharmapal Contractor Hot Mix Plant Versus Pr. Commissioner of Income Tax, Bathinda - TMI Issues Involved:1. Jurisdiction of Pr. Commissioner u/s 263 of IT Act2. Expenses under hiring charges of machinery3. Capital contribution by partners4. Low withdrawal by partners5. Cash deposits in bank accountsJurisdiction of Pr. Commissioner u/s 263 of IT Act:The appeal filed by the assessee challenges the order of the Pr. Commissioner of Income Tax, Bathinda, invoking section 263 of the Income Tax Act, 1961. The assessee contests the cancellation of the order passed by the Assessing Officer under section 143(3) without proper hearing. The crux of the issue revolves around the Pr. Commissioner's authority to revise the assessment order, alleging errors prejudicial to the revenue's interest. The Pr. Commissioner's notice under section 263 raised concerns over various aspects of the assessment, prompting a review of the initial order.Expenses under Hiring Charges of Machinery:One of the key issues in the appeal pertains to expenses claimed by the assessee under hiring charges of machinery. The Assessing Officer disallowed a portion of these expenses, which the Pr. Commissioner found insufficient. However, the Tribunal noted that the Assessing Officer had allowed a significant deduction for these expenses after disallowing a specific amount. The Tribunal found no unsustainable basis for the Assessing Officer's decision and referred to past instances where similar orders under section 263 were set aside, indicating inconsistency in the Pr. Commissioner's actions. Consequently, the Tribunal deemed the Pr. Commissioner's order on this issue unsustainable.Capital Contribution by Partners:Another issue raised was the capital contribution by partners, specifically concerning deposits in their accounts. The Pr. Commissioner questioned the adequacy of inquiries made by the Assessing Officer in this regard. However, the Tribunal determined that the Assessing Officer's conclusions were sound, and the Pr. Commissioner failed to identify any errors in the assessment process. Given the lack of substantial grounds for revision, the Tribunal deemed the Pr. Commissioner's order invalid concerning this issue.Low Withdrawal by Partners:The Pr. Commissioner also highlighted the low withdrawals by certain partners, suggesting potential discrepancies. However, the Tribunal noted that similar issues were raised in previous assessments of the same assessee, where the Tribunal had annulled orders under section 263. Drawing parallels, the Tribunal found the Pr. Commissioner's decision on this matter unsustainable, as no substantial grounds justified the revision.Cash Deposits in Bank Accounts:Lastly, the Pr. Commissioner raised concerns about cash deposits in bank accounts without thorough inquiry by the Assessing Officer. The Tribunal observed that these deposits were duly recorded in the assessee's books of account, indicating transparency. With no evidence of errors or discrepancies in the records, the Tribunal deemed the Pr. Commissioner's order on this issue unsustainable. Consequently, the Tribunal set aside the order passed under section 263, allowing the appeal of the assessee.In conclusion, the Tribunal's detailed analysis of the issues raised in the appeal against the Pr. Commissioner's order under section 263 of the IT Act showcases a consistent pattern of setting aside the revision orders due to lack of substantial grounds and unsustainable reasoning, ultimately favoring the assessee in this case.