2020 (12) TMI 47 - AT - Income Tax

Tribunal overturns Tax Commissioner's decision, upholds Assessing Officer's diligence. -16

The Tribunal set aside the Principal Commissioner of Income Tax's order under section 263, allowing the appeal of the assessee against the assessment for ... Revision u/s 263 - as per CIT-A interest on SBI constitute other income which was not properly verified by the AO - HELD THAT:- Assessee explained that the same represent interest on deposits made by the assessee firm as margin money for obtaining bank guarantee. Therefore, argued that the other income mentioned in the profit and loss account is part of business income which was considered by the AO and taken a conscious decision that no separate addition is warranted on account of other income. Since it is apparent from the assessment record that the assessee had explained that the other income represents business income which was accepted by the AO and did not make any addition, after examining the issue in detail, AO has applied his mind and taken a conscious decision holding that the other income is business income and estimation of income @0.5% meets the ends of justice. This Tribunal also in the case of ABC Engineering Works Vs. DCIT, Circle-2(1), Vijayawada [2019 (8) TMI 1603 - ITAT VISAKHAPATNAM]viewed that write off of sundry creditors constitute business income and no separate addition is required in respect of sundry creditors balances written off. The present revision is on difference of opinion which the Pr.CIT intends to substitute his opinion in place of decision taken by the AO and revision u/s 263 is not permitted on difference of opinion. This view is supported by the decision of Spectra Shares and Scrips (P) Limited [2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] -merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263 - Once AO had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries. See G.V.R. ASSOCIATES VERSUS INCOME-TAX OFFICER [2017 (4) TMI 393 - ITAT VISAKHAPATNAM] - Decided in favour of assessee. Issues:Appeal against order u/s 263 of the Income Tax Act, 1961 for A.Y. 2015-16.Analysis:1. The assessee, engaged in running a rice mill, filed an appeal against the order of the Principal Commissioner of Income Tax (Pr.CIT) u/s 263 of the Income Tax Act, 1961. The AO completed the assessment u/s 143(3) estimating income @0.5% on gross turnover due to unverifiable bills, rejecting books of accounts. The Pr.CIT found other incomes not related to business income and set aside the assessment for revision u/s 263.2. The assessee contended that all issues were examined during assessment, and the AO estimated income @0.5% of total turnover. The other income of Rs. 3,81,03,903 was explained as a write-off of paddy creditors due to financial constraints. Interest on SBI Deposit was argued to have a direct business nexus, supported by bank account details. The AO's conscious decision not to make separate additions was highlighted.3. The Tribunal noted that the AO sought details of other income and interest on deposits, which the assessee explained as business-related. Citing precedents, it was held that the AO's decision not to make separate additions was valid. The Pr.CIT's revision was deemed a difference of opinion, not permissible under section 263.4. Relying on court decisions, the Tribunal concluded that the AO had applied due diligence in estimating income and considering all relevant aspects. The Pr.CIT's revision was found unwarranted, and the appeal of the assessee was allowed.In conclusion, the Tribunal set aside the Pr.CIT's order u/s 263, allowing the appeal of the assessee against the assessment for A.Y. 2015-16.