2022 (9) TMI 495 - AT - Income Tax

Tribunal upholds CIT's decision to set aside assessment order under section 263

Dr. Kuldeep Geharilal Nahar Versus Comm. Income Tax-4 Ahmedabad

The Tribunal dismissed the appeal and affirmed the ld.CIT's decision to set aside the assessment order under section 263 of the Income Tax Act, 1961 for ... Revision u/s 263 by CIT - Erroneous order passed by the AO, allowing claim of dispensary expenses without conducting any inquiry - HELD THAT:- Assessee only referred to the notices before us without pointing out where exactly the queries regarding the claim of expenses relating to the dispensary expenses were raised in the said notices. Further, he has not pointed out any reply filed by the assessee in response to query, if any, with regard to the expenditure claimed relating to the dispensary run by the assessee. Therefore, this contention of assessee that issue was examined during the assessment proceedings, we find, it without any basis at all and is therefore rejected. As for the other contention of assessee that there was no illegality in the order of the AO since the assessee had been consistently returning such 28% of net profit from his medical profession including dispensary income, we find is neither here nor there. The ld.counsel for the assessee has made this claim for the first time before us. This claim was not made before the ld.CIT. Further, no evidence has been filed to support his contentions that the assessee had been returning profit at a consistent rate in all the years. Therefore, this claim of the assessee, we also find, is baseless and is also rejected. No infirmity in the order of the CIT holding the assessment order passed by the AO, allowing claim of dispensary expenses without conducting any inquiry despite the facts demonstrating no income being earned by the assessee from the same, as erroneous and prejudicial to the Revenue. - Decided against assessee. Issues:Assessment order under section 263 of the Income Tax Act, 1961 for the Asst. Year 2013-14 deemed erroneous by the ld.CIT due to allowing expenses without proper examination.Analysis:The appeal was filed against the order passed by the ld.CIT under section 263 of the Income Tax Act, 1961. The ld.CIT found the assessment order erroneous as the Assessing Officer (AO) had allowed the claim of expenses without examining the same, specifically related to a medical dispensary run by the assessee. The assessee, being a doctor, had not shown any income from the dispensary but claimed substantial expenses. The ld.CIT held that the assessment order was prejudicial to the Revenue as no proper inquiry was made into the expenses claimed. The ld.CIT set aside the assessment order and directed a fresh assessment after proper inquiries and verification. The ld.CIT's findings emphasized the need for examination of expenses in relation to the income offered by the assessee.During the appeal, the assessee contended that the AO had examined all relevant issues during the assessment proceedings and had accepted the returned income without error. However, the Tribunal found that the contention lacked merit as the queries regarding the claim of expenses related to the dispensary were not adequately addressed by the assessee during the assessment proceedings. The Tribunal rejected the assessee's claim that the issue was examined during the assessment.Another contention by the assessee that consistent net profit was being returned from the medical profession, including dispensary income, was also dismissed by the Tribunal. The Tribunal noted that this claim was made for the first time during the appeal, with no supporting evidence provided. As a result, the Tribunal upheld the ld.CIT's decision to restore the issue to the AO for a fresh examination, allowing the assessee to present any arguments or contentions before the AO.In conclusion, the Tribunal dismissed the appeal, affirming the ld.CIT's decision to set aside the assessment order and directing a fresh assessment to verify the nexus between expenses claimed and income offered by the assessee. The order was pronounced in the Court on 7th September, 2022, at Ahmedabad.