TaxTMI 
TaxTMI 
2023 (3) TMI 614
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....ssessment order by Income Tax Officer, Ward1(2), Asansol u/s. 143(3) of the Act dated 21.12.2018. 2. At the outset, we take note of the fact that this present appeal is delayed by 506 days for which petition for condonation of delay is placed on record. The impugned order passed u/s. 263 of the Act is dated 09.03.2021 and the period of limitation for filing the present appeal expires on 08.05.2021. It is noted that the limitation for filing the present appeal falls during the period of Pandemic of Covid-19. Petition for condonation of delay is placed on record by assessee, explaining the reasons for delay owing to Pandemic of Covid-19 during that time. It is noted that the period of delay falls during the time of Pandemic of Covid-19 whi....
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....bserved that there was in fact, a loss of Rs.38,89,726/- incurred by the said JV and, therefore, 33% of this loss coming to Rs.12,83,610/- should have been reduced from the capital of partners. According to him, this wrongful addition to the capital of partners has resulted in overstatement of partners' capital in the firm as on 31.03.2016. 4.1. According to Ld. Pr. CIT, this leads to inadmissible payment of interest on the balance of partners' capital amounting to Rs.1,54,033/- (12% of Rs.12,83,610/-) and thus, a potential understatement of income in the subsequent assessment year i.e. AY 2017-18 also. Based on these observations, a show cause notice dated 08.02.2021 was issued u/s. 263(1) of the Act. Assessee furnished a detailed reply....
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....' capital as on 31.03.2006 which is inclusive of the incorrect figure of Rs.12,83,610/-. According to the assessee, interest on partners' capital account has not been paid excessively since it has been computed on the opening balance of capital and not on the closing balance which inadvertently includes the figure of Rs.12,83,610/-. According to the assessee, there is no element of interest which has been claimed on the incorrect figure of Rs.12,83,610/- and, therefore, the order as alleged by Ld. Pr. CIT cannot be termed as erroneous in so far as it is prejudicial to the interest of the revenue. Ld. Pr. CIT did not find favour with the submissions made by the assessee and drew his consideration to set aside the assessment made by the Ld. A....
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....t that assessee while arriving at the balances of capital of the partners in the assessee firm, incorrectly took the share of loss in the aforesaid JVs as share of profit. It is quite understandable that interest on the partners' capital balance must have been calculated on the figure including this wrong treatment. However, from the factual verification of the claim of interest as submitted by the Ld. Counsel, it is noted that it is computed on the opening balance of the capital of partners in the assessee firm i.e. on 01.04.2015. There was no occasion to include the share in profit/loss for the year from the said file in the opening balance and capital balance of the partners on which interest has been charged. The apprehension of Ld. Pr.....
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....t by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and in so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii) Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; [because AO has to discharge dual role of an investigator as well as that of an adjudicator] then in aforesaid any of the events, the order passed by....