TaxTMI 
TaxTMI 
2024 (8) TMI 865
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....g the assessment order, under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") dated 15.02.2021 (hereinafter referred to as "the assessment order"), as erroneous and prejudicial to the interest of the revenue. The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provisions of law; 2. The Pr. CIT failed to appreciate that the Assessing Officer after due application of mind as regard allowability of deduction claimed u/s 36(1)(ii) framed the assessment order without making any disallowance on the said count; 3. Assuming without admitting that the present case was a case of inadequate enquiry, the Pr. CIT failed to appreciate that the power of revision envisaged under section 263 of the Act and the Explanation 2 thereto can be exercised only where no enquiry as required under the law is done and that it is not open to invoke the said provisions in cases of inadequate enquiry, 4. The Pr. CIT erred in holding that the interest expense of Rs 37,10,63,373/- is disallowable without appreciating that the corresponding borrowed funds have been utilized for business purpose and therefore ....
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....upporting documents/information in support of the issues involved (as mentioned below)If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: Incometaxindiaefiling.gov.in You have filed the return of income for AY 2018-19 on 25.09.2018 declaring total income of Rs. (-) 37,22,61,114/- under normal provisions of the Act. The assessment was completed u/s 143(3) on 15.02.2021 accepting the returned income as such. 2. On perusal of assessment order u/s 143(3) dated 15.02.2021, it is observed that the order is erroneous and prejudicial to the interest of revenue for the following reasons: 2.1 On verification of the records, it is seen that an amount of Rs. 9369.28 lakh has been debited as "interest expenses" in the Profit & Loss Account. It is also observed that only an amount of Rs. 5.52 lakh has been credited to the P & L A/c against which an amount of Rs. 5658.64 lakh has been disallowed u/s. 36(1)(iii) in the comput....
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....ited to the P & L A/c against which an amount of Rs. 5658.64 lakh has been disallowed u/s 36(1)(iii) in the computation of income suo-moto as the borrowed capital was used for non business purposes. 2.2 It has been further observed that the loss from business is mainly on account of payment of interest of Rs9369.28 lakh on borrowed capital Since the borrowed capital has not been used for earning any taxable income, the entire amount of Rs. 9369.28 lakh ought to have been disallowed in the order passed u/s. 143(3) dated 15.02.2021 as against the suo moto disallowance of Rs. 5658.64 lakh. Hence, the assessment order suffers from an under assessment of Rs 3710.64 lakh..." 6. Whereas in compliance to notices, the assessee has filed the information referred at Para 6 of the revision order as under: "6. In In response, Shri. Jay Bhansali, CA & A/R of the assessee attended and furnished written submissions which have been perused carefully and placed on record. The submissions of the assessee are briefly summarized as under; 1. The assessee company is in the business of infrastructure activities 2. During the year under consideration, the assessee ha....
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....set-aside on the issue of allowability of 37,10,63,373/- u/s. 36(1)(iii) and the AO is directed to make an enquiry in this matter and re-assess the income after giving an opportunity of being heard to the assessee. 8. The order u/s 263 of the Income Tax Act, 1961 is passed accordingly." 8. Finally the Pr.CIT has passed order u/sec 263 of the Act dated 30.03.2023. Aggrieved by the order of the Pr.CIT, the assessee has filed an appeal before the Honble Tribunal. 9. At the time of hearing, the Ld. AR submitted that the Pr.CIT has erred in considering the order passed by the AO is erroneous and prejudicial to the interest of the revenue, irrespective of the fact that the assessee has complied with the information and the notices and the A.O. having verified and examined the facts has accepted the same. The Ld.AR submitted that the assessee has obtained loans and has justified the deduction u/s 36(1)(iii) of the Act and these facts were also brought on record. The assessee has submitted voluminous details in compliance to notice U/sec 142(1) of the Act and were examined and verified. The observations of the Pr.CIT is without merits and whereas the AO has applied the mind ....
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....before Pr.CIT are referred as under: "The assessee has given interest free loans of Rs. 7,16,05,000/- and holds investments of Rs. 935,56,66,708/- break-up of which is as under: Particulars Amount Amount A. Interest free advances 7,16,05,000 B. Investments 935,56,66,708 Investments in unquoted equity shares 195,85,37,419 Investments in LLP as parter 66,71,29,289 Investments in compulsory convertible debentures (CCDs) 673,00,00,000 Total (A+B) 942,72,71,708 1.3 Break-up of interest bearing and interest free funds are as under: Particulars Amount Amount Amount Share capital 5,07,088 Reserve & surplus 286,59,35,489 Optionally convertible debentures Arrow Media & Broadband Pvt Ltd Pan India Network Ltd 170,21,00,000 208,90,00,000 379,11,00,000 Inter corporate deposits Pan India Infraprojects 96,31,39,553 Pvt ltd Pan India Utilities Distribution 96,37,85,553 6,46,000 Current account with limited liability Partnership Essel Prop....
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....m the earlier years and was being accepted by the revenue and it cannot be disturbed. When the Pr.CIT observes that the order passed by the A.O. is erroneous, he should make necessary inquiries or verification. Whereas the AO has applied the mind and accepted the possible view. We rely on the decision of the Honble High Court of Bombay in the case of M/S Grasim Industries Ltd Vs CIT (321 ITR 92) considered the law laid down by the Honble Supreme Court on the scope of the revisionary proceedings initiated under sec 263 of the Act and the observations are read as under: "Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be "erroneous in so far as it is prejudic....
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....eous, by conducting necessary enquiry, if required and necessary, before the order under section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order is not sustainable in law and the said finding must be recorded. The Commissioner of Income tax cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the Commissioner of Income tax must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the Commissioner of Income tax and he is able to establish and show the error or mistake made by the Assessing officer, making the order unstainable in law. In some cases possibly though rarely, the Commissioner of Income tax can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fr....
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....ation as to whether expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him - Whether under section 263 substitution of judgment of Commissioner for that of ITO is permissible - Held, no - Whether ITO's conclusion can be termed as erroneous simply because Commissioner does not agree with his conclusion - Held, no - Whether ITO's order could be held to be 'erroneous' simply because in his order he did not make an elaborate discussion - Held, no - Whether provisions of section 263 were applicable to instant case and Commissioner was justified in setting aside assessment order - Held, no 14. We Considering the overall facts, circumstances, ratio of the judicial decision and the details submitted in the course of hearing are of the view that the if any query is raised in the assessment proceedings and it was responded by the assessee, mere fact that it is not dealt within by the A.O. in the order cannot implied that there is no application of mind and the A.O. has applied one of the possible view. Hence, the action of the Pr.CIT cannot be acceptable as the order passed by the A.O. does not sat....