TaxTMI 
TaxTMI 
2024 (9) TMI 532
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the Assessment Year (AY) 2018-19. Facts of the case: 2. The assessee-company filed its return of income on 26-03-2019 declaring total income of Rs. (-)32,70,00,706/-. The return was processed u/s. 143(1) of the Act determining total income of Rs. (-) 32,48,93,990/-, after an adjustment of Rs. 21,06,716/- on account of late payment of employees' contribution to National Pension Scheme. Later on, the case was selected for complete scrutiny under CASS by issuing notice u/s 143(2) of the Act dated 22-09-2019 for the scrutiny of following issues: 1. Investments/Advances/Loans 2. Refund Claim 3. Business Loss 4. ICDS Compliance and adjustment 5. Expenses Incurred for earning exempt income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t be revised. In response to the same, the assessee challenged the jurisdiction assumed by the Ld.PCIT u/s. 263 of the Act. The Ld.PCIT passed an order u/s 263 of the Act dated 16-03-2024 as the assessee did not submit anything on the merit of the issue but argued on the legal aspect of the proceeding u/s. 263 of the Act. The Ld.PCIT set aside the order passed by the AO u/s. 143(3) r.w.s. 144B of the Act with a direction to pass afresh assessment order after duly examining the facts of the case to the extent discussed in the order. 4. Aggrieved by the order of the Ld.PCIT, now the assessee is in appeal before us with the following grounds of appeal: 1. In law and in the facts and circumstances of the Appellant's case, impugn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....satisfied in the case of appellant company as issue which has been relied upon for passing the order u/s. 263 does not show any error or prejudice to the interest of the revenue. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 5. During the course of hearing before us, the Ld.Authorised Representative (AR) of the assessee, took us through the notices issued by the AO and the reply submitted by the assessee in response thereto. The Ld.AR stated that the assessee has not earned any exempt income as it is evident from the statement of income submitted. The Ld.AR also stated that the Ld.PCIT has relied on the Circular No. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the original assessment proceedings, had duly examined the issue by issuing a notice under section 142(1) of the Act, to which the assessee had responded. The AO, after being satisfied with the submissions, passed the order under section 143(3) read with section 144B of the Act. 7.1. The Ld.PCIT has invoked Section 263 of the Act, claiming that the AO did not properly examine the applicability of Section 14A of the Act, resulting in an erroneous order prejudicial to the revenue. However, as argued by the assessee, the AO had duly inquired into the relevant facts and legal provisions during the original assessment proceedings. Considering the above, it is apparent that the twin conditions required for invoking Section 263 of the Act are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowance under Section 14A of the Act cannot exceed the amount of exempt income earned by the assessee, and no disallowance can be made if no exempt income is earned. 7.4. So far as the reliance placed by the Ld.DR in the case of Gold Coin Health Food (P.) Ltd.(supra) is concerned, it is crucial to note that this decision deals with the levy of penalty under Section 271(1)(c) of the Act, and the retrospective applicability of amendments regarding penalties. The principles laid down in Gold Coin Health Food (P.) Ltd. do not directly address the issue of disallowance under Section 14A of the Act in the context of the earning of exempt income. Moreover, the explanation inserted by the Finance Act, 2022, though stated to be clarificatory, per....