TaxTMI 
TaxTMI 
2025 (1) TMI 1480
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....63 kindly be quashed. 2. The Id. PCIT, Udaipur seriously erred in law as well as on the facts of the case in assuming jurisdiction u/s 263 by wrongly and incorrectly holding that the subjected assessment order passed u/s 147 dated 15.04.2021 is prejudicial to the interests of the revenue. The assumption of jurisdiction u/s 263 being contrary to the provisions of law and facts on record, hence, the proceedings- initiated u/s 263 hence, the impugned order dated 29.02.2024 deserves to be quashed. 3. Rs. 24,14,531/ The Id. PCIT, Udaipur in the impugned order passed u/s 263 of the Act, raised an altogether new issue of the alleged disallowance on account of late payment of PF/ESI contributions of Rs. 24,14,531/- u/s 36(1)(va) of the Act. The impugned order thus, to this extent is a nullity being without jurisdiction and therefore deserves to be quashed. 4. Rs. 63,97,664/-1 The Id. PCIT, Udaipur in the impugned order passed u/s 263, raised an altogether new issue of the alleged disallowance u/s 43B(e) of the Act on account of interest payable to scheduled banks on bank loan of Rs. 63,97,664/-. The impugned order thus, to this extent is nullity being without jur....
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.... Therefore, he could neither hand over his responsibilities to his colleague nor could inform Shri Sandeep Kumar Saboo, Director of the company about the documents, including the appeal papers. 2.2 Although subsequently, Shri Sushil Mittal resumed his duties in the office sometime in the first week of May, 2024, yet however, it did not occur to his mind that some appeal papers were to be signed, which were still lying pending with him. 2.3 It is only thereafter, in the second week of July, 2024 when CA Dharm Chand Jain, FCA contacted the counsel engaged at Jaipur w.r.t. the status of the appeal (which he believed had already been filed), but then he was informed that the same is yet to be filed and that the appeal papers were received by Shri Sushil Mittal for getting them signed. In absence of any persuasion from the side of the Assessee and M/s DHARM CHAND JAIN & ASSOCIATES, Chartered Accountant, the counsel at Jaipur, already handling a heavy workload, informed the factual position to Shri Dharm Chand Jain. It is only thereafter, the Director, Shri Sandeep Kumar Saboo immediately enquired Shri Sushil Mittal and asked him to hand over him the subjected documents....
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....er It is, therefore, humbly prayed that: a. This application may kindly be allowed by condoning the delay, taking a sympathetic view, in the interest of justice. b. Any other order, which this Hon'ble ITAT deems fit and proper, be also passed in favour of applicant assessee." The assessee also supported the contention so raised in the application with an affidavit so executed by Shri Sandeep Saboo director of the company. Based on that contention the ld. AR of the assessee prayed to condone the delay. 3.1 On the other hand, ld. DR objected that the reasons advanced are not sufficient to condone the delay. 3.2 We have heard both the parties and perused the materials available on record. The Bench noted that the reasons advanced by the assessee for condonation of delay of 96 days that the person was engaged in the marriage of daughter and thereafter on being aware the appeal was filed. Looking to the facts stated in the application they are sufficient to condone the delay and it has merit based on the prayer advanced by the assessee. Thus, we concur with the submission of the assessee and condone the delay of 96 days in filing the appeals by th....
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....his statement recorded on 11/11/2019 u/s 131(1) of the Act mentioned that he was only a helper/cleaner in the Office of Shri Om Prakash and Shri Om Prakash established a proprietorship concern called M/s Kangna Agro Products in the name of Shri Sanjay. He further stated in his statement that he never did any business from this proprietorship concern, and he did not have any knowledge about the business activities of the said concern or about the funds credited/debited in the said bank accounts of the concern, M/s Kangna Agro Products. 4.5 Therefore, in Order to verify the actual production of goods and the subsequent sale of the same, assessee was asked to provide the complete set of evidentiary document with respect to its purchase of raw materials and sale of produced goods. In response to question no. 3 & 4 raised to the assessee vide notice u/s 142(1) of the Act dated 05.02.021 assessee responded as below:- "3. The purchases of raw material are made both from traders and APMC's agents. 4. The purchases are made in cash mainly from the farmers as well as through cheques." 4.6 The assessee was also asked to submit the purchase register, sales register ....
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....bserved a detailed holding holds that the order of the assessing officer is therefore, liable for revision under clause (a) & (b) of the Explanation of (2) of section of 263 of the Act. The relevant finding of the ld. PCIT is reiterated herein below:- "8. Considering the above facts, it is held that the order passed by the Assessing Officer (FAU) u/s 147 r.w.s. 144B of the IT Act dated 15.04.2021 is suffering from specific defects, hence, order so passed by the AO is erroneous and also prejudicial to the interest of the revenue. The order of the assessing officer is therefore, liable to revision under clause (a) &(b) of the Explanation (2) of section 263 of the Income Tax Act, 1961. 9. In the light of above discussion, assessment order passed by the AO in the case of the assessee is Set-aside (Partly) for fresh assessment by the AO on the issues of - (A) Disallowance on account of late payment of ESI/PF (Rs.24,14,531/- ). (B) Disallowance u/s 43B(e) of the Act (Rs.63,97,664/-). (C) Disallowance u/s 36 (1)(iii) (Rs.21,732/-); (D) New Loans accepted during the year (Rs. 6.35 Crores) The AO is directed to complete the asse....
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....6.11.2017 declaring total income at Rs. 9,56,12,530/-. The same was processed on date 16.10.2018 u/s 143(1) of the Act. Thereafter, the case was reopened u/s 147 by issuing notice u/s 148 dated 17.03.2020, in response to which the appellant filed ROI declaring the same total income. The reassessment was completed after making additions of Rs. 6,93,32,499/- making additions u/s 68 of the Act on account of unexplained credits in the grab of bogus sales and thus, the total income was finally assessed at Rs. 16,49,44,849/- (PB 62-69) vide the order u/s 143/147 at 15.04.21. Later on, the ld. CIT acting u/s 263 issued SCN u/s 263 14.02.2023 (PB 122-127). In response thereto the appellant filed submissions time to time on dated 21.02.2023 (PB 128), 16.06.2023 and finally on 13.10.2023 (PB 129-146). The ld. CIT initially raised the following issues: - 1. Late payment of PF/ESI contributions u/s 43B (Rs. 24,14,531) 2. New Loans taken during the year, not examined (6.35 Crore) 3. Disallowance of unpaid sale tax u/s 43B of the Act (Rs, 5,02,000) 4. Disallowance of unpaid interest payable to banks u/s 43B (e) of the Act (Rs. 63,97,664) ....
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.... be charged as per Section 115BBE of the Act for the addition already made u/s 68 of the Act, supra. 10. Thereafter, based on outcome of such enquiries and verification, necessary additions, wherever required, may be made to the total income of the assessee as per law by modifying the assessment order u/s 147/144B of the Act dated 15.04.2021. However, the AO is directed to ensure that reasonable opportunities of being heard are provided to the assessee before passing such order." Hence this appeal Submissions: The impugned order passed u/s 263 is completely beyond the scope of S. 263 of the Act on various grounds, as discussed herein below. 1. Legal Position on Sec.263 - Judicial Guideline: Before proceeding, we may submit as regards the judicial guideline, in the light of which, the facts of this case are to be appreciated. 1.1 The pre-requisites to the exercise of jurisdiction by the Commissioner u/s 263, is that the order of the Assessing Officer is established to be erroneous in so far as it is prejudicial to the interest of the Revenue. The Commissioner has to be satisfied of twin conditions, namely (i) The order of the Ass....
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....ment as contemplated u/s 147 of the Act is for a specific purpose of assessing the escaped income and therefore, the AO, in the reassessment proceedings can assess only those item of income which have escaped assessment and find place in the reasons to believe but the income not being a part of the reasons recorded cannot be considered in the reassessment proceedings and also therefore, cannot be subject matter of revisionary proceedings u/s 263 of the Act. The facts are not disputed that in this case, the Assessment Order passed u/s 147 dt. 15.04.2021 has been subjected to revision u/s 263 by the Ld. CIT. A Notice u/s 148 was issued on 17.03.2020 for A.Y. 2017-18 under consideration, and reasons to believe are recorded as communicated to the appellant by the AO vide his letter dt. 01.10.2020. For a ready reference the same are being reproduced hereunder: "The information was received from the office of Income Tax officer, Ward 45(1), Delhi vide his letter no. ITBA/AST/F/17/2019- 20/1021883746(1) dated 07/12/2019 that during the assessment proceedings Sh. Sanjay Prop. Kangna agro Products stated in his statement which was recorded on oath u/s 131 of the IT Act 1961 that he....
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....ne in as much as the entire assessment was not thrown open before him. Hence, consequently AO was supposed to complete the assessment u/s 147/148 of the Act as per reason to believe only. Also when no other escaped income came to his notice during re-assessment proceedings. The issues raised now by the Ld. CIT in the captioned SCN u/s 263 being failure of the AO in making various disallowances/additions were not part of the reasons to believe. In other words, the captioned SCN does not touch/not even whisper anything stated in the reasons to believe based on which only, the proceedings u/s 147 was initiated hence, such issues are beyond the scope of 263 and therefore, the proceedings may kindly be dropped. 3. Supporting Case Laws: 3.1 In case of CIT vs. Alagendran Finance Ltd, (2007) 211 CTR (SC) 69, the Hon'ble Supreme Court, while dealing with more or less an identical issue of revisionary power exercised under s. 263 of the Act in respect of an assessment order passed under s. 143(3) r/w s. 147 of the Act, has held in the following manner: "15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this c....
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....ssment - General - Whether where assessment is sought to be reopened only on one or more specific grounds and reassessment is confined to one or more of those grounds, original order of assessment would continue to hold field, save and except for those grounds on which a reassessment has been made under section 143(3) read with section 147 - Held, yes Fact: For the relevant assessment year, the assessee's original order of assessment under section 143(3) dated 27-12-2006 was sought to be reopened on 6-3-2007 solely on the basis that the benefit of section 72A had been wrongly allowed to the assessee. In the order of reassessment, that was passed on 27-12-2007, the claim made by the assessee with reference to the provisions of section 72A was disallowed. On 30-4-2009, the Commissioner issued the impugned notice under section 263 on the ground that the assessment order passed on 27-12-2007 was erroneous and prejudicial to the interests of the revenue. The assessee challenged said notice contending that though, in form, the Commissioner had sought to revise the order dated 27-12-2007 which was passed on a reassessment made under section 143(3) read with section 147, in substance a....
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....d to 31.10.2017. Payment of Employees State Insurance (ESI) S.No. Month of Deduction Amount Paid Due Date of Payment The actual date of payment 1. August, 2016 Rs. 38,263/- 21-Sep-16 26-Sep-16 2. October, 2016 Rs. 38,263/- 21-Nov-16 22-Nov-16 3. November, 2016 Rs. 37,272/- 21-Dec-18 30-Jan-17 4. December, 2016 Rs. 45,810/- 21-Jan-19 31-Jan-17 5. January, 2017 Rs. 52,449/- 21-Feb-19 06-Mar-17 6. February, 2017 Rs. 51,546/- 21-Mar-19 24-Mar-17 Payment of Employees Provident Fund (PF) S.No. Month of Deduction Amount Paid Due Date of Payment The actual date of payment 1. April, 2016 Rs. 2,74,365/- 15-May-16 16-May-16 2. August, 2016 Rs. 26,028/- 15-Sep-18 16-Sep-16 3. September,2016 Rs. 2,98,842/- 15-Oct-18 19-Oct-16 4. October, 2016 Rs. 2,98,842/- 15-Nov-18 21-Nov-16 5. November, 2016 Rs. 2,95,941/- 15-Dec-18 06-Feb-17 6. December, 2016 Rs. 3,21,421/- 15-Jan-19 03-Feb-17 7. January, 2017 Rs. 3,22,118/- 15-Feb-19 21-Feb-17 8. February, 2017 ....
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....x vs. M-s State Bank of Bikaner & Jaipur (D.B. Income Tax Appeal No.177-2011); Commissioner of Income Tax vs. Jaipur Vidyut Vitaran Nigam Ltd. (D.B. Income Tax Appeal No.189-2011), followed." 4.2.4 The Hon'ble ITAT, Jaipur Bench has also followed the same view in the case of ACIT v-s M-s Anil Special Steel Industries Ltd., Jaipur (2014) 52 TW 189 (JP) Para 4 & 7 of its order. Similarly, in M/s K.S. Automobiles Pvt. Ltd. vs ITO in ITA No. 1184 (JP), Zuberi Engineering Company vs. DCIT (2019) 197 TTJ (Jp) 659 and Hon'ble Apex court in the case of CIT vs. Alom Extrusions Ltd. (2009) 227 CTR 417 (SC) also held so. 5. The above decisions were binding upon the AO even if the department might have filed SLP in absence of any stay granted over the operation of the said judgments. Thus, the AO was bound to have followed the law of the land. Hence he took a possible view and committed no error. 6. Alternatively, it is well settled law that if decisions of non-Jurisdictional High Courts are in conflict with each other than decision favorable to assessee must be followed. Kindly refer CIT v. Vegetable Products Ltd. [1972] 88 ITR 192 (SC) Hon'ble Supreme Court has lai....
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....ddition thereto, making disallowance under Income Tax Act and creating demand cannot be the legislative intent. The above provisions of 36(1)(va) nowhere prohibits the allowability u/s 37(1), which is a residuary category. Even in the case of Checkmate (Supra) there is no prohibition if the assessee is allowed u/s 37(1) of the Act. This contention is duly supported by the case of Trupti Enterprises (P) Ltd. Vs. DCIT (2022) 36 NYPTTJ 1280 (Cuttack)." 4.1.2 The Ld. CIT dealt with this issue at page 22 onwards, as under: - "(A) Disallowance on account of Late Payment of PF/ESI Contributions (Rs.24,14,531) (i) The assessee failed to make the payments of certain amounts collected from the employees as provident fund/ESI contribution within the prescribe time. The statutory auditors have reported in from 3CD that following amounts of PF/ESI contributions of employees were not paid/deposited by the assessee within the prescribed time of relevant statues of PF/ESI. X X X (ii) This amount of Rs. 24,14,531/- was legally disallowable in terms of section 36(1)(va) r.w.s 2(24)(x) of the Income Tax Act, 1961. (iii) However, while finalizing t....
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....spute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the revenue. The satisfaction of the Commissioner, therefore, was based on no material, either legal or factual, which would have given him the jurisdiction to take action under section 263. [Para 5]" (II) Also relied CIT, LTU, Bangalore vs. Canara Bank [2021] 123 taxmann.com 207 (Karnataka). Since the AO acted in accordance with the law as interpreted by the jurisdictional HC, ITAT which prevailed on the date of the passing assessment order and continued even when Sec.263 order was passed hence, no fault can be found in his action and in particular, proceeding u/s 263 cannot be invoked in such a case. (III) Further, it was held in the case of PCIT vs. SPPL Property Management (P.) Ltd. [2023] 151 taxmann.com 103 (Calcutta) that where Assessing Officer had followed decision of jurisdictional High Court which held field in relevant assessment year relating to PF contribution received from employees but not deposited to concerned account within due date and completed assessment on said basis, assessment could not be held to be prejudicial to intere....
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....re though claimed but was not paid. Reference to note 23 to financial statements (PB 17-28) is also relevant. Since the assessee has been making payments in this manner that the bank itself making the deduction of interest from the CC account, it was not a case of any amount remaining outstanding as on 31.03.2017. Hence, it is not a case of making payment after the end of the previous year and before the due date of filing ITR u/s 139(1). Moreover, clause 26(i)(B)(a) (PB 37) speaks of the payment of the statutory dues only and apparently does not include outstanding interest payment to the bank relating to clause (e) of section 43B of the Act." 4.2.2 The Ld. CIT dealt with this issue at page 24 onwards, as under: - "C) Disallowance u/s 43B(e) of the Act (Rs.63,97,664/-) (i) As per Note 23 to Balance-sheet, the assessee has incurred an expenditure of Rs. 63,97,664/- as interest payable to scheduled banks on bank loans. As per clause (e) of section 43B of the Act, any sum payable by the assessee as interest on any loan or advance from Scheduled Bank, if not paid before the due date of filing of ITR u/s 139(1) of the Act, was disallowable. (ii) Furt....
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.... case. 4.3 C) Disallowance u/s 36(1)(iii) or u/s 37 of the Act (Rs.21,732): 4.3.1"12. In Para 4(e) of the SCN it is alleged that as per clause 34(c) of form 3CD (PB 40-41), the auditors have reported payment of interest of Rs. 21,732/- on account of the delayed payment of TDS. It is alleged that the same is not allowable expenditure u/s 36(1)(iii) or u/s 37 of the Act which otherwise should have been disallowed. It is submitted that firstly, such an interest is not of penal nature and it is merely of compensatory nature. There is no allegation nor any finding with evidence that such interest was of penal nature. Even a reference to the relevant provision of Sec.201 of the Act doesn't speak of any such interest of penal nature. Such contention is also supported by various case laws." 4.3.2 The Ld. CIT dealt with this issue at page 25 onwards, as under: - "(D) Disallowance u/s 36(1)(iii) or u/s 37 of the Act (Rs.21,732/-) (i) As per clause 34 (c) of form 3CD, the auditors have reported that the assessee have incurred an interest amount of Rs. 21,732/- for delayed payment of TDS. This interest was not an allowable expenditure u/s 36(1)(iii)....
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....editor bearing complete name, address and PAN is enclosed (PB 77). Similar confirmation in case of all the creditors are also enclosed (PB 70-80). However, there is nothing on record to show anything contrary thereto. Some of the other creditors are old and are coming from preceding years as their opening balances are available in their ledger accounts. In most of the cases closing balances are there which means the account was carried forward in next AY 2018-19. Nothing wrong was found hence the assessment was rightly completed." 4.4.2 The Ld. CIT dealt with this issue at page 26 onwards as under: - "(F) Inadequate Examination/Verification of 'New Loan During the Year (Rs.6.35 Crore): - (a) The clause 31(a) of Tax Audit report contains the details of loan or deposit amount exceeding the limit specified in sec. 269SS taken or accepted during the previous year. (b) The a/c confirmations of respective parties have been filed during the revisional proceedings u/s 263 of the Act. Further, the PAN of M/s Advani Pvt. Ltd., having the maximum outstanding/closing balance of Rs. 1.05 Crores has been furnished (PAN-AACCA1895Q). (c) Perusal of resp....
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....evant to the assessment year 1975- 76". In the case of Abdul Hamid v. Income-tax Officer [2020] 117 taxmann.com 986 (Gauhati - Trib.) it was held that only probability and likelihood to find error in assessment order is not permitted u/s 263. 4.5 E) Tax charged u/s 115 BBE of the Act 4.5.1 Where the show cause dated 03.10.2023 (PB 143-144), the Ld. CIT also raised the issue of application u/s 115 BBE as under-: "However, in connection with the queries raised vide Notice dated 14.02.2023 vis-à-vis your reply filed on 16.06.2023, on further examination of assessment records, it was found that the FAO/AO, while finalizing the assessment proceeding u/s 147 of the Act, in your case for the impugned A.Y on 15.04.2021, made an addition of Rs. 6,93,32,499/- u/s 68 r.w.s 115BBE of the Act. This addition of Rs. 6,93,32,499/- was made by the FAO by way of treating the sales made to M/s Kangna Agro Products as non-genuine and bogus and hence, held that the same was only an accommodation entry. In para 7 of the assessment order, the FAO has held that since the assessee has not given any vital information to prove that the impugned sales of Rs. 6,93,32,....
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....unt of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance [or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) [and clause (b)] of subsection (1).]" 5.2 A combined reading of S. 14 with S. 56 of the Act makes is evidently clear that for the assessment of an income it must have to be classified under four heads of income as enumerated u/s 14 and if it doesn't fall under any specific head of income as per item A to E of S. 14, such income has to be assessed under the residuary head of income i.e. item F of S. 14. Therefore, income added u/s 68 or 69 etc. has to be given a specific head in terms of S. 14. 5.3 The Hon'ble Supreme Court in case of Karanpura Development Co Ltd vs. CIT [1962] 44 ITR 362 (SC) held that these heads are in a sense exclusive to one another and income which falls within one head cannot be brought to tax under another head. Further, the Hon'ble Supreme Cour....
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....roducts but was treated as Bonus, etc, which is treated as an accommodation entry. The Ld. CIT also referred to Para 7 of the subjected assessment order and finally addition u/s 68 of the Act. These admittedly facts that the amount of sales declared by the assessee in the accounts. Thus, the amount subjected to emanated from the regular business activity of the assessee of manufacturing and extracting of vegetable oil, doc, etc. The net profit arising from this transaction was also undisputedly included in the audited P&L account and the ROI. Thus, this subjected amount, pertained to the declared business activity/ source only. Therefore, such amount could not be considered as income from other sources and was to be classified. Even the Ld. CIT in the impugned order did not direct the AO that such income should be assessed under the income from other sources. There is no other known or unknown source of income, neither stated by the assessee nor so found by the department. 5.7 In these circumstances, the only inescapable conclusion is that the subjected income was nothing but business income from the disclosed business activity of the assessee. Therefore, "merely to levy m....
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....nt by means of an appeal." 6. Judicial Guideline: The Hon'ble Rajasthan High Court, ITAT Jaipur and various other courts have held that where the additional income/ undisclosed income declared during the course of survey is relatable to some business activity then it cannot be considered to be income from other sources and consequently S. 115BBE cannot be invoked. 6.1 The Hon'ble Ahmedabad Tribunal in case of Chokshi Hiralal Maganlal vs DCIT (ITA No. 3281/Ahd/2009 AY 2004-05 dated 5 August 2011) held that for invoking deeming provisions under sections 69, 69A, 69B & 69C there should be clearly identifiable investment or asset or expenditure (i.e. in our understanding not connected with business so as to make convenient to invoke aforesaid sections). In case source of investment or asset or expenditure is clearly identifiable and has no independent existence of its own where a case arises to claim that it cannot be separated from business then first 'what is to be taxed is the undisclosed business receipt. Only on failure of such exercise, it would be regarded as taxable under section 69 on the premises that such excess investment or asset or expenditure is unexpla....
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.... according to the common notions of practical man because the Act does not provide any guidance in the matter. Of course, lot of judicial precedents are available to a taxpayer to arrive at a conclusion about determination of appropriate head of income. 8. No error when AO acted in accordance with binding decisions: In addition, the legal position and the judicial guideline through the various decisions of Hon'ble Rajasthan High Court and ITAT Jaipur, is well settled. The AO acted in accordance with the judicial guideline and the ratio laid in the cases of: a. CIT vs Bajargan Traders [2024] 466 ITR 397 b. Chokshi Hiralal Maganlal vs DCIT (ITA No. 3281/Ahd/2009 dated 05.08.2011/ (2011) 45 SOT 349). c. Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014- 15 dated 25 May 2018). and applying the same on the facts of the case in hand, decided that the provisions of S.115BBE were not applicable and hence did not therefore apply high rate of tax. 9. (F) Clause (a) of Explanation 2 of S. 263 wrongly invoked: 9.1 The ld. CIT stated that "7. As per the amended provision i.e., clause (a) of Explan....
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....in it. It is only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. The AO in the present case has not accepted the submissions of the assessee on various issues summarily but has shown appetite for inquiry and verifications. The AO has passed after making due enquiries issues involved impliedly after due application of mind. Therefore, the Explanation 2 to section 263 of the Act do not, in our view, thwart the assessment process in the facts and the context of the case. Consequently, we find that the foundation for exercise of revisional jurisdiction is sorely missing in the present case. 18 In the light of above facts and legal position, we are of the considered view that the AO had made detailed enquiries and after applying his mind and accepted the genuineness of loans received from GTPL and PAFPL, which is also plausible view. Therefore, we find that twin conditions were not satisfied for invoking the jurisdiction under section 263 of the Act. The case laws relied by the ld....
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....n 263, it is clear that the power of suo-motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue". It is not an arbitrary or unchartered power, it can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issue....
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....er section 143(3), assessment order could not be held to be an erroneous order which was prejudicial to interest of revenue. In view of the above submissions and the Judicial Guideline, the impugned order passed u/s 263 deserves to be quashed. 10. Notice u/s 263 barred by limitation: 10.1 At the outset, it is submitted that S. 263(2) of the Act provides that no order would be made in exercise of the powers conferred u/s 263(1) of the Act after the expiry of two years from the end of the financial year in which the order is sought to be revised was passed. 10.2 It can't be denied that the matter relating to the examination of the (1) Late payment of PF/ESI contributions u/s 43B, (2) New Loans during the year, (3) Disallowance of unpaid sale tax u/s 43B of the Act, (4) Disallowance of unpaid interest payable to banks u/s 43B (e) of the Act, (5) Disallowance u/s 36(1)(iii) or u/s 37 of the Act and (6) Disallowance u/s 35AC (2) of the Act (hereinafter referred as the "new issues / aspects"), have the subject matter of the re-assessment order dated 15.04.2021(PB 62-69) passed u/s 143(3)/148 of the Act [which is presently being sought to be revised by ....
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.... 10.5. Supporting Case Laws: For this proposition kindly refer the following: 10.5.1. In Chhabra Syncotex (P) Ltd. Vs. ACIT [ITA No. 239/Jp/2018]; (Supra - Re. Para 3.4) (DC ) 10.5.2. CIT vs. Larc Chemical Limited [2014] 368 ITR 655 (Bombay) is the direct decision on the present context, wherein, it was held that (DC): "12. We have considered the rival submissions. It is not disputed that save and except the issue of non-genuine purchases all other issues dealt with by the Commissioner of Income-tax in the order dated March 30, 2009, were not a subject matter of the assessment order passed on June 28, 2006, under section 143(3)/147 of the Act. All the other issues on which the Commissioner of Income-tax is seeking to exercise the jurisdiction under section 263 of the Act were concluded by virtue of an intimation under section 143(1) of the Act which admittedly was done beyond a period of two years prior to the notice dated March 17, 2009, issued under section 263 of the Act. Section 263(2) of the Act provides that no order would be made in exercise of the jurisdiction under section 263(1) of the Act after the expiry of two years from the end of t....
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.... the assessee claimed deduction in respect of the interest amount paid to the trust on the goodwill during the assessment years 1986-87 to 1988-89 whereas under the partnership deed, the goodwill amount was payable by incoming partners and, therefore, no amount was payable by the firm as and by way of interest for the liability of the goodwill and, therefore, the firm was not entitled to claim any deduction in respect of the interest paid to the trust. Under the order of the Assessing Officer, the relevant facts have not been examined. The order of the Assessing Officer was erroneous. The order of the Assessing Officer was prejudicial to the interest of the revenue." 10.5.5. Further in the case of L.G. Electronics India (P.) Ltd. Vs PCIT (2016) 388 ITR 135/ 290 CTR 283 (Allahabad) (PB 23 to 29)(DC ), the original assessment was passed at total income of Rs. 5,83,91,17,790/- on dated 21.10.2011 wherein an addition on account of sales tax subsidy of Rs. 61,00,79,579/- was made. Thereafter, the case was reopened and reassessment was completed vide order dated 26.03.2015 by making a further disallowance of Rs. 1,38,95,995/- u/s 40(a)(ia) of the Act (and the total reassessed in....
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....ed to succeed on the second point raised before the learned Single Judge." 11. It is further submitted that, any contrary interpretation/view, shall render the limitation provisions u/s 263(2) of the Act as completely nugatory or purposeless and shall confer blind and unfettered power upon the revenue and the ld. CIT may disturbed the finality of the orders, one way or the other, which can never be the intention of the legislature. The Hon'ble courts have always held that the provisions relating to limitations must be construed very strictly in as much as permitting the reopening of a concluded matter has the effect of unsettling the rights and obligations of the parties at any moment of time. 12. Even Otherwise (alternatively, and without prejudice to the other contentions and arguments), assuming, the AO had passed an assessment order u/s 143(3), prior to the subjected reassessment order, even then this revision u/s 263 would have been barred by limitation since as per Section 153(1) [prevailing at that time], the said order was to be passed within 21 months from the from the end of the assessment year in which the income was first assessable. The time chart is ....
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.... w.r.t. the status of the appeal (which he believed had already been filed), but then he was informed that the same is yet to be filed and that the appeal papers were received by Shri Sushil Mittal for getting them signed. In absence of any persuasion from the side of the Assessee and M/s DHARM CHAND JAIN & ASSOCIATES, Chartered Accountant, the counsel at Jaipur, already handling a heavy workload, informed the factual position to Shri Dharm Chand Jain. It is only thereafter, the Director, Shri Sandeep Kumar Saboo immediately enquired Shri Sushil Mittal and asked him to hand over him the subjected documents - the appeal set, who thereafter, recollected and after making an extensive search could lay his hand on the appeal papers. Upon getting hold of the documents, Shri Sandeep Kumar Saboo, promptly signed the papers and thereafter, forwarded the same to the counsel at Jaipur without any further delay. 2.4Thus, the delay in filing of the instant appeal was not at all deliberate or intentional but arose due to circumstances beyond the assessee's control, primarily stemming from the unintended and bonafide mistake committed by the Employee working at the Assessee-Company. The ....
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....5. Copy of notice u/s 142(1) dated 01.03.2021 along with its reply filed on dated 12.03.2021 before AO 51-61 6. Copy of Assessment Order dated 15.04.2021 passed u/s 147 62-69 7. Copies of Confirmations of accounts from the Loan Creditors. 70-80 8. Copies of Receipts of service tax payments for AY 17-18. 81-94 9. Copy of Ledger statement of Interest paid to the schedule bank. 95 10. Copy of relevant extracts of Bank Statement of CC A/c 96-119 11. Copy of form 58A filed in support of the deduction claimed u/s 35AC. 120-121 12. Copy of notice u/s 263 of PCIT dated 14.02.2023 122-127 13. Copy of reply of filed in response to notice dated 14.02.2023 along with Acknowledgement (same was filed for notice dated 03.10.2023) 128-142 14. Copy of notice u/s 263 of PCIT dated 03.10.2023 143-145 15. Copy of acknowledgement of response filed for notice dated 03.10.2023 146 6.3 The ld. AR of the assessee also filed an another paper book on 11.11.2024 on the decision referred in support of the contention so raised in the written submission and the index of the judicial decision relied upon are as unde....
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....2) of section 263 of the Act would begin to run from the date of order of assessment and not from the order of the re-assessment. Thus, action of the ld. CIT(A) is illegal and PCIT's order was silent on that issue even though the assessee raised that aspect of the matter before her. Even the reason advanced by the ld PCIT partly was also not forming part of the show cause notice. 8. Per contra, the ld. DR supported the order of the ld. PCIT and submitted that the assessee while passing the order u/s. 263 of the Act PCIT has dealt with all the submission and objections raised by the assessee. The contention that the order u/s. 148 cannot be revised is incorrect appreciation of the fact and the ld. PCIT can revise all the orders and therefore, she supported the order of the ld. PCIT. 9. In the rejoinder to the arguments of the ld. DR, ld. AR of the assessee submitted that the ld. PCIT has invoked the clause (a) & (b) of the Explanation (2) of section 263 of the Income Tax Act, 1961 whereas the same was not part of the show cause notice issued to the assessee and on that aspect of the matter he relied upon the written submission so filed. 10. We have heard both the parties an....