TaxTMI 
TaxTMI 
2025 (3) TMI 1209
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....passed by the ld. Assessing Officer is found to be erroneous in so far as it is prejudicial to the interest of the revenue. 2. That in law and on the facts and circumstances of the case, the ld. Principal Commissioner of Income Tax, (Central), Jaipur grossly erred in directing the Assessing Officer to disallow the so-called excess contribution to the ESI/PF more than as prescribed under rule 87 of the Income Tax Rules. 3. That in law and on the facts and circumstances of the case, the ld. Principal Commissioner of Income Tax, (Central), Jaipur grossly erred in directing the Assessing Officer to take excess stock valued at Rs. 1,50,00,000/- as investment and treat it as unexplained income u/s. 69 r.w.s. 115BBE of the Act. 4. That in law and on the facts and circumstances of the case, the ld. Principal Commissioner of Income Tax, (Central), Jaipur grossly erred in directing the Assessing Officer to disallow interest expenses of Rs. 38,35,156/- u/s. 14A r.w.r. 8D of the Act. 5. That in law and on the facts and circumstances of the case, the ld. Principal Commissioner of Income Tax, (Central), Jaipur grossly erred in directing the Assessing Officer t....
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.... how and on what basis the profit of Rs. 38,69,984/- claimed to have been made on inter unit transfer of goods valuing Rs.2,92,49,216/- had been worked out, assessee's A/R admitted that no working in respect of each invoice readily available and it was a lengthy process. In the light of that situation, the assessee was required to explain as to why the invoice value may not be enhanced and thereby the deduction claimed u/s 10AA by the SEZ Unit may not be reduced by invoking the provisions of Sec. 80IA(8) r.w.s. 10AA of the Act. Thus, ld. AO noted that the issue for consideration before him was to what quantum by which deduction claimed u/s 10 AA by the SEZ Unit be reduced. Ld. AO considering the facts of the case in its entirety, he considered it fair and reasonable and to safeguard the interest of revenue to make a further addition @ 17.74% on the value of inter-unit transfer of Rs. 2,92,49,217/-, being the net profit rate disclosed by Sitapura Unit as profit, this was worked out at Rs. 51,88,811/- over and above the profit of Rs. 38,88,584/- as claimed by the assessee on inter-unit transfers from Mahapura Domestic Unit. Accordingly amount of Rs. 51,88,811/- was reduced from t....
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.... the cheques for the payment were tendered on or before the due date, but the credit had been delayed due to late clearing by the bank. Ld. PCIT noted while hearing fixed for the revisionary proceeding wherein AR was asked to explain how the payment of PF/ESI made not in excess of the limits prescribed as per rule 37 of the Income Tax Rules. In the reply it was submitted that the ld. AO raised a specific query wherein the assessee explained that how payment of ESI/PF was not more than the stipulated percentages as prescribed u/r 87. Ld. PCIT after perusing the reply noted that ld. AO was required to verify what are the component of Rs. 12,24,75,451/- which the AR is showing as part and parcel of the salary & wages that AO failed to do so. Therefore, she considered that ld. AO has erred while passing the assessment order in this and thus has caused prejudice to the interest of revenue. 4.3 As is evident from the record that the assessee made disclosure of Rs. 1.50 crore as additional income during survey on account of excess stock. Ld. PCIT noted that income offered for tax in the ITR was on account of excess stock found during survey and hence such sum should have been brough....
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....old that ld. AO failed to made disallowance of deduction claimed u/s. 10AA of the Act. 4.6 So with those observations and relying on the order of the Malabar Industiral Limited Vs. CIT and CIT Vs. Paville Projects P. Ltd., she held that the assessment order passed u/s 153A dated 12/4/2021 passed by the AO is held to be erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Act. The said order has been passed by the AO in a routine and casual manner without applying proper mind on issue discussed in the order. The AO has not verified the details which were required to be verified under the scope of scrutiny. The order of the AO is, therefore, liable to revision under the explanation (2) clause (a) of section 263 of the Act. The assessment order is set aside and restored to the file of Assessing officer to examine the issues in the light of the observation made in this order after allowing reasonable opportunity to the assessee. 5. Feeling dissatisfied with the finding recorded by the ld. PCIT, Central, Jaipur in an order passed u/s. 263 of the Act, the assessee preferred the present appeal challenging the order of the PCIT....
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....bed Depreciation of Rs. 77,85,895/-. Totaling Rs 81,58,486/- [PB 200-201]. 1.6. That the assessee Company's DTA Unit (Mahapura) rented the building and machinery situated at Mahapura, Jaipur [PB 387-393] which was earlier owned by PinckcityColourstones Pvt. Ltd. during the F.Y. 2011-12 relevant to AY 2012-13 and started its own domestic Operations being Non-deduction claiming Unit situated at Mahapura, Jaipur [PB 204]. That NO part of Building and Plant & Machinery owned by M/s. Pink City Colorstones Pvt. Ltd. was given on lease/sold to M/s. Pinkcity Jewelhouse Pvt. Ltd. (SEZ Unit). 1.7. That during the FY 2012-13 the plant and machinery was purchased by Mahapura, Jaipur (DTA Unit) from PinkcityColourstones Pvt Ltd at WDV for a consideration of Rs. 1.88 Crores [PB 205-206]. That the Mahapura, Jaipur (DTA Unit) apart from the Machinery Purchased from PinkcityColourstones also made substantial investment in Plant and Machinery at domestic Unit of Rs. 57,12,807/- during FY 2011-12 and Rs. 63,03,158/- during FY 2012-3 and thereon till 31.3.2016. The additions to Plant & Machinery in Mahapura, Jaipur (DTA Unit) were to the tune of Rs 6.47 Crore apart from the Machinery....
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....nted to the assessee appellant by the Hon'ble ITAT. 1.12. That survey proceeding u/s 133A of the Act was carried out against the assessee appellant's business premises on 17-18.08.2017 and in consequence, reassessment proceedings u/s. 148 of the Act was initiated for the Assessment Years 2012-2013 to 2015-2016 and scrutiny assessments u/s. 143(3) of the Act for Assessment Years 2016-2017 to 2018-2019 were also initiated. 1.13. That during the course of Survey specific query was made to the Director with regards to transfer of Plant & Machinery by PinkcityColourstones Pvt Ltd to which it was categorically replied that the same was transferred to assessee appellants DTA Unit at Mahapura [PB 816-822]. Subsequent to survey queries were made to the assessee appellant to which replies dated 02.09.2017 [PB 207-213] & 09.09.2017 [PB 214-216] were submitted by the assessee appellant. 1.14. That on the basis of survey, thereafter scrutiny assessment orders u/s. 143(3) r.w.s. 147 of the Act for assessment year 2012-2013 was passed on 17.12.2018 [PB 79-94], for assessment year 2013-2014 was passed on 17.12.2018 [PB 111-127], for assessment year 2014-2015 was passed o....
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....ransfer of goods valuing Rs.2,92,49,216/- has been worked out. The assessee's A/R admitted that no working in respect of each invoice is readily available and it is a lengthy process. The assessee sought further time to furnish the details and explain the issue, but this being a time-barring case, no further time is allowed. Sufficient opportunities have already been allowed to the assessee. In such a situation, the assessee was required to explain as to why the invoice value may not be enhanced and thereby the deduction claimed u/s 10AA by the SEZ Unit may not be reduced by invoking the provisions of Sec. 801A(8) r.w.s. 10AA of the Income Tax Act, 1961. The issue for consideration is as to what is the quantum by which deduction claimed u/s 10 AA by the SEZ Unit is to be reduced. The turnover, gross profit/gross profit rate, net profit and net profit rate disclosed by both SEZ Unit and Domestic Unit are as follows :- Unit Turnover Rs GP /GP Rate Rs. NP /NP rate Rs. DomesticUnit 52,68,47,908 67271908 /12.77% 12672574/2.41% SEZ Unit-1 64,83,44,075 155602459/24.00 115008372/17.74 6. The details filed by the assessee and books of accounts ha....
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....56-557], [PB 558- 559], [PB 560-563], [PB 564-565] & [PB 566-571] were filed by the assessee appellant and supporting documents [PB 572-619, 620, 621, 622-627, 628, 629-630, 631-632, 633-655] were also submitted. That the assessment order dated 12.04.2021 was passed whereby the ld. Assessing Officer allowed deduction u/s. 10AA by dividing the common expenses incurred by Mahapura Domestic Tariff Area Unit &Sitapura SEZ Unit-I proportionately. To the extent benefit of deduction u/s. 10AA was disallowed, the assessee appellant is in appeal before the ld. CIT(A) and the appeal is pending. It may be highlighted that at one end the ld. Assessing Officer proposed the ld. PCIT to take action against the assessee u/s. 263 of the Act vide its letter dated 19.02.2021 for A.Y. 2015-2016 [PB 676-678], however, he himself has while passing the assessment order for A.Y. 2018-2019 subsequently on 12.04.2021 has not disallowed the entire claim of deduction u/s. 10AA of the Act and has disallowed the claim of deduction by dividing the common expenses incurred by Mahapura Domestic Tariff Area Unit &Sitapura SEZ Unit- I proportionately. It is apparent that the Assessing Officer was himself not satisfi....
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....47] & dated 30.03.2024 (email) [PB 548-555] alongwith relevant supporting documents. 1.21. That the ld. PCIT vide its order dated 30.03.2024 passed u/s. 263 has partly accepted the submission of the assessee appellant to the extent of nonapplicability of provisions of section 40(a)(ia) and disallowance u/s. 36(1)(va) for delay in deposit of ESI/PF, however, has held that the assessment order dated 12.04.2021 passed by ld. Assessing Officer is erroneous & prejudicial to the interest of revenue qua (a) benefit of section 10AA is not available to the assessee appellant, (b) disallowance u/s. 14A ought to have been made, (c) surrendered stock should be subjected to tax u/s. 69 r.w.s. 115BBE of the Act & (d) ESI & PF is deposited in excess as provided under Rule 87 of the Income Tax Rules. Ground No. 1: Order passed by the ld. PCIT u/s. 263 is bad in law. 2. Proceedings initiated on the basis of Audit Objection: That on the basis of Audit Objection [PB 680-710] & letter by the ld. CIT(DR-ITAT) [PB 711], the ld. PCIT has issued notice dated 08.03.2024 u/s. 263 [PB 01-05] for A.Y. 2018- 2019. The reasons for taking the proceeding u/s. 263 is not an independent v....
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....n by the ld. AO on which the ld. PCIT is not in agreement cannot hold the order liable to be sustained. PCIT based on the borrowed information and has not established as to how the view taken by the ld. AO is not correct when the issue raised has already been form part of the proceeding before the ld. AO. Based on the discussion so recorded we are of the considered view that the proceeding initiated u/s. 263 is merely based on the audit objection, PCIT is not agreement with the ld. AO and the observation on the stock, in the audit report already filed by the assessee. Thus, there is clear absence of his satisfaction and there is no independent view of the ld. PCIT even on merits thus, the assessee which has been completed there cannot be the second inning to the revenue without justifying the twin condition to the order passed by the ld. AO. We note that on all the four issue the AO has called for the details, examined the issue and the plausible view on the matter is taken. Merely there is an audit objection, adverse remark of the auditor and the ld. PCIT is not in agreement with the view of the AO the order cannot be sustained as liable to quash as the twin cond....
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....w cause notice u/s.263 of the I.T. are similarly worded as have been noted in the audit objection. Therefore, subsequently on mere audit objection, the Ld. Principal CIT, was not justified in initiating the proceedings u/s.263of the I.T. Act. The Principal CIT was, therefore, not justified in holding that Assessing officer did not make necessary enquiry into the matter. The Ld. Principal CIT merely disagree with the findings of the Assessing officer, therefore, it could not be termed as assessment order to be erroneous and prejudicial to the interest of Revenue. Therefore, we do not subscribe to the view of the Principal CIT in exercising jurisdiction u/s.263 - Decided in favour of assessee. • Hon'ble ITAT Chennai Bench in Refex Industries Ltd. v. DCIT (2014) 11 TMI 653 has held: Rather, CIT without independent application of mind has replicated audit objections in the show cause notice issued u/s.263 - In Shri Jaswinder Singh Versus Commissioner Of Income Tax-II [2012 (6) TMI 543 - ITAT Chandigarh] it has been held that exercise of revisional power on the basis of audit objection is not tenable in law - thus, the CIT without examining the records and proper applicatio....
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....the Revenue. It is evident from the show cause notice that the ld. PCIT initiated revisionary proceedings just on the basis of the AO's report without carrying out any independent examination of the record followed by independently satisfying himself that the assessment order required revision. Thus we are satisfied that the ld. PCIT exercised his jurisdiction to initiate the revision proceedings in a wrongful manner, which, ergo, cannot be accorded our imprimatur. Assessee created the bedrock for challenging the revision through the additional ground, on the basis of the show cause notice issued by the ld. PCIT, which is part of the assessee's paper book. Our decision of quashing the revision on this legal issue is based on such show cause notice - The additional ground raises a pure question of law, for which no fresh investigation of facts is required. That is raison d'etre for our admitting the additional ground and then espousing it for consideration. It is, therefore, ultimately held that the ld. Pr. CIT was not justified in invoking the revision jurisdiction. Decided in favour of asses • Hon'ble ITAT Indore Bench in DBL Betul Sarni Tollways Ltd....
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....t became a case of jurisdiction deficit resulting into vitiating the impugned order. • Hon'ble ITAT Chandigarh Bench in Ashwani Oberoi v. PCIT (2023) 2 TMI 1109 has held: The entire exercise seems to have been done because of audit objection only. Since, the Assessing Officer had duly enquired about the matter and was satisfied with the explanation given by the assessee, the ld. PCIT, in our view, has wrongly exercised his revision jurisdiction on the issue which is nothing but change of opinion, that too, at the instance of audit party. In this case, even the AO did not admit to the audit objections rather requested to settle the audit objection. Therefore, the revision jurisdiction exercised by the ld. PCIT cannot be held to be justified. The revision order passed u/s 263 of the Act is, therefore, quashed. Appeal of assessee allowed. • Hon'ble ITAT Delhi Bench in Ashish Dham v. PCIT (2021) 10 TMI 1106 has held: Revision u/s 263 by CIT - Case was selected for scrutiny - assessee had claimed rental income and claimed deduction u/s 24B as interest paid for home loan against the property bearing No.C-207, Sarvodaya Enclave, New Delhi-110017 - on the basis of....
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....initiated u/s. 263 of the Act the ld. PCIT has held that the Assessing Officer ought to have verified whether PF & ESI were paid in compliance to Rule 87 of the Income Tax Rules and excess PF & ESI deserves to be disallowed. 3.4. That without any show cause or without any query raised to the assessee appellant during the course of proceedings initiated u/s. 263 of the Act the ld. PCIT in the impugned order has held that the Assessing Officer ought to have verified whether PF & ESI were paid in compliance to Rule 87 of the Income Tax Rules. The said finding of the ld. PCIT is against the powers conferred u/s. 263 of the Act. In case the ld. PCIT had anything in mind, then she was obliged to issue show cause notice or raise query in this regard. However, without seeking any justification from the assessee & without understanding the correct factual backdrop the impugned order has been passed. 3.5. That if the ld. PCIT is permitted to invoke powers conferred u/s. 263 without even confronting the issue to the assessee then such powers would become arbitrary and draconian in nature and the purpose of section 263 itself would be defeated. The said action would also be a....
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.... that question as pressed raises any substantial question of law. 3.6. That in this regard, we wish to clarify that during the course of assessment proceedings the Assessing Officer noted that there was some mismatch in the figures of salary as per Audit Report and as per Income Tax Return and had asked the assessee to clarify the same and asked the assessee as to why-not Rule 87 of the Income-tax Rules be invoked to disallow excess PF/ESI deposited. The assessee appellant vide its letter [PB 558-559] submitted to the Assessing Officer had clarified as under: Regarding your query for which originally return was selected under scrutiny. i. Excees Contribution to Provident Fund, Superannuation fund or Gratuity Fund That on perusal of Part A - P and L Profit and Loss Account for the financial year 2017-18 of Income Tax Return form, at Point No 14 the following amounts has been shown which are as under: 14. Compensation to employees I Salaries and Wages 15742627 ii Bonus 3708410 Vii Contribution to recognised Provident Fund 6174439 Ix Contribution to any Other fund 3326094 X Any Other Benefit to employee i....
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...." and is "invalid". 3.9. Thus, the invocation of powers u/s. 263 by the ld. PCIT is bad in law and deserves to be quashed and set-aside. Ground No. 3: Invocation of section 69 r.w.s. 115BBE of the Act 4. That during the course of survey, variance in stock of Rs. 1,50,00,000/- was found which was offered for tax as business income by the assessee appellant. 4.1. That during the course of assessment proceedings, the ld. Assessing Officer raised queries towards the same and the same were replied by the assessee appellant vide its letter dated 08.03.2021 [PB 560-563]. The ld. Assessing Officer after verification of books of accounts & other relevant records was satisfied and chose not to disturb the same and has accepted the assessee appellants submission. 4.2. That the ld. PCIT in the impugned order has opined that the said difference in stock was in the nature of 'Other Income' and thus provisions of section 69 read with section of the Act 115BBE should have been invoked by the ld. Assessing Officer. 4.3. That there was proper application of mind on the part of the ld. Assessing Officer and the matter has been duly examined by the....
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....nd oil seeds, and the excess stock which has been found during the course of survey is stock of rice. Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (2016 (9) TMI 1354 - ITAT JAIPUR) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head "business income" and not under the head income from other sources" • Hon'ble Gujarat High Court in PCIT v. Dharti Estate (2024) 1 TMI 1197 has held: Revision u/s 263 - Taxability of income disclosed in survey proceedings u/s 133A at Higher Rate of tax u/s 115BBE - While deleting the addition, ITAT found that there was nothing stated in either pre-amended or post-amended provision of Section 115BBE that when the assessee surrendered undisclosed income during the search action for the relevant years, higher tax rate is required to be charged. HELD THAT:- In the facts of the case, during the course of assessment proceedings, as the Assessing Officer had made due inquiries and was aware of th....
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....come as surrendered during survey proceedings - surrendered amount as "business income" OR "deemed income" i.e income from undisclosed sources - CIT (Appeals) sustained the surrendered amount u/s 68 of credit entry and u/s 69 of excess stock - appellant contended that surrendered amount represents the "business income" as the appellant has no other source of income. Whether deeming provisions of Section 68 can be invoked in respect of amount introduced in the capital account of the assessee and found credited during the course of survey in the books of accounts of the assessee? - HELD THAT:- The Survey team had asked a specific question to the assessee during the course of survey to explain the source of capital introduced during the financial year 2018-19 relevant to assessment year 2019-20 and in response, the assessee had stated that he was unable to explain the source of capital introduced during the during the financial year 201819 relevant to assessment year 2019-20, however, in order to buy piece of mind, he voluntarily surrendered the sum - Therefore, during the course of survey, the assessee has failed to offer any explanation regarding the source of such capital introduce....
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....ntire addition is certainly without forming proper basis for conversion into business income to non-business income. The revenue was not able to submit any evidence during assessment and appeal proceeding that the said income is not connected with the business income of the assessee or accumulated from nonrecognising source. Hence, when all the incomes earned by the assessee are only from the business income of the assessee, there do not arise any question as to application of provisions of section 69A and hence taxing such income at special rate as per section 115BBE is improper. It is a settled principle in law that when there is no other/separate source of income identified during the course of survey or during the course of assessment proceedings, any income arising to the assessee shall be treated to be out of the normal business of the assessee only. During survey proceeding the assessee filed surrendered letter and in statement assessee also recorded and income was surrendered. We respectfully relied on the order of Sh. Harish Sharma & M/s. Sham Jewellers [2021 (5) TMI 482 - ITAT CHANDIGARH] and case of Daulatram Rawatmull [1966 (4) TMI 73 - CALCUTTA HIGH COURT]. In consider....
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....ing carried on by the assessee. The ld CIT(A) has also returned a finding that the advances were admitted as being related to business activity of the assessee. Where the same has been found unrecorded in the books of accounts, the same has to be brought to tax under the head "business income". Thus the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 and 69A of the Act and the same has been rightly offered to tax under the head "business income". In absence of deeming provisions, the question of application of section 115BBE doesn't arise for consideration. Decided in favour of assessee. • Hon'ble ITAT Chandigarh Bench in Ravinder Kumar Bansal v. PCIT (2023) 12 TMI 716 has held: Revision u/s 263 - course of survey proceedings at the assessee's business premises, certain discrepancy were observed and confronted to the assessee and in response, the assessee offered a sum towards unexplained misc. advances - CIT stated that the assessee in his return of income has disclosed the surrendered income in the profit/loss account and paid taxes at the rates applicable to normal business income which need to be ta....
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.... u/s 68 - income from other source (income declared at the time of survey) - tax is payable u/s 115BBE or not - recovery of cash amount of advances made by the assessee to the other persons for purchase of land / plots and thus comes under the purview of section 68 or not - HELD THAT:- Additional income was in the nature of business income and don't fall under Sec. 68 and/or Sec. 69 of the Act and consequently therefore, Sec.115BBE could not have been invoked. In view of the above discussion, therefore, we are of the considered view that the CIT was not at all justified by invoking the provisions of Sec. 263 by wrongly/incorrectly holding that the subjected assessment order u/s 143(3) dated 25.02.2019, was passed without considering that the income declared under the head of other sources being recovery of cash amount of advances paid for purchase, comes under preview of S. 68 and 69 and thus, the tax u/s 115BBE was to be paid, as against the tax at normal rates. The assumption of jurisdiction u/s 263 was contrary to the law and facts on record. Hence, the proceedings initiated u/s 263 of the Act and the impugned order are hereby quashed. Thus, ground of appeal decided in favour of....
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....he income surrendered by the assessee falls within the provision of section 69 of the Act. As such, the assessee in the present case was able to justify the source of income surrendered during survey operation and therefore we are of the view that the same cannot be treated as deemed income u/s 69 of the Act. Once the income goes out of the preview of the deeming provision, the provision of section 115BBE of the Act, cannot be applied. We note that the AO has taken one of the impossible view by treating the income offered during survey operation as income under the head business and profession. The Ld. PCIT cannot substitute the view taken by the AO as per his understanding of facts of the case - Decided in favour of assessee • Hon'ble ITAT, Jodhpur Bench in case of Lovish Singhal v. ITO in ITA No. 142- 146/Jodh/2018 dated 23.05.2018 has held: I have heard the rival contentions and record perused. I have also carefully gone through the orders of the authorities below. I have also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld AR during the course of hearing before the ITAT in the contex....
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....me - whether the surrendered amount can be taxable under section 115BBE read with section 69A of the Act or it was to be taxed as a regular business receipt - HELD THAT:- To decide this issue, it is important first to visit the statement of the director of the assessee which was recorded during the course of survey. We have particularly gone through the answer to question No. 35 wherein the director of the assessee has clearly stated that the figures noted in the diary represented sales unrecorded in the books of account and these figures related to the period April 2015 to August 2015. In the present case, the addition under section 69A could have been made only if no explanation, regarding source of such income, was offered or the explanation offered by the assessee was not satisfactory in the opinion of the Assessing Officer. In the present case, as we have already noted that the assessee had given complete explanation regarding the source of entries recorded in the diary, which were explained to be part of unrecorded sales and the Assessing Officer also did not object to the said explanation. Therefore, addition cannot be made under section 69A of the Act and if the addition ca....
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.... was submitted by the assessee appellant that: the assessee company had invested Rs. 50 lacs in mutual funds in growth option and they are not capable of earning any dividend income nor any dividend income was earned during the year under consideration and the capital gains tax is payable on redemption of the same from AY 2019-20 and they were redeemed in subsequent years and income on the same was offered to tax. That balance Rs 21,44,76,231/- is invested in Partnership Firm M/s. Pinkcity Retail ventures LLP out of which Rs 70,000/- is towards capital contribution and rest is towards current capital account which has no link to exempt income. That during the year the assessee share in loss of the firm was Rs. 20,897/-. Thus no exempt income was earned during the year under consideration. That it is settled law that the disallowance u/s 14A cannot exceed the actual exempt income earned, which in the instant case of the assessee is Rs. Nil as no dividend Income has been received and no profit from firm has been received. 5.2. That the ld. PCIT has held that actual earning of exempt income is not necessary and has relied upon Circular No. 5/2014 and has further relied upon a....
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....ding Hon'ble Jurisdictional Tribunals have already held that the amendment made by Finance Act, 2022 whereby the explanation was inserted would be prospective in nature and would not apply retrospectively. We rely upon: • Hon'ble Calcutta High Court in the case of PCIT v. Avantha Realty Ltd. (2024) 6 TMI 987: Disallowance u/s 14A - HELD THAT:- Tribunal took note of the decision of the High Court of Delhi in PCIT Vs. Era Infrastructure Ltd. [2022 (7) TMI 1093 - Delhi High Court] which had taken note of the decision in the case of Cheminvest Ltd. [2015 (9) TMI 238 - Delhi High Court] wherein it was held that amendment by the Finance Act, 2022 of Section 14A of the Act by inserting a non-obstante clause and explanation we take effect from 01.04.22 and cannot be presumed to have retrospective effect and, therefore, on facts the amendment cannot be applied to the assessment year under consideration. We find no error in such conclusion arrived at by the learned Tribunal. • Hon'ble Madhya Pradesh High Court in the case of PCIT v. Keti Construction Ltd. (2024) 5 TMI 168: Addition u/s 14A - disallowance in cases where no exempt income has been claimed by the assess....
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.... • Hon'ble Delhi High Court in the case of PCIT v. Techno Trexim (India) Ltd. (2023) 11 TMI 346: Disallowance u/s 14A r.w.r.8D - in the period in issue assessee had not earned any exempt income - HELD THAT:- Issue concerning whether Section 14A r.w.r. 8D could not be triggered where no exempt income has been earned as decided in Bhilwara Energy Ltd. case [2023 (7) TMI 1316 - Delhi High Court] as relying on Cheminvest Limited [2015 (9) TMI 238 - Delhi High Court], Chettinad Logistics (P.) Ltd.. [2017 (4) TMI 298 - Madras High Court] and IL And FS Energy Development Co Ltd [2023 (5) TMI 1266 - Delhi High Court]. Also Special Leave Petition (SLP) was preferred against Cheminvest Limited, which was dismissed [2018 (7) TMI 567 - SC ORDER]. Also whether the Finance Act, 2022 could have retrospective effect, the said aspect also stands covered by the judgment rendered in Principal Commissioner of Income Tax (Central)-2 v. M/s Era Infrastructure (India) Ltd. [2022 (7) TMI 1093 - Delhi High Court] - Decided against revenue. • Hon'ble Delhi High Court in the case of PCIT v. Telecommunications Consultants India Ltd. (2022) 8 TMI 1486: Addition u/s 14A - exempt income e....
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...., 2022. Thus, even otherwise the assessment order could not have been held to be erroneous. 5.6. Thus, the invocation of powers u/s. 263 by the ld. PCIT is bad in law and deserves to be quashed and set-aside. Ground No. 5: Deduction under section 10AA of the Act: 6. That as submitted hereinabove subsequent to survey conducted on 17- 18.08.2017, reassessment proceedings u/s. 148 of the Act were initiated and passed for the Assessment Years 2012-2013 to 2015-2016 and scrutiny assessments u/s. 143(3) of the Act for Assessment Years 2016-2017 to 2018- 2019 were also initiated and passed. 6.1. That for ready reference, summary chart of assessment / reassessment undertaken against the assessee appellant since its commencement of business in A.Y. 2010-11 till A.Y. 2018-2019, prior to survey and post survey and whether 263 / 148 proceedings were initiated by the Revenue or not is as hereunder: S No. A.Y. Order Passed u/s. 143(3) Order Passed u/s. 147 w.r.s 143(3) 263 proceedings initiated 148 proceedings initiated 1 2010-2011 28.03.2013 NO NO 2 2011-2012 07.03.2014 18.12.2017 NO NO 3 2012....
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....ia; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of machinery or plant by the assessee. Explanation 2.-Where in the case of an undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with. 6.4. That section 263 has been sought to be invoked against the assessee appellant by the ld. PCIT for the following reasons [PB 01-05]: Upon examination of the assessment record, it is revealed that that M/s Pinkcity Colour Stone Pvt. Ltd. was having high profits but later on the same was closed and the plant & Mac....
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....n on rent and thereafter in the next year the same was sold to Pinkcity Jewelhouse P Ltd, Mahapura Unit at book value. We would like to bring to your attention that SEZ Units are also governed by SEZ laws and for any unit in SEZ to take plant and machinery on rent, specific permission is required from authorities concerned and in the case of the Pinkcity Jewelhouse P Ltd neither any permission was ever sought and nor the same was allowed and in absence of the same, the plant and machinery could not have been shifted to SEZ Unit. NO part of Building and Plant & Machinery owned by M/s. Pink City Colorstones Pvt. Ltd. was given on lease/sold to M/s. Pinkcity Jewelhouse Pvt. Ltd. (Sitapura SEZ Unit). Sitapura SEZ Unit constructed its own Building on land owned by it and purchased the necessary Plant & Machinery required for the purpose of manufacturing. Thus the foundational basis on which notice has been issued is factually incorrect and wrong. We would also like to draw your attention to the fact that in our reply to proceedings u/s 133A at Para 10 of our reply dated September 2, 2017 we had made it clear that the old Plant & Machinery was purchased by the Mahapura Unit whic....
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....work itself that is not on job work than the profit would have surely increase by another 1% to 2%. Apart from 5.51% to 10.54% that is cost saving would have been in the range of 7.51% to 12.54% on higher side and 6.51% to 11.54% on lower side. b) As it is already evident from our cost analysis sheet that the seller company has sold the goods after adding its profit to the cost of goods sold to the assessee company. The purchases made from the assessee company are of semi finished goods/raw materials and the profit margin on the finished goods are usually much higher than that of semi finished goods/ raw materials. The only concern of the assessee company is the quality and the price of the goods purchased. c) That M/s PinkcityColorstone (P) Ltd. does its business in local market and also in foreign market whereas the assessee company is 100% export oriented company and only makes exports to the foreign buyers only and the profit margin in exports is more than the local sales. d) That the turnover of PinkcityColorstones P Ltd in FY 2009-10 i.e. AY. 2010-11 is Rs 91182218.99 as compared to Rs. 42752592/-in the immediately preceding year i.e. an increase of....
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....ch notice has been issued is factually incorrect and wrong. Fourthly it is also not correct that the assessee company did not make any value addition on the goods exported from SEZ Unit. That during the survey only ten instances were pointed out in which proper explanation was not provided for the value addition made, however, in response to queries posed after survey proceedings u/s 131 our reply dated September 2, 2017 at Para 5 of our reply following explanation was given. 5. During the course of survey of Sitapura Unit - I, observation was raised that in ten cases of purchases, items are exported without doing any manufacturing. The said observation was raised for the reason that during the course of survey assessee could not produce process chart in respect of these invoice. It is submitted that entire movement of manufacturing of goods is verifiable from computer software for which hard-disk of computer system was impounded during the course of survey. During survey, production process report in respect of all the invoices has made available for verification of survey team except these ten invoices. Now assessee has trace out process movement of these invoic....
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.... / Plant & Machinery on rent, without prior permission of the Development Commissioner and no such permission was taken. • No statement by any Director or Employee that plant & machinery and building have been given on rent by M/S PinkcityColorstones Pvt. Ltd. to Sitapura SEZ Unit. • During the course of survey specific query was made to the Director Shri Manuj Goyal with regards to transfer of Plant & Machinery by PinkcityColourstones Pvt Ltd to which it was categorically submitted that the same was transferred to assessee appellants DTA Unit at Mahapura [PB 816-822] • Sitapura SEZ unit has constructed its own Building and has purchased Plant & Machinery. • M/s PinkcityColorstones Pvt. Ltd. has not sold any plant & machinery to Sitapura SEZ Unit. • M/s PinkcityColorstones Pvt. Ltd. has sold the plant & machinery to Mahapura DTA Unit. • M/s PinkcityColorstones Pvt. Ltd. was not having strong profits but on the contrary was incurring regular losses. • Employees of M/s PinkcityColorstones Pvt. Ltd. were absorbed by its DTA Unit, i.e., Mahapura Unit and not by Sitapura SEZ Unit. • T....
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....19 were carried out u/s. 143(3) and after satisfaction benefit of deduction u/s. 10AA was granted. • Provisions of section 10AA(4)(iii) are applicableonly when the unit is formed and whereas the case of the assessee for all the years from AY 2010-11 to AY 2018-19 have been completed u/s 143(3) / 148 after due verification and scrutiny and in none of these years the deduction was not disallowed for the frivolous reason that some plant & machinery have been transferred from domestic unit to SEZ Unit (which itself is factually wrong). • Fixed Asset Register of both DTA Unit at Mahapura& SEZ Unit at Sitapura were submitted to prove that plant & machinery was purchased by Mahapura DTA Unit from PinkcityColorstones Pvt. Ltd. • VAT was not leviable on purchases made by Sitapura SEZ Unit (Vide Notification dated 01.01.2003 & 09.06.2006). Whereas VAT was leviable on purchases made by Mahapura DTA Unit. On the plant & machinery purchased by Mahapura DTA Unit from PinkcityColorstones Pvt. Ltd. VAT has been charged. If the said plant & machinery was purchased by SEZ Unit from PinkcityColorstones Pvt. Ltd. then there would have been no requirement to charg....
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....n overrule decision, if it is manifestly wrong or proceeds on mistaken assumption. The ld. PCIT has invoked explanation (2) clause (a) of section 263 of the Act to set-aside the assessment order. 6.8. That on perusal of the order passed by the ld. PCIT it is apparent that: • The ld. PCIT has doubted the business of the assessee just for the sake of doubting and to somehow justify its order in order to disallow the benefit of deduction u/s. 10AA of the Act. • The ld. PCIT in the year 2024 is doubting the formation of SEZ Unit which happened in the year 2006 as doubtful, that too, without any positive evidence and only by doubting the evidences& documents submitted by the assessee appellant. • The ld. PCIT in order to justify its order had to disprove the evidences& documents submitted by the assessee appellant and not to simply doubt it. • The ld. PCIT failed to appreciate that since day 1, the assessee appellant was maintaining separate books of accounts of DTA Unit & SEZ Unit, the said is not only the requirement for assessee's convenience, but also for compliance with other statutory laws such as Labour Laws & VAT Laws,....
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....e address of SEZ Unit it mentioned and not DTA Unit. • The ld. PCIT failed to appreciate that the goods which are installed in the SEZ unit require permission from SEZ unit, whereas no such permission has been taken by the SEZ Unit since the old casting machine was purchased by DTA unit and which does not require any permission from any authority. • The ld. PCIT failed to appreciate that the turnover of SEZ Unit was Rs. 64.83 crores & DTA Unit was Rs. 52.68 Crores. • The ld. PCIT failed to appreciate that substantial amount was invested by the assessee appellant towards Plant & Machinery even in its DTA Unit. • The ld. PCIT has failed to appreciate and has conveniently ignored the fact that TDS has been duly deducted & paid on rent paid by Mahapura DTA Unit to PinkcityColorstones Pvt. Ltd. during Financial Year 2011-2012 & 2012-2013 itself. • The ld. PCIT has failed to appreciate that if the assessee appellant actually wanted to fabricate the rent agreement, then it would have endeavored to back-date the notary stamp as well, no such thing was done, it was notarized when the need to get it notarized for felt, further ....
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....d. PCIT. The reassessment order passed in assessee appellants case for A.Y. 2015- 16 was found to be erroneous / prejudicial to the interest of the revenue, which was subsequently quashed by the Hon'ble ITAT. The assessment order passed in assessee appellants case for A.Y. 2016-17 was sought to be reassessed alleging escapement of income but was dropped vide order dated 29.03.2024 passed by the ld. Assessing Officer himself. The assessment order passed in assessee appellants case for A.Y. 2017-18 was sought to be reassessed alleging escapement of income was initially dropped vide order dated 29.03.2024 passed by the ld. Assessing Officer, however, subsequent to ld. PCIT order u/s. 263 has been reopened vide order dated 29.04.2024 passed u/s. 148A(d) by the ld. Assessing Officer. That the proceedings sought to be initiated by the revenue department either through invoking 148 or through invoking 263 or through invoking 251(1) shows that in their eyes such powers are overlapping. If the assessee cannot be caught in the web of 148 then the department can jump to 263 and if the assessee cannot be caught in the web of 263 then the department can jump to 148 and if the assessee cannot be....
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....be treated as without jurisdiction. The relevant findings of the Hon'ble Supreme Court are as under: 29...... It would be anomalous to suggest that a tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violation of it. If a tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior tribunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise, there would be confusion in the administration of law and respect for law would irretrievably suffer. We, therefore, hold that the law declared by the highest court in the State is binding on authorities or tribunals under its superintendence and they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that be so, the notice issued by the authority signifying the launching ....
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....judicial hierarchy by ignoring the order of this Tribunal dated 14/01/2019 wherein the Tribunal had already quashed the assessment order dated 15/03/2016 but also granting relief to the assessee on merits on each of the five issues that were subject matter of revision proceedings, thereby proving his highhandedness. Hence, it could be safely concluded that proper and requisite enquiries were indeed carried out by the ld. AO while passing the order dated 02/05/2018 giving effect to the order of the ld. CIT(A) dated 28/06/2017 and hence, the ld. PCIT grossly erred in invoking revisionary jurisdiction u/s.263 of the Act on the ground that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue because proper enquiries were not carried out by the ld. AO. No hesitation in quashing the revision order passed by the ld. PCIT u/s.263 - Decided in favour of assessee. 6.12. That it is submitted that the view taken by the learned Assessing Officer is in accordance with past history of the case, detailed replies filed before the learned Assessing Officer during the course of assessment and material available on record including as derived during cou....
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....t satisfied. Each and every erroneous order cannot be the subject matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. 6.15. That the phrase "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue has a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. For example, when an Assessing Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Assessing Officer has taken one view with which the CIT did not agree with, it cannot be treated as an erroneous order prejudicial to the interest of the revenue because the view taken by the Assessing Officer is unsustain....
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....ental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings, in the absence of any material change justifying the Revenue to take a different view of the matter and, if there was no change, it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12 of the Income-tax Act of 1961. • Hon'ble Supreme Court in PCIT v. Maruti Suzuki India Limited (2019) 7 TMI 1449 observed that:We find no reason to take a different view. There is a value which the court must abide by in promo....
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....ction by the ld PCIT under s. 263 of the Act is that to establish order of the AO is to be erroneous insofar as it is prejudicial to the interest of the Revenue, the PCIT has to satisfy of twin conditions simultaneously, namely (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If any one of them is absent, s. 263 cannot be invoked. This provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to Revenue's interest, that the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue' has to be read in conjunction with an erroneous order passed by the AO. However, every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has....
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....7.12.2018 passed u/s. 143(3) r.w.s. 147 for A.Y. 2015-16 159 174 • Assessment Order dated 19.12.2018 passed u/s. 143(3) for A.Y. 2016-17 175 189 • Assessment Order dated 30.12.2019 passed u/s. 143(3) for A.Y. 2017-18 190 199 • Computation of Income Pink City Colorstones Pvt. Ltd. for A.Y. 2009-10 200 201 • Computation of Income Pink City Jewel House Pvt. Ltd. for 202 A.Y. 2018-19 202 203 • Ledger Account of Pink City Colorstones Pvt. Ltd. in books of 204 Pink City Jewel House Pvt. Ltd. (Mahapura Unit) in F.Y. 2011-12 204 204 • Ledger Account of Pink City Colorstones Pvt. Ltd. in books of 205 Pink City Jewel House Pvt. Ltd. (Mahapura Unit) in F.Y. 2012-13 205 206 • Reply dated 02.09.2017 submitted by the assessee appellant 207 in consequence to survey proceedings 207 2013 • Reply dated 09.09.2017 submitted by the assessee appellant in consequence to survey proceedings 214 216 3. Copy of reply dated 22.03.2024 submitted online by the assessee appellant alongwith: 217 217 • Copy of order dated 07.03.2024 ....
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....rse of assessment proceedings for A.Y. 2018-2019 alongwith relevant documents such as: 556 558 560 564 566 557 559 563 565 571 • Audit Report alongwith Final Accounts 572 619 • Income Tax Return 620 620 • Calculation of Deduction u/s. 10AA 621 621 • List of Bank Accounts with reconciliation 622 627 • Investment details 628 628 • PF Chart 629 630 • Trading and Profit & Loss A/c. 631 632 • VAT Returns 633 655 10. Copy of reasons recorded & objection letter dated 29.10.2018 submitted by the assessee appellant for A.Y. 2015-2016 656 667 666 670 11. Copy of Audit Objection dated 17.11.2020 for A.Y. 2015-2016 alongwith Audit Memo 671 672 671 670 11.1 Copy letter dated 19.02.2021 sent by the Id. ACIT to the Id. PCIT. 676 678 12. Copy of letter dated 18.07.2024 submitted by the Assessee Appellant 679 679 12.1 Copy of Audit Memo in respect to section 10AA for A.Y. 2018-2019 680 688 12.2 Copy of Audit Memo in respect to section 14A for ....
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....aval Lund AB v. CIT (2021) 11 TMI 327 859 861 • Hon'ble ITAT Chandigarh Bench in Ashwani Oberoi v. PCIT (2023) 2 TMI 1109 862 865 • Hon'ble ITAT Delhi Bench in Ashish Dham v. PCIT (2021) 10 TMI 1106 866 870 ISSUE NOT RAISED IN THE 263 NOTICE 18. • Hon'ble Bombay High Court in PCIT v. Universal Music India Pvt. Ltd. (2022) 4 TMI 1081 871 873 APPLICABILITY OF SECTION 69 READ WITH SECTION 115BBE 19. • Hon'ble Rajasthan High Court in PCIT v. Bajargan Traders (2017) 11 TMI 388 874 877 • Hon'ble Gujarat High Court in PCIT v. Dharti Estate (2024) 1 TMI 1197 878 880 • Hon'ble ITAT Jaipur Bench in Rekha Shekhawat v. PCIT (2022) 8 TMI 791 881 896 EXPLANATION INSERTED TO SECTION 14A IS PROSPECTIVE IN NATURE 20. • Hon'ble Calcutta High Court in the case of PCIT v. Avantha Realty Ltd. (2024) 6 TMI 987 897 900 • Hon'ble Madhya Pradesh High Court in the case of PCIT v. Keti Construction Ltd. (2024) 5 TMI 168 901 907 • Hon'ble Delhi High Court in the case of PCIT v. Techno Tre....
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....arrying Corporation Vs PCIT 3 TMI 945and Delhi Bench of ITAT in the case of Majestic Properties Pvt. Ltd. Vs PCIT 8 TMI 673 and so on filed their written submission. Therefore, he emphasized that ground No. 1 may be decided based on that factor. 7.2 So far as ground Nos. 2 to 5 being issued based on merits, two issues dropped by ld. PCIT therefore, considering that aspect of the matter even though the audit objection was there she considered that the order of AO is not prejudicial to the interest of the revenue. 7.3 So far as the excess stock applying the provisions of section 69 read with section 115BBE of the Act, as is clear that the assessee has surrendered the income based on stock and it emanated from the business income. Merely based on the audit objection, when the ld. AO has taken a plausible view the order cannot be held prejudicial when the ld. AO has already made in detailed scrutiny of the records and examined that issue also and that order cannot be revised. The ld. AR of the assessee also submitted that the reply that aspect has been made before Assessing Officer vide letter dated 08.03.2021 wherein the ld. AO has examined that the issue and accepted the disclo....
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....issue stating that on all those issues raised even on merits does not constitute the order of the assessment as erroneous or prejudicial to the interest of the revenue. Ground no. 6 being general in nature does not require our adjudication. 9.1 As regards, ground no. 1 raised by the assessee challenging the order of the PCIT on the technical ground. As argued by the ld. AR of the assessee very strongly and straightforward attacking the jurisdictional deficit in the revisionary - action invoked by the ld. PCIT. He submitted that ld. PCIT had not invoked the provisions of section 263 while examining the assessment record. But when the assessment record was examined by the revenue audit party, they raised certain audit objections in the order of the assessment. Against that audit objection ld. AO proposed action u/s. 263 as remedial action to review his own order page 703 to 708. To demonstrate further to this factual aspect of the matter ld. AR referred to the audit memo in the paper book page 680 to 688 which deals issue of 10AA, page 689 to 691 deal the issue of section 14A r.w.r. 8D, page 692 to 693 deals the issue of PF/ESI, page 694 to 702 deal the issue of invoking of the pr....
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....g Officer to review of order passed by him, though a proposal sent by the Assessing Officer. The ld. PCIT has invoked the provisions of section 263 of the Act based on that proposal so submitted by the ld. AO. Thus, as is evident that review of an order passed is not permitted and are bad in law. We get support of this view from the decision so cited by the assessee in the case of Jain Carrying Corporation v. PCIT in ITA No. 134/Jodh/2018 wherein author of the bench are the same and in that case the bench has held as under:- 10. We have heard the rival contentions and perused the material placed on record and gone through the judicial precedent cited by the parties to drive home this contention so raised. The bench noted that in this case survey action u/s 133A of the Act was carried out on 06.02.2019 at the business premises of M/s Laxminath Infrastructure Pvt. Ltd., Churu. In that proceedings, the assessee disclosed a sum of Rs. 40,00,000/- to buy the mental peace and has duly offered that income while filing the return of income. Subsequent to filing the return of income, the case of the assessee was selected for scrutiny wherein the ld. Assessing Officer after raising ....
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....e policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity". On the second issue we note that the ld. PCIT is trying to justify the claim of the assessee with the net profit rate and the expenses incurred by the assessee and merely based on the contention that the ld. PCIT is not in agreement with the view taken by the AO the assessment cannot be hold liable to be sustained u/s. 263 of the Act. As regards the opening and closing stock we note that the ld.AO has called for the details and has examined the issue. Merely in the audit report the auditor has stated that increase / decrease has not been certified by them the order which is passed after examination of the issue cannot be a base to again given the second inning to the ld. AO and review of the order passed after the examination of the issue is not permitted under the law. As regards the fourth issue there is no observation recorded by the ld. PCIT has simply stated that the issue does....
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.... bench while dealing with the similar set of facts held that- "9. We hold that a possible view has been taken by the ld AO in the matter and merely because the ld PCIT is of a different view on the same issue, he cannot resort to invoke revision proceedings u/s 263 of the Act. This is only a case wherein the ld PCIT is trying to substitute his view in lieu of a possible view already taken by the ld AO on the impugned issue on the allowability of LTCL. Reliance in this regard is placed on the decisions of Hon'ble Jurisdictional High Court in the case of Gabriel India Ltd reported in 203 ITR 108 (Bom) and in the case of Nirav Modi reported in 390 ITR 292 (Bom). It is also pertinent to note that the Special Leave Petition (SLP) preferred by the Revenue before the Hon'ble Supreme Court against the judgement of Nirav Modi was dismissed in 77 taxmann.com 15 (SC). 10. We also find that the Explanation 2 to section 263 of the Act, which was heavily relied upon by the ld DR before us, would not apply to the facts of the instant case as full enquiry was already made by the ld AO in the original assessment proceedings itself. Infact the stand of the assessee was accepted by ....
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.... they are left open." Respectfully following that decision of the co-ordinate bench and since the ld. PCIT based on the borrowed information and has not established as to how the view taken by the ld. AO is not correct when the issue raised has already been form part of the proceeding before the ld. AO. Based on the discussion so recorded we are of the considered view that the proceeding initiated u/s. 263 is merely based on the audit objection, PCIT is not agreement with the ld. AO and the observation on the stock, in the audit reportalready filed by the assessee. Thus, there is clear absence of his satisfaction and there is no independent view of the ld. PCIT even on merits thus, the assessee which has been completed there cannot be the second inning to the revenue without justifying the twin condition to the order passed by the ld. AO. 9. In the light of the discussion so recorded we considered the ground raised by the assessee and quash the order of the PCIT, Bikaner. In the result the appeal of the assessee is allowed. On being consistent with the findings so recorded in the order referred to herein above, we quash the order passed by ld. PCIT u/s 263 of t....
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....ed 08.03.2021 [PB 560-563]. The ld. Assessing Officer after verification of books of accounts & other relevant records satisfied and chose not to disturb the same, and thereby accepted the submission made. Whereas in the proceeding u/s. 263 ld. PCIT in the impugned order has opined that the said difference in stock was in the nature of 'Other Income' and thus provisions of section 69 read with section of the Act 115BBE should have been invoked by the ld. Assessing Officer. When there was proper application of mind on the part of the ld. Assessing Officer after having examined during the course of assessment proceedings, it is not a case where necessary inquiries have not been carried out by the ld. Assessing Officer. Furthermore, when two views are possible ld. AO after considering the submission accepted the view of the assessee-appellant, and said approach does not automatically hold the assessment order erroneous or prejudicial to the interest of the revenue. Ld. AO accepted the plea that assessee appellant has no other income other than business income. Even our own Hon'ble High Court in PCIT v. Bajargan Traders (2017) 11 TMI 388 has held that the investment in the excess st....
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....efore, on facts the amendment cannot be applied to the assessment year under consideration. Based on these observations, ground no. 4 raised by the assessee is also allowed. 13. Ground no. 5 raised by the assessee deals with the observation of the ld. PCIT to disallow the claim of deduction u/s. 10AA of the Act made in the return of income so filed. Ld. AO verified the claim of the assessee after the survey and also made variation on account of price variation between the SEZ unit and that of the DTA unit. As is evident from the submission subsequent to survey conducted on 17-18.08.2017, reassessment proceedings u/s. 148 of the Act were initiated and orders passed for the Assessment Years 2012-2013 to 2015- 2016 and scrutiny assessments u/s. 143(3) of the Act for Assessment Years 2016-2017 to 2018-2019 were also initiated and passed. The claim of the assessee was verified in that proceeding from A.Y. 2010-11 till A.Y. 2018-2019, prior to survey and post survey and the year under consideration is one of those years. As is evident from the order of the PCIT that he has invoked the explanation (2) clause (a) of section 263 of the Act. On that aspect, it is observed that amendmen....