TaxTMI 
TaxTMI 
2025 (6) TMI 968
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....led to appreciate that on the facts of the case, no disallowance u/s 14A was warranted and hence, there was no reason to set aside the asst. order on the said issue. 4. The learned Pr. CIT further erred in holding that the learned A.O. had not verified the issue regarding delayed payment of employee's contribution to provident fund and thereby erred in setting aside the asst. order on the said issue. 5. The learned Pr. CIT failed to appreciate that the learned A.O. had verified the issue relating to the delayed payment of employee's contribution and therefore, there was no reason to set aside the asst. order on the said issue. 6. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 3. Brief facts of the case are that the assessee is a private limited company, engaged in the business of civil construction for Irrigation Department and PWD of Government of Maharashtra. It also undertook contract for construction of road in joint venture. E-return of income for the A.Y. 2020-21 filed on 14/01/2021 declaring income of Rs. 6,43,04,760/-. The case selected for scrutiny under CASS and statutory notices u/s. 14....
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.... 04. In view of the above, it is found that the assessee company failed to disallow income of Rs. 1,44,42,319/- received from AOP/BOI. Further Rs. 4,71,825/-was also not disallowed by the assessee company. Also no verification on the aforesaid issues has been done in the assessment proceedings by the AO. As per explanation (2) to section 263(1) of the Act an order without making inquiries or verification which should have been made is deemed to be erroneous in so far as it is prejudicial to the interest of revenue." 4. The Ld.PCIT referring to the above two issues, observed that Ld.AO ought to have examined these issues after calling for relevant records and thereafter verified the same. The assessee furnished detailed reply to the said show-cause notice. However, the Ld.PCIT was not satisfied and concluded the revisionary proceedings observing that since the AO has failed to make necessary enquiry on the issues stated above in the show-cause notice, the assessment order for A.Y. 2020-21 dated 19/03/2022 passed u/s. 143(3) of the Act is erroneous insofar as prejudicial to the interest of Revenue and accordingly, the assessment order was set aside directing the AO to exami....
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.... taxmann.com 119 (Surat-Trib.). 8. On the other hand, ld.DR vehemently argued supporting the order of Ld.PCIT. 9. We have heard rival contentions and perused the material placed before us. The assessee is aggrieved with the assumption of jurisdiction u/s. 263 of the Act by the Ld.PCIT finding of the Ld.PCIT holding the assessment order dated 19/03/2022 for A.Y. 2020-21 erroneous insofar as prejudicial to the interest of revenue as the AO failed to examine the following two issues: (1) disallowance u/s. 14A of the Act for the investments made in Kalyan Raj Desai JV and investment in equity shares of Nature Delight Dairy and Dairy Products P. Ltd. and (2) relating to disallowance u/s. 36(1)(va) for delay in deposit of employees contribution to PF. 10. We find that the provision of Section 263 of the Act has direct bearing on the issue raised before us, therefore, it is pertinent to take note of this section which reads as under: "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the rev....
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.... to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 10.1. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the forma....
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....8] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). [Emphasis Supplied]" 11. Now, examining the facts of the instant case in the light of the above judgments and discussions, we firstly take up disallowance u/s. 14A of the Act. The Ld.PCIT has referred to investments made by the assessee in Kalyan Raj Desai JV from which the assessee earns exempt income and secondly investment made in equity shares of Nature Delight Dairy and Dairy Products P. Ltd. From perusal of the paper book pages 30-66 regarding the documents filed in relation to Kalyan Raj Desai JV, we observe that the assessee had not made any investment in the said joint venture and the opening balance as on 01/04/2019 of Rs. 3,56,617/- is the net profit share from joint ventures for F.Y. 2018-19 and the addition during the year of Rs. 1,44,42,319/- is also net profit share for joint ventures received/accrued to the assessee for the F.Y. 2019-20. Thus, it remains an admitted fact that the assessee had not made any investment out of its interest bearing funds in Kalyan Raj Desai JV and, therefore, no disallowance u/s. 14A of the Act is called for. So far as investment made in equity shares o....
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....nd ESI before the due date of filing the return. The Hon'ble jurisdictional High Court in the case of CIT vs. Ghatge Patil Transports Ltd. (supra) and various other Hon'ble High Courts have decided this issue in favour of the assessee, according to which no addition can be made on account of late payment of employees' contribution to PF and ESI if the said sum is deposited to the credit of the central government before the due date of filing the return. The law was finally settled by the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT (supra) which was pronounced on 12.10.2022 whereas the Assessing Officer has passed the order on 13.08.2021. Therefore, we are of the considered opinion that since the assessee has admittedly deposited the employees' contribution to PF and ESI before the due date of filing of return, therefore, the PCIT was not justified in invoking the provisions of section 263 of the Act by relying on the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT (supra), which came subsequent to the order passed by the Assessing Officer. We, therefore, are of the considered opinion tha....