TaxTMI 
TaxTMI 
2026 (6) TMI 273
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction, illegal, bad in law, void ab initio and liable to be quashed. 2. That the PCIT erred in invoking revisionary jurisdiction under section 263 of the Act qua assessment completed by National Faceless Assessment Centre (NFAC/assessing officer') under section 143(3) read with sections 144C(3) and 144B of the Act, which is a complete code in itself. 3. That on the facts and circumstances of the case, the impugned order having been passed by the PCIT in undue haste without: (a) considering the submissions tiled, and (b) first disposing off the legal objections by passing a separate speaking order, and (c) without providing reasonable opportunity of being heard, is illegal, bad in law and liable to be quashed set aside. 4. That the PCIT erred on facts and in law in exercising revisionary powers under section 263 of the Act on various issues in the impugned order, Without satisfying the twin jurisdictional conditions of the assessment order being: (a) erroneous; and (b) prejudicial to the interests of the Revenue and consequently, the impugned order is illegal, bad in law and liable to be quashed. 5. That the order passed by the PCIT setting as....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the exercise of revisionary jurisdiction by the PCIT under section 263 in respect of following liabilities, is without jurisdiction and bad in law: (i) liabilities aggregating to Rs. 3,115.31 lacs qua advances from MSMEs and; (ii) advances aggregating to of Rs. 3,496.07 lacs received from various customers. 10.1. Without prejudice, the PCIT erred in issuing vague/ open ended directions to the assessing officer to examine the aforesaid liabilities [refer ground No.10 supra]. 10.2. That the PCIT erred in not appreciating that the (i) addition was made in earlier year only on the ground that there was increase in trade payables whereas in the relevant year, trade payables has only decreased; and (ii) advances from customers was nothing but advance received from patients at the time of admission which was to be adjusted against the final bills raised by the assessee. Qua claim of deduction of administrative expenses 11. That on the facts and circumstances of the case and in law, the exercise of revisionary jurisdiction by the PCIT under section 263 on the issue of administrative expenses, is without jurisdiction and bad in law. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 263 qua each of the following issues (collectively referred to as 'adjustments in total income and items in the Profit and loss account/Balance Sheet'), is without jurisdiction and bad in law: A. Issues qua which additions were made in earlier years but not in the relevant year (i) Disallowance under section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 without appreciating that no exempt income was received and issue was specifically examined in assessment proceedings: (ii) Unexplained cash deposits without appreciating that in earlier year cash was deposited during demonetization period whereas in relevant year cash was deposited on account of normal business transactions; (ii) Addition on account of fraudulent ICDs of Rs. 445,02,62,000 without appreciating that addition of said amount was already made in AY 2019-20 and no new advances were given in the relevant year; B. Adjustments made in computation of income (iv) ICDS Adjustments mandated by section 145(2) without appreciating that same resulted in upward adjustment to the taxable income and full disclosure was made in the ITR, computation o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in fact being paid by the assessee. (xvi) Corporate Guarantee on behalf on AEs without appreciating that no income actually received qua corporate guarantee given to banks, notional guarantee commission income recognized as per Ind AS disallowed and no error in assessment order as notional income cannot be brought to tax. (xvii) Provision against Loan Recovery without appreciating that no new provision was made against loan payable during the relevant year and provision against loan receivable made in earlier years stood disallowed in those years. Issue examined during assessment proceedings and no disallowance made after due application of mind. (xviii) Fair Value Adjustments without appreciating that there is no impact on taxability as fair value is the same as the carrying value, as apparent from the audited financial statements (xix) Exceptional item without appreciating that issue was examined during assessment proceedings and no disallowance was made after due application of mind. Further, majority of exceptional items stood suo motu disallowed by the appellant. (xx) Net loss not investigated by the AO without appreciating that is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... upon all the issues deliberated by the ld. PCIT, the assessee had provided necessary details to the ld. AO who had after due consideration and exercising due diligence and accepted the returned income. It was submitted that it is not a case falling within the meanings of Explanation -2 of Section 263, where no enquiries made by the Ld. AO. The ld. Counsel invited our attention to the show-cause notice issued by the ld. PCIT-1, Delhi during the revisionary proceedings and in particular contents of para-15.1 to 15.12 of his impugned order, whereby he held the conclusion of no enquiry done by the Ld. AO. The ld. Counsel further invited our attention to the following conclusions drawn by the ld. PCIT in his impugned order as at para-15.15 to 17 extracted herein below: - "....15.15. AO is directed to conduct comprehensive enquiries on the various heads of expenses spelt out in para 15.1 and 15.12 above. These expenses must be investigated, as the case may be, from the perspective of their genuineness, whether all these expenses were wholly incurred for the purposes of business or profession carried on by the assessee, whether any expenses were incurred in relation to persons s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this order and the Assessing Officer shall allow the assessee adequate opportunity of being heard and to make relevant submissions...." 5. The ld. Counsel argued that all the issues raised by ld. PCIT in paras 15.1 to 15.12 of his order were fully enquired and investigated by the ld. AO. The ld. Counsel invited extensive reference to its paper books running in 100s of pages to strengthen his arguments. The appellant assessee has placed on records copies of every show-cause notice issued by the assessee by the ld. AO and replies given by the assessee. A tabular representation of information solicited by the AO on issues, allegedly investigated by the ld. PCIT and replies submitted by the assessee qua references in the voluminous paper book, is as under:- Issue PCIT's directions / observation in impugned order passed u/s 263 Disclosure by assessee and enquiries made by AO during original assessment Bad Debts written off amounting to Rs. 20,45, 97,000. The PCIT, in paras 10 to 10.10 (pages 75-84), has directed the assessing officer ('AO') to examine the correctness of claim of bad debt of Rs. 20,45,97,000. While directing enquiry, the Pr. CIT has made following obse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otice under section 263 of the Act. * Explanation 2 to section 263 of the Act has been invoked to justify assumption of revisionary jurisdiction. * Notice dated 21.12.2022 (Pages 502-504@ page 504 of PB), raised a specific query calling upon the appellant to furnish details in respect of provision for doubtful debts / doubtful receivables written off. * Notice dated 22.12.2022 (Pages 1005-1007 @ page 1007 of PB), sought year-wise break-up of income in respect of which the doubtful receivables had arisen. * The appellant, vide replies dated 21.12.2022 and 22.12.2022, (Pages 505-1004 and 1008- 1165 of the paper book respectively), submitted that the bad debts written off represents amounts irrecoverable from the patients/ insurance companies, corresponding income from which were offered to tax in earlier year. The appellant also furnished exhaustive details running into approximately 500 pages, including: * ledger extracts and transaction-wise breakup of doubtful receivables written off; and * year-wise details evidencing that the corresponding revenues had already been offered to tax in earlier assessment years. Liabilities not verified by AO [Trade ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the ITR Form but is clubbed with other expenses. * During assessment proceedings the assessing officer did not raise any specific query to examine the claim of administrative expenses, thus, the case is alleged to be a case of "NO ENQUIRY". * Explanation 2 to section 263 of the Act has been invoked to justify assumption of revisionary jurisdiction. * Vide, Query no. 6 of the notice dated 06.12.2022 (@ page 157 of PB), AO raised a specific query qua the claim of other expenses of Rs 569.54 crores and asked the appellant to furnish details of the expenses along with relevant evidences and reasons for increase as compared to the earlier year further; the assessing officer also directed the appellant to furnish the ledgers copies of various expenses including the ones included in "other expenses" (query no 11). * Vide reply dated 12.12.2022 (refer point no. 4) @ Page 161 of PB, appellant furnished details/ nature of the other expenses and clarified that there was per se no increase in the said expenses; the increase is only on account of depreciation on/ amortization of Right to Use Asset, which was a notional entry made on account of Ind AS [Refer, Note 5(xxviii) of aud....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessing officer. * Based on aforesaid allegation/observation, the PCIT has held the case to be of "NO ENQUIRY" by the assessing officer. * Explanation 2 to section 263 of the Act has been invoked to justify assumption of revisionary jurisdiction. * Disclosure of all items of expenditure forms part of audited financial statements and the ITR on records. * Vide notice dated 06.12.2022 (Pages 155-159 @ 157 of PB), sought details of 'other expenses'. [Query no. 6], professional fee, interest paid [Query No. 11] * Vide reply dated 12.12.2022 (refer point no. 4) (Page 161 of PB), the appellant furnished the details/ nature of the other expenses. * Vide reply dated 15.12.2022 [refer point no. 5] (Page 171 of PB), the appellant had furnished details of professional expense and interest paid. * Vide reply dated 20.12.2022 (Pages 497-501 of PB), the appellant had furnished complete details of finance cost of Rs. 390.60 crores, including (i) interest of Rs. 43.29 crores paid on term loan/bank loan and (ii) interest of Rs. 116.45 crores paid on loans borrowed from subsidiary/ holding company viz., Fortis Healthcare, Fortis Hospital and SRL Limited. It was also clarified ....