SHREE SAI CONSULTANTS,MUMBAI vs. PCIT, MUMBAI-12, MUMBAI

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ITA 1286/MUM/2023Status: DisposedITAT Mumbai10 October 2023AY 2018-201910 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the PCIT's order and remitted the issues back to the PCIT for fresh adjudication. The Tribunal granted the assessee one more opportunity to present evidence and cooperate with the proceedings, citing principles of natural justice.

What were the facts?

The Principal Commissioner of Income Tax (PCIT) invoked Section 263 powers to revise an assessment order, deeming it erroneous and prejudicial to revenue. The PCIT found the Assessing Officer (AO) made an ad-hoc disallowance on unsecured loans without proper verification, despite the assessee failing to provide complete details for many lenders.

What were the issues?

Whether the PCIT correctly exercised revisionary powers under Section 263 when the AO had made an assessment based on available information, and whether the assessee should be granted another opportunity to present evidence.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Hearing: 06.09.2023Pronounced: 09.10.2023
1.

The assessee has filed the appeal against the order of the Principal Commissioner of Income tax-42, Mumbai [hereinafter ‘the Ld. Pr.CIT’] passed u/sec 263 of the Income-tax Act, 1961 [hereinafter ‘the Act’].

2.

The assessee has raised following grounds of appeal:

“1.That, on the facts and circumstances of the case and in law, the order passed by the Ld. PCIT-42 u/s 263, merely on presumptions without any material evidences, is bad in law and is liable to be quashed.

3.That, on the facts and circumstance of the case and in law, the Ld. PCIT-42 erred in holding that the assessment order dated 22.04.2021 passed u/s 143(3) of the Act by the assessing officer was "erroneous" and "prejudicial to the interest of the revenue" and also erred in partially setting aside the same and directing the Assessing Officer to frame the assessment order de-novo after making thorough verification

4. 4.1. That on the facts and circumstances of the case and in law, Ld. PCIT erred in passing the order u/s 263 and directing the assessing officer to examine the issue de-novo when the issue is subject matter of appeal before the CIT(A)

4.2. That on the facts and circumstances of the case and in law, Ld. PCIT erred in passing order u/s 263 on the issue which is subject matter of appeal ignoring well settled legal position that PCIT cannot assume revisional jurisdiction on

5. That on the facts and circumstances of the case and in law, the Ld. PCIT erred in exercising revisionary powers without considering the fact that the recourse to section 263 cannot be invoked where two views are possible, as decided in the case of Malabar Industrial Co. Ltd. (Supra), and as such, the order passed is bad in law and is liable to be quashed.

6.That on the facts and circumstances of the case and in law, the Ld. PCIT not considering the fact that detailed examination had already been done by the Ld. Assessing officer at the time of original proceedings u/s 143(3), and as such, the Ld. CIT would not be justified in exercising revisionary powers under section 263 of the Act.”

3.

At the time of hearing, the Ld.AR has not pressed the grounds of appeal No.5 & 6. Accordingly they are treated as withdrawn and are dismissed.

4.

The brief facts of the case are that, the assessee is engaged in the business of building construction & redevelopment of residential and commercial premises. The assessee has filed the return of income for the assessment year 2018-19 disclosing a total loss ₹ 8,73,428/-. Subsequently, the assessee’s

5.

On second disputed issue, the AO found that the assessee has obtained unsecured loans as per the list provided and partially supported with the

6.

Subsequently, the Ld. PCIT on perusal of the record and information found that, the assessee had received unsecured loans of ₹17,35,13,340/- from 24 parties and only 8 parties have responded to the show cause notice issued in the assesseement proceedings. Whereas the AO has made adhoc addition of 20% of unsecured loans as the PAN No., confirmations and other details loans could not provided. The Ld. Pr.CIT is of the opinion that the AO has erred in making the adhoc disallowance @20% and allowed 80% of the unsecured loans despite failure on the part of the assessee to prove the genuineness, identity and creditworthiness of loan creditors. Further the AO has passed the assessment

“09. “In view of the above, I am of the considered opinion that the assessment order dated 22.04.2021 passed by the AO u/s. 143(3) r.w.s 144B of the Act is erroneous and prejudicial to the interest of Revenue, in so much as the assessment was made without proper verification and inquiries on the issue which the AO was expected to make in view of facts and circumstances discussed above and at the cost of repetition, are summarized herein below: • The assessee raised loans from 24 parties. • The assessee furnished confirmation from just 7 parties out of 24 parties • Pan was provided in the case of 8 parties. • No details, not even the PAN was provided for the remaining 16 parties. • The AO without making any further enquiries made an adhoc disallowance of 20% of the loans raised from 15 parties.

7.

Aggrieved, by the order of the Pr.CIT, the assessee has filed appeal before the Hon’ble Tribunal. At the time of hearing the Ld. AR has not pressed ground of appeal

s no. 5 and 6. Since, the assessee has not filed any submission before the Ld. PCIT, the ground of appeal raised in Para 4.2 of the original appeal memo is treated as additional ground of appeal.. The Ld. AR’s contentions are that the Ld. Pr.CIT has erred in considering order passed by the AO is erroneous and prejudicial to the interest of the revenue irrespective of the facts that the assessee has complied with the information and notices to ITBA in the assessment proceedings. The AO having examined and on verifying the facts and has made addition of Rs. 1,61,22,341/- as the assessee has not deducted TDS on the expenses incurred under various heads. Similarly, the AO has made adhoc addition @ 20% of unsecured loans though the assessee has filed details of names, addresses, Pan, ledger accounts. Whereas the AO has issued draft order and made addition. For various reasons and due to covid effect, the assessee could not file objections to the draft order and but aggrieved by the order U/sec 143(3)r.w.s 144B of the Act. The assessee has filed appeal with the CIT(A) challenging

8.

We have heard the rival submission and perused the materials on record. The Ld. AR submitted that the order passed by the Ld. CIT(A) is bad in law as the order passed by the AO is not prejudicial to the interest of the revenue. The contentions of the Ld. AR are that the AO has considered the submissions in respect to the unsecured loans and whereas the AO has considered the facts observed that the assessee has not provided complete details of PAN No. of the parties, address of the parties, bank statements and financial statements of loan creditors. Since the assessee has not substantiated the identity, creditworthiness, and the genuineness of unsecured loans and in the absence of complete details , the A.O has made an addition of 20% of the Unsecured loans of Rs.2,44,08,202/- which works out to Rs 48,81,640/-. The

9.

In result, the assessee appeal is partly allowed for statistical purposes.

Order pronounced in the open court on 09.10.2023.

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