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Income Tax Appellate Tribunal, JABALPUR BENCH ‘DB’, JABALPUR
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by assessee against the different orders of ld.PCIT-2, Jabalpur & ld. NFAC/CIT(A),New Delhi dated 27.02.2019 & 19.08.2021
The assesse has raised the following grounds of appeal in
1. The order passed by Hon'ble Pr CIT-2, Jabalpur u/s 263 of I.T. Act 1961 is illegal, invalid and bad in law.
2. The learned Hon'ble Pr. CIT-2 erred in holding that order passed by AO is erroneous and prejudicial to the interest of revenue. 3. The order passed by A.O. was after complete enquiry made during the year in respect to claim of depreciation and all the compliance were duly made by the appellant. Thus order passed cannot termed erroneous and prejudicial to the interest of revenue. JAB/2021 Digpal Jaiswal 4. The learned Pr. CIT-2 erred in settling aside the assessment with a direction to frame fresh assessment even though complete evidence as regard to allowability of depreciation was on record. 5. The learned Pr. CIT -2 ought to have held that depreciation claimed at Rs.4,28,602/- is correctly allowed in accordance with law and there is no scope to excessive power u/s 263 of I.T. Act 1961. 6. The Hon'ble Pr. CIT-2, Jabalpur has set aside the assessment framed u/s 143(3) r.w.s. 147 despite of the fact findi ngs recorded by A.O. in reassessment framed pursuance to notice u/s 148 at para 2 & 3 that sum of Rs.3,23,670/- was not claimed as interest expenses in profit and loss A/c and therefore there was no case for making any disallowance. A.O. further proceeded to assess the same income as determined in regular assessment framed u/s 143(3) of the Act. 7. Any other ground that shall be prayed at the time of hearing.
The assesse has raised the following grounds of appeal in are as under:-
1. That the levy of Penalty u/s 271(1)(b) dtd. 29.04.2020 by AO and sustained by the Ld. CIT (A), NFAC Delhi dtd. 19.08.2021 is illegal, bad-in-law, of law and on facts.
2. That pursuant to order passed u/s 263 of the Act; the first query letter u/s 142(1) issued on 29.04.2019 was duly replied as reproduced in the Asstt. order passed U/Ss 263 r.w.s. 144 of the Act. Ord. did. 16.10.2019.
3. That the assessee's Reply that letters u/s 142(1) dtd 05.09.2019 and 07.08.2019 based on original return filed u/s 1 39(1) on 31.03.2013 which ceases to be effective and no more in existence; were not given any credence and could not be termed as technical objection as observed by the CIT(A). Since the original assessment order u/s 143(3) of the Act dtd. 26.02.2014 was s ubject matter of 147 of the Act and asstt. order U/Ss 147/143(3) of the Act dtd. 20.06.2016 was passed accepting the returned income. Therefore, the queries raised again and again in the Asstt. order passed U/Ss 263 r.w.s 144 of the Act were the same as in the regular asstt. order u/s 143(3) of the Act dtd. 26.02.2014 as well in the asstt. order passed U/Ss 143(3)/147 dtd. 20.06.2016.
4. That the AO has not recorded any satisfaction for levying penalty norinitiated any penalty u/s 271(1)(b) in the body of Asstt. order or at the bottom of Asstt. order.
5. That the Penalty levied by AO at Rs. 10,000/ - and sustained by CIT(A) is liable to be deleted.
6. Any other ground that shall be prayed at the time of hearing.
JAB/2021 Digpal Jaiswal 4. Heard the arguments of both the parties and perused the material available on record.
The order u/s 263 has been passed on 27/02/2019 wherein assessment framed u/s 143 r.w.s. 147 of I.T. Act 1961 on 20/06/2016 has been set-aside to make fresh assessment by holding that the order passed by A.O. is erroneous and prejudicial to the interest of Revenue in respect to following two matters.
a) Interest paid without deduction of tax at source, hence disallowable u/s 40(a)(ia). b) Depreciation granted @ 30% on Dumpers which is excessive as Dumper is not a motor lorry.
The ld. PCIT has observed that non-application of mind for proper examination of case has rendered the order erroneous in so far as it is prejudicial to the interest of the Revenue.
In the case of assessee, regular assessment has been made u/s 143(3) of I.T. Act 1961 on 26/02/2014 by ITO, Ward - 1, Katni after due examination of audited financial statements and books of account. A.O. has made addition of Rs. 1,00,000/ - out of various expenses claimed in profit and loss account.
Notice u/s 148 of I.T. Act 1961 was issued on 07/01/2016. The reasons recorded indicate that - Notice u/s 148 was issued for escapement of income for no disallowance made u/s JAB/2021 Digpal Jaiswal 40(a)(ia) of I.T. Act 1961 for interest paid without deduction of tax at source at Rs.3,23,670/- to Shriram Finance Ltd. Query letter dated 06/05/2016 was issued to enquire details of interest paid at Rs.3,23,670/- and TDS thereupon. In the case of assessee detailed explanation was submitted in reassessment proceedings to explain that there was no claim for deduction on account of interest. Thus there is no scope for any disallowance to be made u/s 40(a)(ia) of I.T. Act 1961 for interest paid. Thus there is no escapement of income. Reassessment was framed after examining the submission of assessee. Finding is recorded at para 3 of reassessment order that there is no claim for interest payment in Profit & Loss Account. Thus there remain no escapement of income in terms of reasons recorded. Reassessment was framed on income determined in original assessment on 26/02/2014.
Considering the above factual position in this regard and their being no claim of interest in Profit & Loss Accoun t for any interest paid and no deduction having been allowed for any interest paid in reassessment framed there remains no scope for any enquiry about deduction of tax at source on any interest paid for the purpose of determination of assessable income. Assessment order, thus in no manner of consideration can be considered as erroneous and prejudicial to the interest of Revenue.
Hence, we hold that unequivocally hold that the Jurisdiction exercised by PCIT u/s 263 of I.T. Act 1961 to hold that order passed in reassessment is erroneous is unsustainable and bad in law.
In the result appeal of the assessee is allowed.
ITA No. 42/Jab/2021:
The order imposing penalty u/s 271(1)(b) of I.T. Act 1961 has been passed imposing penalty at Rs. 10,000/- for no complying to notice u/s 142(1) of I.T. act 1961 dated 05/09/2019.
Notice u/s 142(1) was in the set aside assessment proceedings pursuance to order passed u/s 263 of I.T. Act 1961. We find that the information required in the notice u/s 142(1) dated 05/09/2019 (P 38 - 39) was already matter of record and available on file of the Assessing Officer. The same is the matter record in the office note of the Assessing Officer.
Bare perusal of provisions of section 271(1)(b) indicates A.O. is required to be satisfied in the course of any proceedings under the Act for default before levying penalty. Assessment order passed on 16/10/2019 (P 14 - 18) does not indicate any satisfaction recorded for levy of penalty u/s 271(1)(b) hence, we hold that penalty levied is unjustified.
In the result, the appeal of the assesse is allowed. Order Pronounced in the Open Court on 30/11/2023.