M/S. THE BOMBAY TRANSPORT COOPERATIVE CONSUMER SOCIETY LTD.,,NAVI MUMBAI vs. INCOME TAX OFFICER-28(3)(1), NAVI MUMBAI

This appeal is filed by the assessee against the revisionary order passed by the Principal Commissioner Of Income Tax Mumbai – 27 (the learned PCIT) for assessment year 2017 – 18 under section 263 of The Income Tax Act, 1961 (the act) dated 11/3/2022 wherein it has been held that the assessment order passed under section 143 (3) of the act dated 23/12/2019 assessing the total income of the assessee at ₹ 2,699,690 by The income tax officer Ward 28 (3) (1), Mumbai (the learned AO) is erroneous and prejudicial to the interest of revenue to the extent it did not make enquiry/ verification which should have been

Assessee has raised following grounds of appeal: –

It filed its return of income on 27/10/2017 declaring a total income of ₹ 1,873,940/– . Case was selected for a complete scrutiny. Based on this the assessment order was passed under section 143 (3) of the act determining total income of the assessee at ₹ 2,699,689/–. The only two additions made by the learned assessing officer is with respect to unexplained money under section 69A of ₹ 14,500/– and disallowance on account of deduction claimed under section 80 P of ₹ 811,249/–.

On examination of the record, the learned PCIT found that (1) that the learned assessing officer has not disallowed an amount of ₹ 254,954/– debited to the profit and loss account on account of loss on assets on disposal which is a capital expenditure (2) the learned AO has not called for any details of purchases and other expenses to verify the correctness of income declared by the assessee. Therefore, the assessment order is deficient/ erroneous insofar as it is prejudicial to the interest of revenue. Accordingly show cause notice was issued on 28/2/2022.

On 7/3/2022, assessee submitted a reply. It was stated that during the financial year 2014 – 15 and 2015 – 16, the Indian oil Corporation Ltd has renovated entire petrol pump by removing the old structure. The old assets such as old building structure, pump driveway, pump shed has

Based on above submission, the learned PCIT held that the capital loss of Rs 254,954/claimed by the assessee as revenue expenditure is not allowable as revenue expenditure. It is an undisputed fact that the asset in respect of which the capital loss has been claimed were part of the block of the assets on which depreciation under section 32 was also claimed. Assessee submitted that the block of assets that these assets were part of still continues. Therefore, the learned PCIT was of the view that the capital loss of ₹ 254,954/– claimed by the assessee as deduction was not admissible deduction for computing the business income. The learned assessing officer while completing the assessment under section 143 (3) should have disallowed the same. With respect to the expenditure, it was held that the learned assessing officer while completing the assessment has not verified the

Assessee is aggrieved with the above revisionary order. The learned authorized representative referred to notice issued under section 142 (1) calling for various details and referred to the details submitted by the assessee. It was further submitted that on the additions made by the learned assessing officer, the assessee has filed an appeal before the Commissioner of income tax (appeals) and the same is still pending. The learned authorized representative referred to page number 21 of the paper book, which is profit and loss account for the year ended on 31st of March 2017 wherein loss on assets disposed of of ₹ 254,954/– were disclosed. He submitted that the issue is covered by the decision of coordinate bench in case of 309 ITR (AT) 294 (Mumbai) in case of Mukand global Finance Ltd versus Deputy Commissioner Of Income

The learned departmental representative vehemently supported the order of the learned principal Commissioner of income tax. It was submitted that there is no evidence available that the learned assessing officer has asked about the capital loss claimed by the assessee or verified any of the expenditure stated by the learned PCIT. He submitted that all the inquiries made by the learned assessing officer revolve around addition under section 69A as well as deduction under section 80 P of the act. He submitted that none of the notices or submission of the details shows that the learned assessing officer has raised any enquiry with respect to the deduction of capital loss claimed by the assessee or any of the expenses incurred by assessee. Therefore, the order passed by the learned assessing officer is erroneous so far as prejudicial to the

We have carefully considered the rival contention and perused the orders of the lower authorities. In this case the return of income declaring total income of ₹ 18 73,940/– was filed by the assessee. On selection of the case for scrutiny, the learned assessing officer has made an addition under section 69A of the act with respect to cash deposit made by the assessee of specified banknotes with PMC bank Ltd amounting to ₹ 14,500. The AO further examined the deduction claimed by the assessee under section 80 P of ₹ 811,249/–. Except, above two items, the learned assessing officer did not inquire any other matter or issues in the assessment proceedings. The notice issued under section 143 (2) of the act dated 21/9/2018 was only with respect to note on the E proceedings. Notice under section 142 (1) of the act dated 3/6/2019 is asking about the general information such as copy of the return of income, brief note on the nature of the business and activities carried on, details of bank account maintained, details of movable and immovable property, the deduction claimed under chapter VIA and reconciliation of interest on investment etc along with other income. The notice under section 142 (1) of the act dated 9/10/2019 mainly inquiring the deposit of cash in the bank account in various forms, details of sundry debtors, creditors et cetera. We further notice dated 12/12/2019 was also with respect to cash deposits. In the end the assessment proceedings resulted into a show cause notice dated