SARA SPINTEX INDIA PVT. LTD.,YAVATMAL vs. PRINCIPAL COMMISSIONER OF INCOME TAX-2, NAGPUR
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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR – VIRTUAL COURT
Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI
आदेश / ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the
order of ld. Pr. Commissioner of Income Tax-1, Pune [‘PCIT’]
dated 24.02.2021 passed u/s 263 of the Income Tax Act, 1961 (‘the
Act’) for the assessment year 2016-17.
At the outset, we find that there is a delay of 64 days in filing
the present appeal. The appellant had filed the petition praying for
condonation of delay on the ground that the delay pertains to the
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covid-19 pandemic outbreak period. The order of the ld. CIT(A)
was served on appellant on 30.03.2021 and the appeal was filed on
28.06.2021. The delay period was covered by the decision of the
Hon’ble Supreme Court in the case of Cognizance for Extension of
Limitation, In re (2022) 441 ITR 722 (SC) dated 10.01.2022,
wherein, the limitation prescribed by various statutes was suo motu
extended on account of difficulties faced by the citizens of the
country on account of Pandemic Covid-19.
Having regard to the explanation given by the assessee for
condonation of delay, we are of the considered opinion that it is a fit
case for condonation of delay. Accordingly, we condone the delay
and proceed to dispose of the appeal on merits.
Briefly, the facts of the case are that the appellant is a
company incorporated under the provisions of the Companies Act,
1956. It is engaged in the business of manufacturing and exporting
cotton yarn. The Return of Income for the assessment year 2016-17
was filed on 31.03.2017 declaring total income of Rs.2,50,49,070/-.
The case was selected for scrutiny under computer assisted scrutiny
selection (CASS) by way of issue of statutory notice u/s.142(1) of
the Act. In this case, survey u/s.133A of the Act was conducted
3 ITA No.56/NAG/2021
during which the appellant has declared additional income of
Rs.2.25 crores and offered the same to tax. Eventually, the
assessment was completed by the Assessing Officer vide order
dated 26.11.2018 passed u/s. 143(3) of the Act after making of
addition of Rs.66,133/- on account of late payment of sales tax.
Subsequently, the ld. PCIT, on review of the assessment
record, formed an opinion that the assessment order passed by the
Assessing Officer is erroneous and prejudicial to the interest of the
Revenue, as the Assessing Officer had failed to examine the
following items :
“i. The AO has failed to ascertain the genuineness and credit worthiness of an amount of Rs.4,07,90,000/- shown as money received against share warrants.
ii. The AO has failed to verify the loans inspite of being a reason for selection under CASS.
iii. The AO has failed to enquire whether any income has accrued to the assessee under the heads “State interest subsidy, TUF interest subsidy & VAT tax”.
iv. The AO also has failed to investigate the genuineness and source of amount claimed by assessee as share application money.
v. The AO has not given any finding that he has examined the books and documents impounded at the time of survey.
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In response to the said show-cause notice, the appellant had
filed a detailed explanation which has been reproduced by the ld.
PCIT in para no.5 of the impugned order. Considering the
submissions of the assessee, the ld. PCIT had concluded that since
the AO had failed to cause necessary enquiries, the assessment order
is erroneous and prejudicial to the interest of the Revenue.
Accordingly, he set-aside the assessment order with a direction to
redo the assessment afresh after examining relevant details and
conducting proper enquiry after affording reasonable opportunity of
hearing to the appellant.
Being aggrieved, the appellant is in appeal before us in the
present appeal contending that the ld. PCIT ought not to have
exercised the jurisdiction u/s 263 of the Act, without reaching the
prima-facie conclusion that the assessment order is erroneous and
prejudicial to the interest of the Revenue.
On the other hand, ld. CIT-DR supports the order of the ld.
PCIT.
We heard the rival submissions and perused the material on
record. The issue in the present appeal relates to the validity of
assumption of jurisdiction u/s 263 by the ld. PCIT. The Parliament
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had conferred the power of revision on the Commissioner of Income
Tax u/s 263 of the Act in case the assessment order passed is
erroneous and prejudicial to the interests of revenue. In order to
invoke the power of revision, the above two conditions are required
to be satisfied cumulatively. References in this regard can be made
to the decision of the Hon’ble Supreme Court in the case of
Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the
case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the
assessment order should be one that it is not debatable or plausible
view. In a case where the Assessing Officer examined the claim
took one of the plausible views, the assessment order cannot be
termed as an “erroneous”.
Now, we proceed to examine whether the assessment order
passed by the Assessing Officer is erroneous or not. Admittedly,
there was no enquiry by the AO on the issues which are sought to be
revised by the ld. PCIT. It is evident from the very submissions
made by the appellant during the course of proceedings before the
ld. PCIT that no enquiry was conducted by the AO on the
aforementioned issues and the items on which the revision was
sought to be made by the ld. PCIT does not call for any interference
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by us having regard to the facts of the each item. We refer to a
decision by the Hon’ble Bombay High Court in the case of CIT Vs.
Ballarpur Industries Ltd. (2017) 85 taxmann.com 10 (Bombay)
holding that mere taking the view by the Assessing Officer without
having subjected the claim to examination would not make it a view
of the Assessing Officer. A view has necessarily to be preceded by
examination of the claim and opting to choose one of the possible
results. In the absence of view being taken, merely because the
issue itself was debatable, would not absolve the Assessing Officer
of applying his mind to the claim made by the assessee and allowing
the claim only on satisfaction after verification/enquiry on his part.
A view in the absence of examination is no view but only a chance
result. The Hon’ble High Court further went on to hold in para
No.16 as under:
“16. Therefore, we are of the view that the Assessing Officer cannot abdicate his responsibility of examining the claim for deduction before allowing it. Absence of examination of the claim made by the assessee while passing an assessment order and allowing the claim made, would render the order of the Assessing Officer erroneous coupled with the fact that it is admitting prejudicial to the interest of the revenue, exercise of revisional jurisdiction u/s.263 of the Act by the ld. Commissioner of Income Tax is proper and valid.” 10. In the light of the above binding judicial precedent, we are of
the considered opinion that the ld. PCIT has rightly exercised the
ITA No.56/NAG/2021
power of revision u/s.263 of the Act. The impugned order passed by
the ld. PCIT was justified and therefore, we do not find any reason
to interfere with the same.
In the result, the appeal filed by the assessee is dismissed. Order pronounced on this 02nd day of February, 2024.
Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 02nd February, 2024. Satish
आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, नागपुर / 3. DR, ITAT, Nagpur. गाड� फ़ाइल / Guard File. 4. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.
ITA No.56/NAG/2021
Date 1. Draft dictated on 01-02-2024 Sr.PS 2. Draft placed before author 02-02-2024 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.
