BAHUBALI IRON & STEEL COMPANY,GHAZIABAD vs. PR, CIT, GHAZIABAD

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ITA 542/DEL/2020Status: DisposedITAT Delhi20 October 2022AY 2014-155 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the PCIT was justified in directing the Assessing Officer (AO) to examine the authenticity of the supplementary partnership deed and the allowability of partner's salary and interest, as the deed was produced before the PCIT. The AO was bound to comply with these limited directions.

What were the facts?

The assessee filed its return of income, and the assessment was completed under section 143(3) with an addition for unverified expenses. The Principal Commissioner of Income Tax (PCIT) issued a notice under section 263, setting aside the assessment order to examine the authenticity of a supplementary partnership deed and the allowability of partner's salary and interest.

What were the issues?

Whether the PCIT erred in assuming jurisdiction under section 263 and setting aside the assessment order without proper examination, and whether the assessment order was erroneous and prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI

Before: DR. B. R. R. KUMAR & SH. YOGESH KUMAR U.S.

Hearing: 18.10.2022Pronounced: 20.10.2022

ORDER PER YOGESH KUMAR U.S., JM

This appeal is filed by the assessee against the order dated 22/03/2019 passed by the CIT(A)-Ghaziabad, for Assessment Year 2014-15.

2.

The grounds of appeal are as under:-

“1. That having regard to the facts and circumstances of the case, Ld. Pr. CIT has erred on law and facts in assuming jurisdiction u/s 263 and has further erred in setting aside the assessment order passed on 01.09.2016 for the purpose of examining the authenticity of supplementary partnership deed and allowability of partner's salary and interest and that too without examining the fact that whether assessment order passed is erroneous and prejudicial to the interest of revenue.

2.That having regard to thefacts andcircumstances of the case, Ld. Pr. CIT has erred in law and on facts in initiating the impugned proceedings u/s 263 more so when conditions for the same have not been complied with and more particularly when the assessment order passed on 01.09.2016 is neither erroneous nor prejudicial to the interest of revenue.

3.

Thathaving regardto thefacts andcircumstances of the case, Ld. Pr. CIT has erred in law and on facts in invoking the impugned proceedings u/s 263 whereas there is no iota of discussion in the impugned order about passing of erroneous assessment order and prejudicial to the interest of revenue.

4. That having regard to the facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in initiating the impugned proceedings and passing theimpugned order u/s 263 is bad in law as the entire details/information/evidence with respect to the issue involved were submitted and examined by the assessing officer during the course of original assessment proceedings.

5. That having regard to facts and circumstances of the case, the Id Pr. CIT has erred in law and on facts in passing the impugned order u/s 263 which is bad in law against the facts and circumstances of the case and in violation of principle of natural justice.

6. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

3. The brief facts of the case are that, the assessee has filed its return declaring income at Rs. 17,20,550/-. The case was selected for complete scrutiny. Assessment has been completed u/s 143(3) of the Act on 01/09/2016 on at total income of Rs. 19,20,550/- after making an addition of Rs. 2,00,000/- on account of unverified expenses.

4.

A notice u/s 263 of the Act has been issued since some discrepancies/error were noticed in the order of the A.O. An order u/s 263 of the Act has been passed by the Principal Commissioner of Income Tax on 22/03/2019 by setting aside the order passed by the Assessing Officer dated 01/09/2016 and remanded the matter to the file of Ld. A.O for limited purpose of examining authenticity of the supplementary partnership deed and the allowability of the partner’s salary and interest in the light of such supplementary partnership deed.

5.

Aggrieved by the order dated 22/03/2019, the assessee has preferred the present appeal on the grounds mentioned above.

6.

The Ld. Counsel for the assessee vehemently submitted that Ld. PCIT has erred in setting aside the assessment order without examining the fact that whether the assessment order was passed is erroneous and prejudicial to the interest of revenue or not. The Ld. Counsel for the assessee also submitted that the Ld. A.O. has examined all the material and passed the assessment order which should not have been interfered by the PCIT u/s 263 of the Act.

7.

Per contra, the Ld. DR submitted that the Ld. PCIT has passed an order u/s 263 of the Act for the limited purpose of examining the authenticity of the supplementary partnership deed which was produced before the PCIT and also to examine the allowability of partner’s salary and interest in the light of such supplementary partnership deed, therefore, the assessee cannot find fault that the order passed u/s 263 of the Act.

8.

We have heard the parties, perused the material on record and gave our thoughtful consideration. It is evident from the order of the Ld. PCIT that the representative of the assessee has filed written reply on 11/03/2019 along with a copy of supplementary partnership deed showing amended Clause 6(b) in respect of salary to the partners. Since, the said supplementary partnership deed dated 01/04/2013 has been produced before the Ld. PCIT, the Ld. PCIT has rightly directed the A.O. to examine the authenticity of the supplementary partnership deed as well as the allowability of the partner’s salary and interests in light of such supplementary partnership deed. The said action of the Ld. PCIT found to be well reasoned and the same requires no interference at our hands.

9.

It is observed that the Ld. PCIT has set aside the matter to the file of A.O. for the ‘limited purpose’ of examining the authenticity of supplementary partnership deed and the allowability of partner’s salary and interest in the light of such supplementary partnership deed. Therefore, the Ld. A.O. bound to comply with the said direction of the Ld. PCIT without travelling beyond the directions issued by the Ld. PCIT. With the said observations, and for the above discussions, we are inclined to dismiss the grounds of appeal of the assessee.

10.

In the result, the appeal filed by the assessee is dismissed.

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