THE PRINCIPAL COMMISSIONER OF INCOME TAX, FARIDABAD vs. M/S NKB INFRASTRUCTURE PVT. LTD.

PDF · subscribers
ITA/155/2022HC Punjab & HaryanaPHHC01059015202226 February 2024Author: MR. JUSTICE SANJEEV PRAKASH SHARMA,MRS. JUSTICE SUDEEPTI SHARMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the ITAT's order. The Tribunal had correctly observed that the assessee had provided a reply to the Assessing Officer concerning the unsecured loan and justified the increase. Furthermore, the loan was from directors or their relatives, and information pertaining to these parties was available with the AO. The Tribunal's finding that the PCIT's contention of the AO not raising any query was baseless was upheld. The Court found that the AO could not be said to have committed any error, and thus, there was no occasion for the PCIT to interfere under Section 263. The details of sundry creditors were also available before the PCIT. Consequently, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax (PCIT), Faridabad, appealed to the High Court of Punjab and Haryana against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had set aside an order passed by the PCIT under Section 263 of the Income Tax Act, 1961. The assessment year in question was 2015-16. The PCIT had invoked Section 263, alleging that the Assessing Officer (AO) had made an erroneous assessment by not adequately inquiring into an unsecured loan of ₹2,95,26,933/-. The Tribunal, however, found that the assessee, M/s NKB Infrastructure Private Limited, had provided a reply to the AO regarding the unsecured loan and justified the increase. The Tribunal also noted that the loan was from individuals who were directors or relatives of directors, and information regarding these parties was available to the AO.

What were the issues?

1. Whether the Principal Commissioner of Income Tax erred in invoking his revisional powers under Section 263 of the Income Tax Act, 1961, by holding that the Assessing Officer's assessment order was erroneous and prejudicial to the interest of the Revenue, specifically concerning the unexplained unsecured loan of ₹2,95,26,933/- for assessment year 2015-16? Assessee's Contention (as per Tribunal's findings): The assessee had provided a reply to the Assessing Officer regarding the unsecured loan and justified the increase. The loan was from directors or their relatives, and information about these parties was available with the AO. Therefore, the AO had not committed any error, and the PCIT's intervention under Section 263 was unwarranted. Revenue's Contention (as per High Court's summary): The PCIT's order did not warrant interference as the unsecured loan of ₹2,95,26,933/- remained unexplained. The PCIT contended that the AO did not raise any query relating to the said loan, making the assessment erroneous.

Which sections of the Income-tax Act were involved?

Section 260A,Section 263

AI-generated summary — verify with the full judgment below

ITA No. 155 of 2022 2024: PHHC:027091-DB -1-

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 155 of 2022 (O&M)

Date of decision : 26.02.2024

Pr. Commissioner of Income Tax, Faridabad

… Appellant Versus M/s NKB Infrastructure Private Limited

…Respondent

CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA

HON’BLE MRS. JUSTICE SUDEEPTI SHARMA

Present: Mr. Varun Issar, Senior Standing Counsel,

for the appellant.

SANJEEV PRAKASH SHARMA, J.

The Revenue is in appeal before this court under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 27.07.2021 passed by the Income Tax Appellate Tribunal, Delhi Bench-E, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 450/Del/2021 for the assessment year 2015-16, whereby the Tribunal set aside the order passed by the Principal Commissioner of Income Tax, under Section 263 of the Act.

2.

Learned counsel for the Revenue submits that the order passed by the PCIT did not warrant any interference as unsecured loan of ` 2,95,26,933/- remained unexplained. The Tribunal has noticed that the assessee had filed reply to the query raised by the Assessing Officer and in compliance of the directions of the Assessing Officer, he justified the reason for increase on the unsecured loan. Moreover for the year in consideration, the loan was added in the cases of the persons who were directors or relatives of the directors and all of them had been VARINDER SINGH 2024.03.13 11:49 I attest to the accuracy and integrity of this document

ITA No. 155 of 2022 2024: PHHC:027091-DB -2-

assessed under the same Assessing Officer and the information relating to the parties was available with the Assessing Officer. Therefore, the contention raised by the PCIT that the Assessing Officer did not raise any query relating to the said loan, was found to be baseless by the ITAT.

3.

The Assessing Officer, therefore, cannot be said to have committed any error while making the assessment and there was no occasion for the PCIT to interfere under Section 263 of the Act alleging that no query has been done by the Assessing Officer. Details of the sundry creditors were available before the PCIT as observed by the Tribunal. This Court finds that no question of law is found to be made out in the facts of the present case as noticed and the conclusions drawn thereto need no interference. The appeal is dismissed.

4.

Pending applications, if any, also stand disposed of.

5.

No costs.

(SANJEEV PRAKASH SHARMA)

JUDGE

26.02.

2024

(SUDEEPTI SHARMA) dinesh/vs

JUDGE

Whether speaking/reasoned

Yes/No Whether reportable

Yes/No

VARINDER SINGH 2024.03.13 11:49 I attest to the accuracy and integrity of this document

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →