SKYLINE MILLARS LIMITED,MUMBAI vs. PR. COMM OF INCOME TAX, MUMABI 6, MUMBAI

1.1 On the facts and circumstances of the case and in Law, the Principal Commissioner of Income tax-6.Mumbai, erred in invoking the provisions of and passing the order U/Sec. 263 of the Income tax Act, 1961 by holding that the Assessment Order U/Sec. 143(3) dated 07.02.2019 passed by the Asst. Commissioner of Income tax-14(3)(2), Mumbai is erroneous and prejudicial to the interest of the Revenue, ignoring the fact that the appellant had reconciled income as per Form 26AS during the course of assessment proceedings and therefore the order passed U/sec. 263 needs to be set aside. 1.2 On the facts and circumstances of the case and in Law, the said C.I.T. erred in not considering the fact that the said A.O. had accepted the claim for Penalty and Fine of Rs.57, 759/- after considering the Tax Audit Report wherein no disallowance was reported by the Tax Auditor for the same which was not in the nature of any Penalty. 1.3. The said Pr. C.I.T. also erred in not considering the fact that the order cannot be subject to Revision U/sec 263 when two views are possible on allowability of claim as held by the Hon'ble Supreme Court in the case of CIT V/S Max India Ltd. 295 ITR 282. 1.4 The order U/Sec. 263 is bad in Law, invalid and void as the assessment order U/Sec. 143(3) was neither erroneous nor prejudicial to the interest of the Revenue.”

Brief facts of the case are that Assessee Company is in the business of development of property and manufacturing industry having income from business, capital gains and other sources. Assessee filed its return of income on 31-10-2017 declaring total loss at Rs (-) 2, 35, 58,908/-. Case of the assessee was selected for scrutiny and was assessed u/s 143(3) accepting the returned income.

Thereafter a notice u/s. 263 was issued vide dated 12-03-2022. We have gone through the contents of the notice vide pg. no. 1 of the paper-book. In contrast to this we have gone through the notice to call information u/s. 142(1) also issued by AO vide pg. no. 11 of paper-book vide dated 22-01-2019. It is observed that the issues raised by the Ld. PCIT u/s. 263 are already covered by the notice issued u/s 142(1) while framing the assessment under section 143(3) of the Act and the same has been duly complied with by the assessee vide it submission dated 24-04-2019, pg. no. 16 of paper-book and submission dated 04-10-2019 vide pg no. 18 of paper-book. It is observed that issues flagged by the Ld.PCIT have been thoroughly examined by the AO. For ready reference copy of notice issued u/s 263 is given as under: “NOTICE FOR THE HEARING Mis/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961-Assessment Year 2017-18. In this regard, a hearing in the matter is fixed on 21/03/2022 at 12:30 PM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations tied in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in 1. The return of income was e-filed on 31.10.2017, declaring total loss at Rs. 2,35,58,908/-. The case was selected for Scrutiny under CASS. Assessment Order u/s 143(3) of the I.T. Act was passed on 07.12.2019 accepting the returned loss.

From the above it is clear that you have claimed TDS credit in respect of income which was not offered for taxation in the assessment year under- consideration and TDS credit was allowed by the AO without making proper enquiries as to why the said income has not been made part of the total income. Further, you have claimed the expenses incurred for infringement of law and not for the purpose of conducting your business and again, the AO allowed the same without making proper enquiries. 5. In view of the above facts, the order passed by the AO without conducting proper enquiries is erroneous in so far as it is prejudicial to the interest of the revenue and liable for revision in terms of section 263 of the Act. 6. In this connection, you are hereby given an opportunity of being heard and your case is fixed for hearing/making submission online on/on or before 21.03.2022 at 12.30 PM. In case of non-compliance, it will be presumed that you have no objection to the proposed revision u/s 263 of the assessment order passed by the AO u/s 143(3) of the Act. RAHUL KARNA PCIT, Mumbai-6” 4. In our observation this is not the case were the issues flagged by the Ld. PCIT has not been discussed and examined by the AO rather, a complete submission was there from assessee and duly examined by the AO. To apply sec. 263 both the limbs of the section has to be attracted i.e. order must be erroneous and prejudicial to the interest of the revenue. Without going into the merits of issues flagged we would like to examine the order of AO from the point of view of whether any error is there in passing the order. In our observation the order of AO doesn’t fall in the category of erroneous order. 5. We have taken note of statement of late fees paid and claimed by assessee and ledger account of Mr. Ashok Jethabhai Patel (issues flagged by the Ld. PCIT)