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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI PAVAN KUMAR GADALE, JM
This appeal is filed by M/s S.K. Ventures (the assessee/ appellant) against the order passed under section 263 of the Income-tax Act, 1961 (the Act) by the Pr. Commissioner of Income-tax-3, Thane [the learned CIT(A)] dated 24th March, 2020, wherein it has been held that assessment order passed under section 143(3) of the income-tax Act dated 27.12.2017 passed by the income-tax Officer, ward 2(4), Kalyan (the learned Assessing Officer) for Assessment Year 2015-16 is erroneous so far as, prejudicial to the interest of the Revenue and therefore, the Assessing Officer was directed to call
“1. In the facts and circumstances of the case and in law, the Ld. PCIT has erred in assuming jurisdiction under section 263 and holding that the order passed u/s. 143(3) by Ld. Assessing Officer dated 27.12.2017 is erroneous and prejudicial to the interest of Revenue.
2. In the facts and circumstances of the case and in law, the Ld. PCIT has erred in passing the impugned order u/s. 263 in utter haste and hurry during the period of pandemic of COVID-19; by neither giving any sufficient opportunity of being heard to the appellant nor considering the submissions made by the Appellant, thereby violating the principles of natural justice.”
The facts of the case shows that assessee is engaged in business of developers and builders, filed its return of income for Assessment Year 2015-16 on 31st October, 2015 declared income of Rs. 91,300/-. The case of the assessee was selected for limited scrutiny under Computer Aided Scrutiny Selection (CASS) for the reason;
(i) mismatch in sales turnover reported in audit report and ITR and (ii) large deduction claimed under Chapter VIA.
Records were examined by the learned PCIT and noticed that a. the opening working in progress as on 01.04.2012 was of Rs. 10,43,11,000/- and closing work in progress as on 31.03.2013 was Rs. 5,08,85,143/-, however as on 01.04.2013, assessee took opening work in progress as Rs. nil and closing stock of Rs. 32,667/- for Assessment Year 2014-15. Therefore, there is a difference of Rs. 83,63,359/- suppressing the work in progress for Assessment Year 2015-16 therefore, the learned PCIT was of the view that the learned assessing Officer did not confront the assessee with above discrepancy but overlooked it .
b. It was further observed by him that assessee has claimed deduction of Rs.1,04,70,137/- under section 80IB of the Act and Assessing Officer overlooked the fact whether the assessee has fulfilled all the conditions of that section or not.
Therefore, a notice was issued to the assessee fixing date of hearing on 6th February, 2020. On 6th February, 2020, assessee sought adjournment. Next date was given on 28th February, 2020. The learned PCIT mentioned that none attended on that date and therefore decided the issue on merits of the case. He
The learned Authorized Representative submitted that a. the learned CIT(A) should not have passed an order in undue haste and hurry which has violated the principle of natural justice. He was of the view that there is no proper opportunity given to the assessee.
b. assessee has sent an email dated 19th March, 2020 to the learned Principal Commissioner of Income Tax, wherein detailed reply was submitted. However, the learned CIT(A) ignoring the above submission as if it is not received. As order was passed on 24th March, 2020, he should have considered the above explanation c. On the merits of the case, he refered to the paper book submitted containing 41 pages. i. On the first issue of suppression of value of stock by Rs. 83,66,359/- he has specifically ii. With respect to the second claim of deduction under section 80IB(10) of the Act, he submitted that the main reason for selection of the scrutiny was large deduction under Chapter VIA of the Act. Assessee replied vide letter dated 19.12.2017 and 3 other correspondences dated 21.12.2017 and therefore after considering the above replies the learned Assessing Officer allowed the claim of the assessee. d. In view of this, he submitted that the order passed by the learned Assessing Officer is after making due enquiries and therefore, the order passed cannot said to be erroneous so far as prejudicial to the interest of the Revenue. e. case of the assessee was selected for limited scrutiny and the learned Assessing Officer could have only examined the issue for which case was selected. He submitted that issue of suppression of work in
The learned CIT Departmental Representative supported the order of the learned PCIT.
We have carefully considered the rival contentions and perused the orders of the learned PCIT as well as the learned Assessing Officer. The return of the assessee was selected for Limited scrutiny only for the two issues : (i) large deduction under Chapter VIA claiming by the assessee and (ii) Sales Turnover mismatch. The learned PCIT invoked the provisions of Section 263 of the Act holding that the Assessing Officer did not inquire about the suppression of the work-in-progress as well as large deduction claimed by the assessee under section 80IB(10) of the Act. We find that issue of suppression of the work in progress was not at all part of the limited scrutiny scope before the Assessing Officer. Despite that the learned Assessing Officer examined the same and allowed the claim of the assessee. Therefore, now the issue arises whether the learned PCIT was within his powers to invoke the provisions of Section 263 of the Act on the issues which were not part of the examination before the learned Assessing Officer on the limited scrutiny, irrespective of the fact whether
However, the issue remains that the learned PCIT while passing the order on 24th March, 2020 has stated that assessee did not comply with date of hearing on 20th February, 2020 and therefore, order was passed without considering the explanation of the assessee. We find that assessee has sent email on 19th March, 2020 explaining the reasons that on account of provision of Section 263 of the Act cannot be exercised for the impugned assessment year. However, this explanation was not considered by the learned PCIT though order u/s 263 of the Act was passed on 24/3/2020. It is apparent that assessee did not attend the hearing on 20/2/2020 but before the order was passed assessee submitted its reply. Therefore in the interest of justice , we direct the assessee to produce the copy of the mail before the ld PCIT and raise all the contention once
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 30.03.2022.