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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of Ld. Pr. Commissioner of Income Tax-2, Pune dated 30.03.2017 passed u/s.263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
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Though the assessee has filed multiple grounds of appeal and revised
grounds of appeal, the crux of the grievance of the assessee is with regard to
the invoking of jurisdiction u/s. 263 of the Act by the Ld. Pr. Commissioner of
Income Tax.
At the outset, we notice that the appeal is time-barred by 137 days for
which condonation of delay petition along with affidavit has been filed by the
assessee. That on perusal of these documents, it is evident that the delay was
caused due to the reasons beyond the control of the assessee and more
specifically, the assessee acted upon the advice of his consultant and while
acting on advice, this present delay has occurred. We have given thoughtful
consideration to the condonation of delay petition as well as affidavit and in
all judicial fairness, we observe that the grounds for delay are justified and
therefore, we condone the delay and proceed to hear the appeal on merit.
The facts in this case which has given rise to the order passed u/s.263
of the Act by the Ld. Pr. Commissioner of Income Tax is that the assessment
was completed u/s.143(3) of the Act at total income of Rs.1,77,78,593/-.
Subsequent to this, upon verification of case records, it was seen that the
assessee had written off the sales tax refund of Rs.10.32 lakhs and claimed it
as an expense. It was further noticed that the assessee has written off work
contract TDS of Rs.10,48,049/- as well and claimed such amount as well as
an expense. The Pr. Commissioner of Income Tax observed that prima facie
such claims are legal statutory claims and cannot be written off as bad debts,
therefore, such claims should have been added back by the Assessing Officer
which he has not done while passing assessment order. Therefore, the notice
u/s.263 of the Act was issued on 01.03.2017 to revise the above assessment
order being erroneous, prejudicial to the interest of the Revenue.
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That on perusal of the notice issued u/s.263 of the Act which is
annexed at page No.1 in the paper book filed before us, in para 3 therein, it is
mentioned that :
“3. On verification of case record it is noticed that :
You have made a wrongful claim of Rs.24,58,032/- on account of writing off sales tax refund and WCT TDS refund.”
The Ld. AR of the assessee at the time of hearing invited our attention
to page 1 of the second paper book which contains copy of notice issued
u/s.142(1) of the Act dated 11.08.2014 wherein certain details were called for
from the assessee including copy of return of income along with computation
of income, Audited Balance Sheet, Tax Audit report, PAN of all the partners,
contact details and 26AS etc. This notice is scanned and annexed as a part of
this order as Annexure -1.
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5.1 The Ld. AR of the assessee, thereafter, referred to page 2 of the paper
book wherein another notice was issued u/s.142(1) dated 29.12.2014 along
with details questionnaire by the Assessing Officer. In that questionnaire,
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Item No. 6 refers to details of other expenses. This notice along with
questionnaire is also made part of this order and annexed herein as
Annexure-2.
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5.2 Thereafter, the Ld. AR of the assessee referred to pages 25 and 26 of
the paper book which is the reply to the Assessing Officer regarding the ‘Bad
debts/ Sundry debit balances’ wherein the assessee categorically stated that
sum of Rs.24.58 Lakhs has been written off by way of bad and irrecoverable
debts and sundry debit balances which are as under:
Sales tax refund Bihar Rs.10,32,097.62 Works contract TDS Rs.10,40,989.00
In this connection, the assessee has explained each of the heads i.e.
Sales Tax Refund, Bihar and Works contract TDS.
5.3 The Ld. AR of the assessee emphasized on the fact that all these
enquiries were conducted adequately by the Assessing Officer and assessee
has given reply to each of the query as and when Revenue Authorities have
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asked for. Therefore, it is not appropriate that Pr. Commissioner of Income
Tax assumes revisionary jurisdiction u/s.263 of the Act stating assessment to
be erroneous and prejudicial to the interest of the Revenue. Pages 25 and 26
of the paper book are also made part of this order and annexed herein below
as Annexure-3 and Annexure-4:
ANNEXURE-3
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ANNEXURE-4
5.4 The Ld. AR further pointed out that even for the Revenue Audit Query
on the issue, they have notified to the Assessing Officer on the issue which
are annexed in pages 17 and 18 of the paper book and are made part of this
order as Annexure-5 and Annexure-6:
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ANNEXURE-5
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ANNEXURE-6
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5.5. The Ld. AR of the assessee further submitted that no action u/s.263 of
the Act is warranted since the Assessing Officer completed assessment
u/s.143(3) of the Act after calling for voluminous details of various items,
duly considering them along with the submissions of the assessee and it is
not that entire return income was accepted by the Assessing Officer,
Assessing Officer completed assessment after making disallowance of nearly
Rs.3.41 Lakhs. Further, details of “Sundry Debit Balances written off’” were
also called for and submitted and queries raised thereon were also duly
answered and then accepted. It is also demonstrated that queries raised by
Audit was also explained before the Assessing Officer.
5.6 The Ld. AR further relied on the following decisions:
i) CIT Vs. Vodafone Essar South Ltd., ITA No.119/2012, 212 TAXMAN 184 ii) Director of Income Tax Vs. Jyoti Foundation, ITA No.267/2013, 357 ITR 388 (Delhi)
Per contra, the Ld. DR has placed reliance on the order passed by the
Ld. Pr. Commissioner of Income Tax u/s.263 of the Act.
We have perused the case record and heard the rival contentions and
have given thoughtful consideration to the judicial pronouncements placed
before us. At the time of hearing, the Ld. AR of the assessee demonstrated
that vide notice u/s.142(1) of the Act and questionnaire issued, details with
regard to writing off Sales Tax refund and Works Contract TDS refund was
called for by the Assessing Officer, specifically Item-6 in the questionnaire
calling for details of other expenses. Thereafter, the assessee has also filed
written reply to these queries and explained in details regarding Sales Tax
Refund, Bihar and Works Contract TDS. We also observe even for the Audit
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query, the assessee has appraised the matter before the Assessing Officer and
again on the same issue the Ld. Pr. Commissioner of Income Tax has invoked
revisionary jurisdiction u/s. 263 of the Act. Therefore, as on facts, the issue
was adequately enquired upon by the Assessing Officer and similarly, the
reply was also furnished by the assessee.
That regarding legal aspects on the matter, we take guidance from the
decision of the Hon'ble Delhi High Court in the case of CIT Vs. Vodafone
Essar South Ltd. (supra.) where it has been held that the records revealed
that the assessee was specifically queried regarding the nature and character
of the charges involved. The Hon'ble High Court further held that it is not a
case of ‘No Enquiry’ as specific queries were made by the Assessing Officer
and those were duly replied. In such circumstances, Ld. Pr. Commissioner of
Income Tax could not have validly exercised revisionary power u/s.263 of the
Act and Revenue’s appeal was dismissed.
That in the present case, the assessee was adequately enquired upon
by the Ld. Assessing Officer at the time of assessment itself and replies on the
issue was filed by the assessee before the Assessing Officer and also at the
time of Audit query. The legal perspective is very clear that once Assessing
Officer has done detailed query on the issue and the assessee has given reply
regarding the same on the same issue, the Ld. Pr. Commissioner of Income
Tax could not invoke jurisdiction u/s. 263 of the Act. It is just a case of
plausible opinion but it cannot be said that assessment was erroneous so as
to the prejudicial to the interest of the Revenue. Once the Assessing Officer
has done necessary enquiry on the matter, the Ld. Pr. Commissioner of
Income Tax may be of the view that enquiry should have been conducted in
some other manner. It is just a question of another view of the matter but
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that does not warrant the Pr. Commissioner of Income Tax should invoke the revisionary jurisdiction u/s.263 of the Act.
In view of our aforesaid findings and examination of the issue, we hold that resorting to revisionary jurisdiction by Ld. Pr. Commissioner of Income Tax and consequent order passed u/s.263 of the Act in the case of the assessee is arbitrary, unwarranted and bad in law and accordingly, we direct to quash the order passed u/s.263 of the Act.
In the result, appeal of the assessee is allowed. 10.
Order pronounced on 28th day of February, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 28th February, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. Commissioner of Income tax-2, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 4. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.
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Date 1 Draft dictated on 26.02.2019 Sr.PS/PS 2 Draft placed before author 27.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order