M/S. M B GHARPURAY ENGINEERS & CONTRACTORS,PUNE vs. PR. COMMISSIONER OF INCOME-TAX, PUNE

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.

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.

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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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.”

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)

Ld. Pr. Commissioner of Income Tax u/s.263 of the Act.

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.

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 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