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Facts
The assessee's original assessment under Section 143(3) was revised by the PCIT under Section 263. The PCIT observed that the assessee claimed a Section 80G deduction, while the tax audit report (Form 3CD) indicated 'Nil' for Chapter VIA deductions, leading the PCIT to believe the Section 143(3) order was erroneous and prejudicial for not disallowing the claim and thus directed a fresh assessment.
Held
The Tribunal found that the assessee had provided comprehensive details and evidence, including a Section 80G certificate, to the AO during the original Section 143(3) assessment in response to a Section 142(1) notice. The discrepancy in the tax audit report was a mistake rectified by the auditor. Since the AO had duly examined and accepted the claim, the original assessment order was neither erroneous nor prejudicial to the revenue's interest, rendering the PCIT's revisionary jurisdiction under Section 263 invalid.
Key Issues
Whether the PCIT validly exercised revisionary jurisdiction under Section 263 when the Assessing Officer had already examined and accepted the Section 80G deduction claim during the original assessment proceedings under Section 143(3).
Sections Cited
263, 143(3), 80G, 142(1)
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY
(नििाारण वर्ा / Assessment Year : 2020-2021) J.G.Chemicals Limited, Vs Pr.CIT(Central)-2, Kolkata Adventz Infinity @5, Unit No.1511, Street No.18, BN Block, Sector V, Salt Lake Kolkata-700091 PAN No. :AABCJ 0625 L (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररतीकीओरसे /Assessee by : Shri Akkal Dudhwewala, FCA राजस्वकीओरसे /Revenue by : Shri P.N.Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 09/07/2025 घोषणा की तारीख/Date of Pronouncement : 30/07/2025 आदेश / O R D E R
Per Rajesh Kumar, AM:
This is an appeal filed by the assessee against the order dated 08.01.2025, passed by the ld. PCIT(Central), Kolkata-2, for the assessment year 2020-2021.
The assessee has challenged jurisdiction exercised u/s.263 of the Act by the Pr.CIT on the ground that the order passed u/s.143(3) of the Act dated 20.04.2022 was erroneous and prejudicial to the interest of revenue.
The facts in brief are that the order u/s.143(3) of the Act was passed on 20.04.2022 assessing total income of the assessee at Rs.14,11,61,610/-Thereafter the PCIT observed from the assessment records that the assessee clamed deduction of Rs.8,28,001/- u/s.80G of Act in the income tax return filed for the impugned assessment year. The PCIT also noted from Form 3CD (tax audit report) that deduction under Chapter VIA is shown at Nil which resulted in short determination of assessable income amounting to Rs.8,28,001/-. The PCIT noted that the claim of the assessee of Rs.8,28,001/- u/s.80G of the Act should have been disallowed by the AO in the order passed u/s.143(3) of the Act and added to the income of the assessee. According to Pr.CIT the order passed by the AO is erroneous and prejudicial to the interest of revenue and hence notice u/s.263 of the Act was issued to the assessee. The assessee replied to the said notice. Finally, the Id. Pr.CIT revised the assessment already framed u/s.143(3) of the Act dated 20.04.2022 by directing the AO to make necessary enquiry/verification and pass the assessment afresh and compute the income accordingly after following the provisions of law.
Ld. AR submitted before us that the revisionary jurisdiction invalidly exercised by the PCIT as the order passed u/s.143(3) of the Act is neither erroneous nor prejudicial to the interest of revenue. Ld.AR while taking us through the computation of income at page 38 of the paper book, submitted that the assessee has added back the total amount of Rs.16,79,001/- and claimed deduction u/s.80G of the Act @ 50% of Rs. 16,56,001/- which comes to Rs.8,28,001/-. The Id.AR also took us to copy of ITR filed available at page 40 of the paper book which under the head donations entitled for 100% deduction without qualifying limit and stated that deductions were stated with complete details and facts and Rs.8,28,001/- was made. The Id. AR also stated that the tax auditor while preparing the report wrongly mentioned in the tax audit report in Item No.33 that amount admissible in Chapter VIA to be Nil and the PCIT has relied on that report which has been revised by the tax auditor subsequently by admitting the said mistake. The Id.AR referred to the notice issued by the AO during the assessment proceedings, copy of which is available at page 52 of the paper book wherein vide query No.14, the assessee was directed to submit the evidentiary proof in respect of the claim of deduction under Chapter VIA of the Act and the assessee replied and furnished the details before the AO vide letter dated 22.12.2021 under point No.14 submitting all the details and evidences, copy of 80G certificate in respect of claim has also been placed in the paper book. The Id.AR submitted that in view of these facts, the issue was duly examined by the AO and accepted, therefore, the revisionary jurisdiction exercised by the PCIT deserves to be quashed.
On the other hand, Id.CIT-DR submitted that no prejudicial is going to be caused to the assessee by restoring the investigation to the AO in respect of 80G claim and the assessee would get sufficient opportunity. Therefore, the appeal of the assessee deserves to be dismissed.
After perusing the material available on record, we find that in this case admittedly there is a mistake in the tax audit report in item No.33 wherein the tax auditor stated that a deduction under Chapter VIA to be Nill whereas the assessee has claimed deduction of Rs.8,28,001/-. We have examined the statement of total income of the assessee furnished in the