A. LAKSHMANAN, ,MADURAI vs. CIT-1, , MADURAI

This appeal filed by the assessee is against the order of the learned Principal Commissioner of Income Tax, Madurai-1 in C.No. 401/77/PCIT/MDU-1/2018-19/ dated 21.03.2019, relevant to the Assessment Year 2014 – 2015.

Facts are in brief that the Assessee is an individual carrying in the business of commission on repledge of jewels, filed his return of income

Subsequently, the learned Principal Commissioner of Income Tax by exercising the powers conferred upon him u/s.263 of the Income Tax Act, 1961 has noted that on examination of the assessment records for the Assessment Year 2014 – 2015, it I revealed that during the financial year 2013 – 2014, the Assessee has paid interest to various finance and banking institutions through the three branches of the Assessee to the tune of Rs.82,31,494/- but failed to deduct tax while making payments. The Assessing Officer has not examined during the course of the assessment proceedings. Therefore, the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue and asked the Assessee to explain.

In response to that, the Assessee has submitted that the Assessing Officer after making a complete enquiry made the addition on account of the interest payment to the tune of Rs.4,50,000/- and therefore the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue.

The Assessee’s Authorized Representative, Shri S.P. Velayutham appeared before the learned Principal Commissioner of Income Tax and 3 -: requested that, if at all any enquiry is required; the matter may be remitted back to the Assessing Officer.

The learned Principal Commissioner of Income Tax, after examining the facts of the case and also by considering the request made by the Assessee’s Authorized Representative, remitted the issue back to the file of the Assessing Officer to examine the issue afresh in accordance with law and after giving an opportunity to the Assessee to substantiate his case.

On being aggrieved, the Assessee carried the matter in appeal before the Tribunal. The learned Counsel for the Assessee had submitted that in respect of the interest payment made by the Assessee to the financial institutions and banks examined by the Assessing Officer and addition was made, therefore the learned Principal Commissioner of Income Tax has wrongly invoked the jurisdiction u/s.263 of the Income Tax Act, 1961 and submitted that the same may be cancelled.

On the other hand, the learned Departmental Representative has submitted that the Assessee’s Authorized Representative himself asked the learned Principal Commissioner of Income Tax to remit the issue back to the Assessing Officer. Therefore, the learned Principal Commissioner of Income Tax has correctly exercised the jurisdiction u/s.263 of the Income Tax Act, 1961 and the same is submitted that it may be upheld.

In this case, the Assessee has paid interest amount to the financial institutions and banks to the extent of Rs.82,31,494/- and the Assessee has agreed for the addition of Rs.4,50,000/- on account of the interest payment. The Assessing Officer has accepted the same and the addition is made without making any enquiry. Subsequently, the learned Principal Commissioner of Income Tax by exercising the powers conferred upon him u/s.263 of the Income Tax Act, 1961 examined the records and found that the Assessing Officer has not examined the issue relating to interest payment and it is erroneous and prejudicial to the interest of the Revenue.

That apart, the Assessee’s Authorized Representative himself appeared before the learned Principal Commissioner of Income Tax and requested to remit the issue back to the Assessing Officer for examining the same.

So, keeping in view the facts and circumstances of the case and also by considering the request made by the Assessee’s Authorized Representative, the learned Principal Commissioner of Income Tax had 5 -: remitted back the issue to the Assessing Officer to examine the issue afresh in accordance with law.

Thus, we find no infirmity in the order passed by the learned Principal Commissioner of Income Tax and hence no interference is warranted.

In the result, the appeal filed by the Assessee in is dismissed.