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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
This appeal by the assessee against the order dated 24-02-2022 passed by the Principal Commissioner of Income Tax-4, Pune (‘PCIT’) u/s. 263 of the Act for assessment year 2015-16.
The assessee raised sole ground of appeal
which is as under :
1. The Ld. CIT, while passing the order u/s. 263 r.w.s. 254 of the ITA, failed to appreciate the directions of the Hon. ITAT. He failed to appreciate that the Hon. ITAT expressly directed the CIT to examine whether his earlier order u/s. 263 was prejudicial to the interest of the revenue. The Ld. CIT however held that any order which is not in accordance with the provisions of the ITA, is prejudicial to the interest of the revenue without appreciating the distinction between the an erroneous order and an order prejudicial to the interest of the revenue.”
3. At the outset, we find that this Tribunal directed the PCIT to examine is as to whether the alternative determination of disallowance at Rs.1,51,92,814/- as computed by the assessee under Rule 8D(2)(iii) is prejudicial to the interest of Revenue or not, vide order dated 08-10-2021 in ITA No. 467/PUN/2020. The Tribunal arrived at such conclusion basing on the calculation put forth by the Ld. AR during the course of hearing of appeal in ITA No. 467/PUN/2020.
4. We find the AO computed the disallowance of Rs.1.64 crore @ 0.25% as against the average value of investments at Rs.303.85 crore being average value of investments between 01-04-2014 to 30-09-2014 which is in excess of disallowance of Rs.1,51,92,814/- as put forth by the ld. AR by taking average value of investments at Rs.607.71 crore as opening figure as on 01-04-2014 and Nil figure as on 31-03-2015 giving average value of investments at Rs.303.85 core.
5. The PCIT ought to have examined the same is as to whether proposed disallowance of Rs.1,51,92,814/- @ 0.50% taking the average value of investments of Rs.607.71 crore as opening figure on 01-04-2014 and Nil figure as on 31-03-2015 is prejudicial to the interest of Revenue or not. Without examining the same, the PCIT held the AO failed to conclude the assessment as per the provisions of the Income Tax Act, 1961 and set aside the order dated 22-11-2017 passed by the AO as erroneous and prejudicial to the interest of Revenue. Therefore, we are satisfied that the assessee has made out a case that the assessment order dated 22-11-2017 is not prejudicial to the interest of Revenue and in view of the same, the order of PCIT is not justified and it is set aside. Thus, the ground raised by the assessee is allowed.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 08th July, 2022.