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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI ANADEE NATH MISSHRA
[A]. This appeal has been filed by the assessee against the order dated 28.03.2017 passed by Learned Pr. Commissioner of Income Tax, New Delhi [in short, “Ld. Pr. CIT”] pertaining to 2009-10 assessment year. The assessee has raised following grounds of appeal:-
GROUND NO. 1 1.1 On the facts and circumstances of the case and in law the Ld. PR. CIT Delhi-19 has erred in passing an Order u/s 263 of the I.T. Act, 1961 as the Proceedings initiated u/s 263 are not valid in law.
GROUND NO. 2 2.1 The Pr. CIT Delhi-19 had initiated revision proceedings in order to carry out fishing and roving enquiry in the matters which had already been concluded and which were not permissible u/s 263 of the Act.
ITA No:-3179/Del/2017 2.2. The Assessment Orders u/s 143 (3) and u/s 147 could not be considered erroneous and prejudicial to the interest of the revenue for the following reasons: 2.3 The Assessing Officer had taken the possible views after application of mind but Pr. CIT Delhi-19 had not demonstrated how the Orders passed by the Assessing Officer were not only erroneous but also prejudicial to the interest of the Revenue hence the Revision Order was beyond the scope of Section 263 of the Act and hence not valid and unsustainable in law. 2.4 Though Ld. Pr. CIT Delhi-19 was not satisfied with the scope of enquiry conducted by the Assessing Officer, but he himself has neither conducted any enquiry nor brought on record any corroborative material justifying and showing that the Assessing Officer’s findings were erroneous. 2.5 The Assessing Officer had passed the Assessment Orders under Section 143(3) and further after making an addition u/s 147 also, which a Reasonable and Prudent Officer had already completed the requisite enquiries, correctly appreciated the facts and verifications and had come to a reasoned conclusion before passing the Order.
[B]. Vide assessment order dated 02.06.2014 passed u/s 143(3)/148 of the Income Tax Act, 1961 (in short ‘the Act’), income of the assessee was determined at Rs.30,82,340/-. The assessment order was revised under section 263 of the Act, by learned Pr. CIT, vide impugned order dated 28.03.2017. The relevant portion of the aforesaid impugned order dated 28.03.2017 of the ld. Pr. CIT is reproduced as under:-
The case was completed u/s 143(3) on 21.12.2011 at a total Income of Rs. 27,32,280/- against the returned income of Rs. 25,79,054/- after making an addition of Rs. 2,58,303/- on disallowance out of communication & telephone expenses, business promotion, Diwali & Pooja expenses and staff welfare expenses.
2. Thereafter the case was reopened u/s 148 and the assessment / reassessment was completed u/s 147 at total income of Rs. 30,82,340/- after making addition of Rs. 3,50,064/- (on account Page | 2
ITA No:-3179/Del/2017 of non-deduction of tax at source in case of fabrication charges paid to 5 parties and not showing fees received for professional/technical services Rs. 2,93,864/- and 56,200/- respectively) on 02.06.2014.
Post assessment u/s 147, the case was examined in the office of PCIT-19 wherein it is found that some points/issues should have been examined / verified by the AO during the proceedings u/s 147, but he failed to do so. Consequently notice u/s 263 was issued to the assessee show causing on points / issues which are hereunder:- To, Sh. Shelendra Kumar Jain, 76-B, DDA Flats, Jhilmil Colony, Vivek Vihar, Delhi-110095
Sir, Sub: Notice u/s 263 of the I.T. Act, 1961 in the case of Sh. Shelendra Kumar Jain (PAN: ADJPJ4984G), 76-B, DDA Flats, Jhilmil Colony, Vivek Vihar, Delhi-110095, A.Y. 2009-10 – Regarding 1. Your case was completed u/s 143(3) on 21.12.2011 at a total income of Rs. 27,32,280/- against the returned income of Rs. 25,79,054/- after marking a total addition of Rs. 2,58,303/- on disallowance out of communication & telephone expenses, business promotion, Diwali & Pooja expenses and staff welfare expenses.
From perusal of assessment records, it is observed that during assessment proceedings, some issues remained unverified and un-enquired by the A.O. To clarify these issues. AO had issued notice u/s 154/155 dated 25.10.2012 which was followed by reminder letter dated 16.08.2013 for which no compliance was made by you. Subsequently the case was reopened u/s 148 and the assessment/ reassessment was completed u/s 147 at total income of Rs 30,82,340/- after making addition of Rs. 3,50,064/- (on account of showing fees received for professional/ technical services Rs.2,93,864/- and 56,200/- respectively) on 02.06.2014.
3. Post re-assessment u/s 147, the case was examined in the office of PCIT-19 wherein it is found that following points should have been asked and examined / verified by the AO during the proceedings u/s 147, but he failed to do so:-
(i) You have not filed reply to the notice issued u/s 143(2)/142(1) on 25.03.2014. Submit your reply why penalty u/s 271(1)(b) r.w.s. section 274 of the I.T. Act. Page | 3
ITA No:-3179/Del/2017 (ii) Submit the reply for non-deduction of TDS for expenses on Office Rent and job Work Charges amounting to Rs. 5,40,000/- and 3,03,542/- respectively.
In view of the above, it is apparent that assessment in this case has been completed without verifying the above aspects. In other words, the order of the AO under discussion is erroneous in so far as it is prejudicial to the interest of revenue.
5. The above issues were required to be examined by the AO while finalizing the assessment proceedings. In view of above, you are show caused as to why the assessment order may not be treated as erroneous in so far it is prejudicial to the interest of revenue under the provisions of section 263 of the I.T. Act, 1961.
In case, you have anything to submit in this regard, you may submit the same either personally or through your authorized representative in this office on 16.03.2017 at 11.30 AM at Room No. D-106, First Floor, Vikas Bhawan, I.P. Estate, New Delhi- 110002, failing which it would be presumed that you have nothing to say in the matter and an order u/s 263 of the Income Tax Act, 1961 will be passed on the basis of material available on record.
From the reply filed by the assessee, it is seen that he has argued that TDS deduction was not warranted for the payment of Office Rent because the payment varies between Rs. 2000/- to Rs. 9000/- p.m. Secondly on the issue of Job Work charges he has replied that Each Job Work hoarding is less than Rs. 20,000/- which is below threshold limit of TDS. However he could not provided the name of each party to whom he had made the above payments. In view of the above, the genuineness of these expenses has remained unverified. However taking into account the nature of business the assessee is undertaking, it is seen that the back office of the assessee is located at far off places being small villages. The expenses on Office Rent and Job Work charges cannot be ruled out entirely. However the facts remain that the assessee could not provide the names of parties to whom he had made the payments neither during the assessment proceedings u/s 143(3) nor during proceedings u/s 263. Hence the plea of the assessee that proceedings u/s 263 should not be initiated, is rejected.
[C] This present appeal has been filed by the assessee against the aforesaid impugned revision order dated 28.03.2017 of the Ld. Pr. CIT. At the time of hearing, Revenue was represented by Shri. S.S. Rana, CIT (DR).
However, none was present from the assessee’s side. In the absence of any ITA No:-3179/Del/2017 representation from assessee’s side, at the time of hearing before us, we heard the Ld. CIT (DR). The Ld. CIT (DR) relied upon the aforesaid impugned order dated 28.03.2017 of the Ld. Pr. CIT. He also relied on the precedents in the cases of (i) order dated 29.11.2017 of Hon’ble Supreme Court in the case of Denial Merchants Pvt. Ltd. vs. ITO (Appeal No. 2396/2017) ii. Malabar Industrial Co. Ltd. vs. CIT 243 ITR, 83 (SC) (iii)
Rajmandir Estates (P.) Ltd. vs. PCIT 386 ITR 162 (Calcutta) iv. Rajmandir Estates (P.) Ltd., vs. PCIT 245 Taxman 127 (SC). After perusal of the order of the AO and the aforesaid impugned order dated 28.03.2017 of the Ld. Pr. CIT, we find that the Ld. Pr. CIT has passed speaking order. Relevant portion of the impugned order of the Ld. Pr. CIT had already been reproduced in foregoing paragraph (B) of this order. We find that the Ld. Pr. CIT has given detailed reasons for his decision in the aforesaid impugned order dated 28.03.2017 of Ld. Pr. CIT. During appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short) no material has been brought for our consideration to persuade us to take a view different from the view taken by the Ld. Pr. CIT in the impugned order. Therefore, after hearing the Ld. CIT (DR) and after perusal of materials on record, and further, in view of the foregoing discussion, we decline to interfere with the aforesaid impugned appellate order dated 28.03.2017 of Ld. CIT(A). In view of the foregoing discussion, the appeal filed by assessee is dismissed.
ITA No:-3179/Del/2017 [D] Before we part; we explicitly clarify that the assessee will be at liberty to approach ITAT for restoration of the appeal in accordance with Proviso to Rule 24 of Income Tax (Appellate Tribunal), Rules, 1963. If the assessee does approach ITAT for restoration of the appeals in ITAT, the matter will be considered in accordance with law having regard to the facts and circumstances.
[E] In the result, appeal filed by Assessee is dismissed.
Order pronounced in the open court on 20/11/2019.