TBR INFRA PVT LTD,ALAMPURAM vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, RAJAHMUNDRY
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आदेश /O R D E R
PER S. BALAKRISHNAN, ACCOUNTANT MEMBER: 1. This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1074807105(1) dated 21.03.2025 for the
I.T.A. No. 260/VIZ/2025 TBR Infra (P.) Limited A.Y.2018-19 arising out of order passed under section 143(3) of Income Tax Act, 1961 (in short ‘Act’) dated 17.04.2021.
Brief facts of the case are that, assessee is a Private Limited Company, filed its return of income for the A.Y. 2018-19 on 30.10.2018 admitting a taxable income of Rs.84,84,440/- which was summarily processed under section 143(1) of the Act on 31.10.2019. Subsequently, the case was selected for scrutiny and notice under section 143(2) and 142(1) of the Act were issued on various dates. In response to the notices, assessee has filed relevant requisite documents through ITBA Portal. On-going through the submissions made by the assessee, Ld.Assessing Officer [hereinafter in short “Ld. AO"] observed that the assessee has claimed expenditure amounting to Rs.11,45,866/- towards Coin Commission. Ld. AO observed that assessee has not deducted tax at source as prescribed under section 194H of the Act and thereby invoked provisions of section 40(a)(ia) of the Act while disallowing 30% of the gross amount commission amounting to Rs.3,43,759/-. Further, Ld. AO also disallowed a sum of Rs.23,05,444/- being 50% of the business promotion expenses claimed by the assessee, as genuineness of these expenses could not be verified.
On being aggrieved by the order of the Ld. AO, assessee carried the matter in appeal before Ld. CIT(A). Before Ld. CIT(A), assessee raised jurisdiction of the Ld. AO for the issuance of notice under section 143(2) of the
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I.T.A. No. 260/VIZ/2025 TBR Infra (P.) Limited Act along with other issues on merits. Ld. CIT(A) after considering the submissions made by the assessee, dismissed the appeal of the assessee by sustaining the order of the Ld. AO.
On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising the following revised grounds of appeal: -
“1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) ought to have held that the notice u/s 143(2) was not in accordance of guidelines issued by the CBDT with regard to selection of cases for scrutiny and hence the same is liable to be quashed as invalid. 3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.3,43,759 made by the assessing officer u/s 40(a)(ia) of the Act towards disallowance of 30% of the coin commission expenses. 4. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.23,05,444 made by the assessing officer towards ad-hoc disallowance of 50% of business promotion expenses ofRs.46,10,888 claimed by the appellant. 5. Any other ground that may be urged at the time of appeal hearing.”
Ground Nos. 1 & 5 are general in nature and needs no adjudication.
Ground No.2 challenges the jurisdiction of the Ld. AO for issuance of notice under section 143(2) of the Act without adhering to the guidelines issued by the CBDT, with regard to selection of cases for manual scrutiny. On this issue, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that
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I.T.A. No. 260/VIZ/2025 TBR Infra (P.) Limited Ld.AO has issued notice under section 143(2) of the Act dated 26.09.2019 for the following issues:
S.No. Issues i. Addition in an earlier AY confirmed in appeal or has become final on recurring issue of law or fact.
He further submitted that as per the Instruction No.5/2017 dated 07.07.2017 selection of cases for scrutiny for the F.Y. 2017-18, could not be made on recurring issue of law or fact when the claim of such addition does not exceed Rs.10 Lakhs. He therefore pleaded that the addition made by the Ld.AO in the instant case based on the recurring issue of law or fact involving addition in earlier assessment year amounting to Rs.3,43,759/- and hence well below the limit prescribed by the CBDT Instruction No.5/2017 dated 07.07.2017. He therefore vehemently argued that since notice under section 143(2) of the Act is not valid, entire assessment based on such invalid notice is void-ab-initio.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] relied on the orders of the Revenue Authorities.
We have heard both the sides and perused the material available on record. The case of the Ld. AO for the issuance of notice under section 143(2) of the Act for the impugned assessment year is on the following issue: -
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I.T.A. No. 260/VIZ/2025 TBR Infra (P.) Limited S.No. Issues i. Addition in an earlier AY confirmed in appeal or has become final on recurring issue of law or fact.
However, we find from the CBDT Instruction No.5/2017 dated 07.07.2017 relied on by the Ld.AR in Para No. 1(i) the CBDT has given a clear instruction with regard to the selection of returns for compulsory manual scrutiny for the F.Y. 2017-18 as follows:
“Subject: Guidelines for selection of cases for scrutiny during the financial-year 2017-2018-regd.- 1. In supersession of earlier Instructions on the above subject, the Board hereby lays down the following procedure and criteria for compulsory manual selection of returns/cases requiring scrutiny during the financial-year 2017-2018:- (i) Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact of following amounts: • in excess of Rs 25 lakhs in eight metro charges at Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, while at other charges, quantum of such addition should exceed Rs. 10 lakhs; • for transfer pricing cases, quantum of such addition should exceed 10 crore.
Accordingly, in the instant case where the addition amounting to Rs.3,43,759/- is well below the limit prescribed for the selection of return requiring scrutiny during the F.Y. 2017-18. We therefore find merit in the argument of the Ld.AR that the scrutiny assessment proceedings raised on invalid notice and hence not sustainable and deserves to be quashed. We therefore quash the assessment order as Void-ab-initio and thus allow the legal
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I.T.A. No. 260/VIZ/2025 TBR Infra (P.) Limited ground raised by the assessee. Accordingly, Ground No.2 raised by the assessee is allowed.
Since, assessment order is quashed, Ground No.3 and 4 raised on merits are not adjudicated and left open.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 30th October, 2025.
Sd/- Sd/- (संदीप धसंह करहेल) (एस बालाकृष्णन) (SANDEEP SINGH KARHAIL) (S. BALAKRISHNAN) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated:30.10.2025 Giridhar, Sr.PS आदेश की प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : TBR Infra (P.) Limited D.No. 7-130/2, TBR Bhavan NH-16, Alampuram West Godavari – 534136, Andhra Pradesh 2. रधजस्व/ The Revenue : Dy. CIT – Circle – 1 Income Tax Office, Aayakar Bhavan Veerabhadrapuram, Kambala Cheruvu Rajahmundry – 533105, Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईल / Guard file //True Copy// आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam
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