M/S. GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY,GREATER NOIDA vs. PR. CIT, NOIDA

2.2015 and 16.2.2015 which were considered by the Ld. A.O. who ultimately passed the Assessment Order u/s 143(3) and excluded interest income from such loans and advances. Therefore, the Impugned Order is merely a change of opinion. 3. That, in the facts and circumstances of the case, Ld. ACIT, in rectification proceedings u/s 154/155 had also inquired on the issue of loans and advances vide notice dated 17.10.2016, and the Appellant had duly given explanations vide its reply dated 3.11.2016, yet no further rectifications were made by making addition of any income in respect of loans and advances. Therefore, the Impugned Order is merely a change of opinion. 4. That, in the facts and circumstances of the case, the Ld. PCIT failed to appreciate that Appellant is statutorily mandated as per the Uttar Pradesh Industrial Area Development Act, 1976, to carry out developmental works through various Central/State Agencies. The loans and advances were thus made as such in the nature of trade advances for execution of various such works and are non-interest bearing. 5. That, in the facts and circumstances of the case, the Impugned Order erroneously omitted the term 'Adv.' (short for advance) as originally mentioned in the books of accounts filed by the Appellant. 6. That, in the facts and circumstances of the case, the Ld. PCIT, failed to appreciate that in proceedings u/s 154/155 of the Income Tax Act, the Appellant had already conceded to the Ld. ACIT's notice 17.10.2016, by way of its reply thereto, that surcharge was wrongly levied and that it should be deleted. 7. That, in the facts and circumstances of the case, the Impugned Order is bad in law, and also deserves to be set aside, for not granting an opportunity of oral hearing. 8. That, in the facts and circumstances of the case, the Impugned Order has wrongly held that the records have not been closely examined by the AO and instead has mechanically accepted the contentions and documents filed by the assesse/appellant. 9. That no question on surcharge was put to the Assessee in the show-cause notice, however, a decision was passed in respect of the same in the impugned order. 10. The Appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of hearing. 2. The brief facts of the case are that the assessee is engaged in the business of infrastructure development. In this case no return of income was filed by the assessee. Therefore notice u/s 142(1) dated 01.08.2014 and subsequent notice dated 10.11.2014 were issued to the assessee. Assessee filed its return of income, in response of notice issued u/s 142(1) on 10.11.2014 wherein assessee has declared income of Rs. 83,39,876/- and the same was claimed exempt u/s 10(20) of the IT Act, 1961. This claim of the assessee was not accepted as activities of the assessee are of commercial nature and not of religious/charitable or activities of Artificial Judicial Person. Accordingly, taxable income was determined u/s 143(3) of I.T.Act, 1961 at Rs. 411,89,24,223/- on 25.03.2015. Thereafter, Ld. PCIT has passed the following order u/s. 263 :- “On perusal of record it is revealed that the assessee had given loans/

Against the above order, assesse has preferred an appeal before us. 5. We have heard both the parties and perused the records. Ld. Counsel for the assessee has summarized the submissions as under:-

That, in the facts and circumstances of the case, the Order under appeal is a mere change of opinion by the Ld. PCIT on the basis of which it has been wrongly concluded that assessment order was prejudicial to the interest of the revenue. Pertinently, the Ld. PCIT himself notes in the impugned order (para 4 @pg.2 - Paperbook) that the issue of loans and advances were already considered by the Ld. A.O. Such exercise of juri iction u/s 263 of the Income Tax Act, 1961 is against the law.

In the notice u/s 142(1) {para 4,pg.2, Vol-1 -Document Compilation), the Ld. A.O. had specifically; enquired about the issue of loans and advances, to which Appellant had replied vide letters dated 13.2.2015 (para 1,pg.3, Vol-1—Document Compilation) and 16.2.2015 (pg.ll, Vol-1 -Document Compilation, also Pg.12-21 are schedule of loans and advances which were annexed with such reply) which were considered by the Ld. A.O. who ultimately passed the Assessment Order u/s 143(3) and excluded interest income from such advances.

Ld. ACIT (A.O.), in rectification proceedings u/s 154/155 had also inquired on the issue of loans and advances vide notice dated 17.10,2016 (Pg.10 - Paperbook), and the Appellant had duly given ; explanations vide its reply dated 3.11.2016 (Pg-13 - Paperbook), yet no further rectifications were made by making addition of any income in respect of loans or advances.

The Ld. PCIT failed to appreciate that Appellant is statutorily mandated as per the Uttar Pradesh industrial Area Development Act, 1976, to carry out developmental works through various Central/State Agencies. The advances were thus made to, inter alia, such entities, in the nature of trade advances for execution of various such works, and, therefore, were non-interest bearing.

That, in the facts and circumstances of the case, the Impugned Order erroneously omitted the term 'Adv.' (short for advance) as originally mentioned in the books of accounts filed by the Appellant. [compare Pg.1-2 (impugned order) with Pg.81 (schedule from GNIDA's balance sheet) of Paperbook].

That, in the facts and circumstances of the case, the Ld. PCIT, failed to appreciate that in proceedings u/s 154/155 of the Income Tax Act, the Appellant had already conceded to the Ld. ACIT's notice 17.10.2016, by way of its reply thereto, that surcharge was wrongly levied and that it should be deleted. Further, no question on surcharge was put to the Assessee in the show-cause notice (Pg.8-9 - Paperbook), however, a decision was passed in respect of the same in the impugned order.

The Impugned Order has wrongly held that the records have not been closely examined by the AO and instead has mechanically accepted the contentions and documents filed by the assesse/appellant (para 5 of impugned order @pg.3 - Paperbook).

Judgments relied upon:

1 Per contra, Ld. DR submitted that ld. PCIT has directed for further enquiry which is permitted by the amendment made in Section 263 of the Act 6. Upon careful consideration, we note that assessee is a statutory body as per the Uttar Pradesh Industrial Area Development Act, 1976. The advances given by the entities to the various Govt., Corporations have been wrongly noted by the PCIT as loans. We note that Ld. PCIT has failed to appreciate that assessee is a statutorily mandated as per the Uttar Pradesh Industrial Area Development Act, 1976 to carry out developmental works through various Central / State Agencies. The advances were thus made to, inter alia, such entities, in the nature of trade advances for execution of various such works, and therefore, were non-interest bearing. The details of assessee’s advances were duly enquired by the AO which the PCIT has himself noted that it is available in the assessment record. Ld. PCIT was of the opinion that the AO did not examine the details available on records and has summarily accepted the confirmations submitted by the assessee ignoring the facts available on records. Thus it is clear that the details were available on record which have not been ignored by the AO. It is clear that the AO has made an enquiry on the issue of loans and advances for which the explanations was given by the assessee and AO was satisfied with it. Furthermore, the Explanation 2 to Section 263 stipulates as under :- Explanation 2 – For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chief Commissioner or Chief Commissioner or Principal] Committer or Commissioner, - (a) the order is passed without making inquiries or verification which should have been made. (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or 8