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Facts
The assessee's income for AY 2018-19 was assessed u/s 143(3) r.w.s. 144B. Subsequently, the PCIT initiated revisionary proceedings u/s 263, contending that the assessment order was erroneous and prejudicial to the revenue because the Assessing Officer had failed to disallow "Delayed Payment of Statutory Dues" amounting to Rs. 1,16,02,879/-, which the PCIT deemed unallowable business expenditure.
Held
The Income Tax Appellate Tribunal (ITAT) set aside the PCIT's order, ruling that the PCIT's assumption of jurisdiction u/s 263 was invalid. The ITAT found that the Assessing Officer had conducted inquiries and the assessee had already suo moto disallowed the disputed expenditure (including penalties and fines) in its income computation. Citing the Supreme Court's Malabar Industrial Co. Ltd. precedent, the Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the revenue, as required for a valid revision under Section 263.
Key Issues
Whether the PCIT's revisionary order under Section 263 was valid when the Assessing Officer had made inquiries and the assessee had already self-disallowed the expenditure forming the basis of the revision.
Sections Cited
263, 143(3), 144B, 142(1), 56(2)(viib), 144A, 120, 119, 92CA, 272A(1)(d), 32(1)(ii), 36, 37, 40, 40(a)(ia), 43B, 129
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI RAJ KUMAR CHAUHAN, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dt. 21/02/2024 by PCIT, Mumbai-5, framed u/s 263 of the Income Tax Act, 1961 ('the Act') pertaining to AY 2018-19. 2. The sum and substance of the grievance of the assessee is that the PCIT erred in assuming juri iction u/s 263 of the Act and further erred in holding that the order dt. 30/04/2021, framed u/s 143(3) of the Act is not only erroneous but prejudicial to the interest of the revenue.
Having heard the rival submissions, we have carefully perused the orders of the authorities below and have considered the relevant documentary evidences brought on record in light of Rule 18(6) of the ITAT Rules, 1963. The Principal Commissioner of Vs Income Tax PCIT, Mumbai -5, Mumbai प्रत्यर्थी / (Respondent)
Briefly stated the facts of the case are that the return of income was selected for complete scrutiny under E-assessment Scheme, 2019, the following issues:- S. No. Issues i. Expenditure of Personal Nature ii. Investments/Advances/Loans iii. Income from Liquor Business iv. Refund Claim υ. Share Premium vi. Sales Turnover/Receipts vii. Expenditure by Way of Penalty or Fine for Violation of any Law
The assessment was framed u/s 143(3) r.w.s. 144B of the Act vide order dt. 30/04/2021. Assuming juri iction conferred upon him by the provisions of Section 263 of the Act, the PCIT-5, Mumbai, issued the following show cause notice:- ***This space has been left blank intentionally (P.T.O)*** आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNAL 2 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX PCIT, Mumbai-5 3 आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNAL To, IMPRESARIO ENTERTAINMENT & HOSPITALITY PVT LTD 66A AMERICAN EXPRESS BAKERY HOUSE, CLARE ROAD, BYCULLA WEST MUMBAI MUMBAI CENTRAL H.O 400008, Maharashtra India PAN/TAN: AAACI7871E AY: 2018-19 DIN & Notice No: ITBA/REV/F/REV1/2023- 24/1059944011(1) NOTICE FOR THE HEARING Dated: 19/01/2024 M/s/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961-Assessment Year 2018-19. In this regard, a hearing in the matter is fixed on 31/01/2024 at 11:30 AM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in Sub: Show-cause Notice under section.263 of the Income-tax Act, for A.Y. 2018- 19 In this case the assessee has filed its return of income for A.Y. 2018-19 on 27/09/2018 declaring total income at Rs. Nil/-. The case was selected for scrutiny and Assessment was completed u/s. 143(3) r.w.s. 144B of the income tax Act, on 30.04.2021 determining total income at Rs. 1,18,30,380/-. (2. On perusal of the assessment records, it is observed that the assessee company has debited a sum of Rs. 1,16,02,879/- under sub head “Delayed Payment of Statutory Dues