K.THIAGARAJAN,MADURAI vs. DCIT, MADURAI

This appeal filed by the assessee is directed against the order passed by the learned Principal Commissioner of Income

The assessee has raised several grounds in his appeal, however the crux of the issue is that the Ld. PCIT has erroneously invoked powers U/s.263 of the Act and directed the Ld.AO to re-do the assessment after examining the applicability of Section 14A and Rule 8D of the rules.

The brief facts of the case are that the assessee is a an individual earning income from salary, interest etc., filed his return of income for the assessment year 2012-13 on 25.07.2012 admitting total income of Rs.55,12,911/-. Subsequently he filed revised return of income electronically on 19.07.2013 admitting total income of Rs.59,23,510/-. The revised return filed by the assessee was initially processed U/s.143(1) of the Act and subsequently the case was taken up for scrutiny and finally assessment order was passed U/s.143(3) of the Act on 25.02.2015.

Thereafter the Ld.PCIT(A) invoked his powers U/s.263 of the Act and remitted back the case of the assessee to the file of Ld.AO in order to examine the applicability of Section 14A and Rule 8D of the Rules in the case of the assessee because the assessee had made investments for earning exempt income and the Ld.AO had not discussed the issue in his order or made any examination on that regard.

The Ld.AR submitted before us that the Ld.AO in his assessment proceedings U/s.143(3) of the Act had examined the issue in detail and since Section 14A and Rule 8D of the Rules was not applicable in the case of the assessee decided not to invoke the above mentioned provisions of the Act. It was therefore argued that the order of the Ld.PCIT invoking the provisions of Section 263 of the Act is erroneous and therefore requested the same to be quashed. The Ld.DR on the other hand vehemently argued in support of the order of the Ld.PCIT and pleaded for sustaining his order.

We have heard the rival submissions and carefully perused the materials available on record. Before us neither the assessee nor his representative could produce any evidence to suggest that the Ld.AO had examined the issue with respect to the applicability of Section 14A and Rule 8D of the Rules in the case of the assessee during the assessment proceedings U/s.143(3) of the Act. Further on perusal of the order of the Ld.AO it is apparent that the Ld.AO had not discussed the issue with respect to the applicability of Section 14A and Rule 8D of the Rules as pointed out by the Ld.PCIT in his order. In this situation, we find the order of the Ld.PCIT invoking his powers U/s.263 of the Act and further directing the Ld.AO to examine the applicability of Section 14A and Rule 8D of the Rules in the case of the assessee to be appropriate. Therefore we hereby sustain the order of the Ld.PCIT passed U/s.263 of the Act.

In the result, appeal of the assessee is dismissed.