INDIA COMMERCIAL SERVICES ,JAIPUR vs. INCOME TAX OFFICER, JAIPUR

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ITA 484/JPR/2024Status: DisposedITAT Jaipur01 August 2024AY 2018-1924 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the jurisdiction under Section 263 of the Income Tax Act, 1961, cannot be invoked merely on the ground that the Assessing Officer (AO) was required to make further inquiries, especially when the record indicates that inquiries were indeed conducted. The PCIT's assertion that the AO failed to apply his mind to the issues of unsecured loans, Section 80G deduction, and depreciation was not substantiated by the material on record. The Tribunal noted that the AO had indeed sought details regarding unsecured loans, issued notices under Section 133(6) to creditors, and received some responses. While the PCIT pointed out deficiencies in the evidence provided by the assessee, the Tribunal found that the AO had conducted relevant inquiries and reached a particular conclusion, even if not explicitly detailed in the assessment order. The Tribunal relied on the principle that if inquiries have been conducted and the AO has reached a conclusion, the PCIT cannot invoke Section 263 to make short inquiries or re-examine the assessment process again and again. The Tribunal found that the PCIT's exercise of jurisdiction under Section 263 was founded on no material and was therefore unsustainable. Consequently, the impugned order passed by the PCIT was set aside. The Tribunal also noted that the PCIT could not expand the scope of scrutiny to issues not before the AO or direct further inquiries on matters already dealt with.

What were the facts?

The assessee, India Commercial Services, filed its return of income for Assessment Year 2018-19, declaring a total income of Rs. 1,21,07,200. The case was selected for complete scrutiny assessment under the E-assessment Scheme, 2019, focusing on 'Income from Real Estate Business' and 'Unsecured Loans'. The Assessing Officer (AO) accepted the return. Subsequently, the Principal Commissioner of Income Tax (PCIT) initiated proceedings under Section 263 of the Income Tax Act, 1961, by issuing a show cause notice dated 29/03/2024. The PCIT alleged that the assessment order passed by the National e-Assessment Centre (NFAC) was erroneous and prejudicial to the interest of the revenue, specifically regarding unverified unsecured loans of Rs. 85,50,000, disallowance of deduction under Section 80G of Rs. 23,876, and depreciation claimed on assets. The assessee responded to the show cause notice by submitting confirmations, donation receipts, and asset purchase bills.

What were the issues?

1. Whether the order passed by the Learned Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, is void ab-initio and deserves to be quashed? (Question of law) 2. Whether the PCIT erred in passing the order under Section 263 on grounds not prejudicial to the interest of the Revenue or erroneous, given that the original order was passed by the NFAC where decisions are taken by a team of persons? (Question of mixed law and fact) 3. Whether the PCIT erred in giving findings on issues already decided by the Assessing Officer? (Question of mixed law and fact) 4. Whether the PCIT erred in not considering the reply submitted by the assessee prior to passing the order under Section 263? (Question of mixed law and fact) 5. Whether the PCIT erred in giving directions for issues already dealt with by the Assessing Officer, specifically regarding unsecured loans of Rs. 85,50,000/-, deduction under Section 80G of Rs. 23,876/-, and depreciation claimed on assets? (Question of mixed law and fact) Assessee's Contentions: - The PCIT erred in invoking Section 263 as the original assessment order was not erroneous or prejudicial to the revenue. - The issues raised by the PCIT were already considered and decided by the AO. - The assessee's reply submitted during the Section 263 proceedings was not considered. - The original assessment order was passed by the NFAC, a body comprising multiple individuals, implying a proper application of mind. Revenue's Contentions: - The PCIT correctly invoked Section 263 as the AO failed to conduct proper inquiries regarding unsecured loans, Section 80G deduction, and depreciation, making the assessment order erroneous and prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 143(3A),Section 143(3B),Section 68,Section 80G,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,”A ” JAIPUR

Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM

Hearing: 30/07/2024Pronounced: 01/08/2024

Result

16.

Resultantly, the appeal filed by the assessee is allowed and the impugned order passed by Learned PCIT is hereby set aside.

Order pronounced in the open court on 01/08/2024.

1.

Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 01/08/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- India Commercial Services, Jaipur izR;FkhZ@ The Respondent- Income Tax Officer, Jaipur 2. 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File (ITA No. 484/JP/2024) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत

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