Loading judgment…
Facts
The Assessing Officer made an addition of Rs. 1,11,24,400/- under section 80JJAA of the Income Tax Act, 1961, which was disallowed by the PCIT under section 263. The PCIT also initiated penalty proceedings under section 270A. The assessee contested the PCIT's order, arguing that the PCIT exceeded the scope of limited scrutiny.
Held
The Tribunal held that the PCIT had no jurisdiction to revise the assessment order dated 12.05.2021, as the case was selected for limited scrutiny on only two issues. The PCIT enlarged the scope of jurisdiction by considering the expenditure on Corporate Social Responsibility, which was not part of the limited scrutiny.
Key Issues
Whether the PCIT's revisional jurisdiction under section 263 can be exercised beyond the scope of limited scrutiny and whether the PCIT correctly disallowed CSR expenditure under section 37(1).
Sections Cited
80JJAA, 270A, 263, 37(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,” B-Bench” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA. No. 753/JPR/2024
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER On 12.05.2021 Assessing Officer, National e-Assessment Centre, Delhi, passed assessment order relating to the assessment year 2018-19, qua the assessee company-appellant herein. Vide said order, income of the assessee was computed, while making addition of Rs. 1,11,24,400/- u/s 80JJAA of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).
M/S Gravita India Ltd. vs. PCIT Above deduction u/s 80JJAA of the Act, claimed by the assessee was disallowed, as the assessee did not substantiate its claim by producing documentary evidence. The Assessing Officer also initiated penalty proceeding 270A of the Act, due to misreporting/under-reporting of the income.
However, on 29.03.2024, Learned PCIT, Jaipur-2 passed the impugned order, which is under challenge by the assessee, before this Appellant Tribunal.
Vide impugned order, Learned PCIT, while exercising powers u/s 263 of the Act held that the above said assessment order dated 12.05.2021 is erroneous in so far as the same is prejudicial to the interest of revenue. Accordingly, while setting aside the assessment order, the Assessing Officer was directed to examine the issue and pass suitable order after affording opportunity of being heard, to the assessee. That is how, the assessee is before this Appellant Tribunal.
Argument heard. File perused.
As to what led Learned PCIT to pass the impugned order, para 2 thereof would reveal that the assessee company was found to have debited a sum of Rs. 28,72,000/- relating to expenditure incurred on Corporate Social Responsibility (hereinafter referred to as the “CSR”), and M/S Gravita India Ltd. vs. PCIT further that the FAO had allowed the same without examining or verifying said aspect involved. Learned PCIT was of the view that instead of allowing the above said expenditure incurred on CSR, the FOA should have disallowed the same in view of the provisions of Section 37(1) of the Act. Before passing the impugned order, a show cause notice dated 22.02.2023, u/s 263 of the Act, was issued by Learned PCIT to the assessee company by way of said notice. The assessee company was called upon to explain as to why the assessment order dated 12.05.2021 be not revised u/s 263 of the Act.
As is available from the impugned order, the assessee company did not furnish any reply, initially, but, on 31.01.2024 presented its response opposing the proposed revision. However, after going through the impugned order, the records and considering the submissions put forth on behalf of the assessee, Learned PCIT passed the impugned order setting aside the assessment order and issued directions to the Assessing Officer, as already noticed above.
Ld. AR for the assessee-appellant has put forth sole argument that the Assessing Officer observed in the assessment order that the case was selected for limited scrutiny assessment on two issues, firstly, on the issue M/S Gravita India Ltd. vs. PCIT of duty drawback and secondly, on the issue of deduction from total income under Chapter VI-A. The assessment order, vide which addition as regards the deduction claimed u/s 80JJAA of the Act was made, is stated to have already been challenged by way of appeal, as submitted by Ld. AR for the assessee, in the course of arguments.
The contention is that when the case was selected for limited scrutiny assessment, Learned PCIT could not go beyond the limited scope of scrutiny i.e. two issues referred to above, but, Learned PCIT exceeded the scope and considered a new aspect i.e. debit entry relating to expenditure incurred on CSR, while referring to the provisions of Section 37(1) of the Act, and as such, the impugned order deserves to be set aside. In support of his contention, Ld. AR has relied on the decision of Jaipur Bench in case of Mahendra Singh Dhankhar (HUF) v. Assistant Commissioner of Income Tax, (2021) 204 DTR 377(JP Trib.) .
On the other hand, Ld. DR for the department has submitted that he stands by the impugned order passed by Learned PCIT, and further that present appeal deserves to be dismissed.