HALMIRA ESTATE TEA PVT. LTD,KOLKATA vs. PCIT-2, KOLKATA

That the assessment order passed by the Assessing Officer on 10.11.2017 u/s. 143(3) after due consideration of documents submitted by the Appellant was neither erroneous nor prejudicial to the interests of the Revenue and therefore the order appealed against be cancelled.”

Brief facts of the case as culled out from the records are that the assessee is a company and income of Rs.2,63,990/- declared in the return of income for Assessment Year 2015-16 filed on 30/09/2015. Case selected for scrutiny through CASS and assessment framed u/s 143(3) of the Act disallowing excessive deduction claimed u/s 80IE of the Act at Rs.6,86,200/-, thereby assessing income at Rs.9,34,400/-. Before concluding the assessment, relevant notice u/s 143(2) and 142(1) of the Act were issued and duly served and the reply to the questionnaire issued u/s 142(1) of the Act filed by the assessee enclosing necessary details.

Subsequently, the ld. Pr. CIT, called for the assessment records and after going through the same noticed that there is a transaction of purchase of property valuing at Rs. 11.41 Crores which has not been verified by ld. Assessing Officer. After considering the records, the ld. Pr. CIT assuming juri iction u/s 263 of the Act issued notice u/s 263 of the Act, dt. 06/03/2020, which read as follows:- “On examination of the assessment records of above mentioned assessment year 2015-16, it appears prima facie that there was failure on part of the A.O to assess the income correctly and as such, the instant order u/s 143(3) is erroneous in so far as it is prejudicial to the interest of the revenue within the ambit of sec. 263 of the Income Tax Act, 1961. In this regard the following discrepancies have been observed: "Purchase of property for Rs. 11.41 Cr. had not been verified at all. The officer accepted the claim only on the basis of a ledger copy and some bank entries. Even the concerned deed of conveyance is not placed on record. But the A.O completed the assessment without necessary legal verification or investigation in this case and accordingly without making any addition in the assessment order u/s 143(3) dated 10.11.2017". In view of the above, you are hereby allowed an opportunity of being heard, either personally or through an authorized representative, in my office at Room no 60, 3rd floor, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 on 12/03/2020 at 10:45 A.M./P.M., and show cause as to why an order u/s 263 of the 3 Assessment Year: 2015-16 Halmira Estate Tea Private Limited I. T. Act, 1961 shall not be passed in your case enhancing/modifying/cancelling the assessment order in question or directing a fresh assessment to be made. In the event of failure to comply with the above, it shall be presumed that you have no objection to the proposed action and the matter shall be finalised on merits on the basis of material on record, without further notice."

During the course of revisionary proceedings, ld. Counsel for the assessee made detailed submissions stating that the assessee entered into an agreement for purchase of a building at Mumbai on 28/11/2014. Copy of ledger account of capital work in progress filed in support of the claim with all relevant entries appearing in the audited balance sheet. He also stated that the assessee availed loan from ICICI Bank for purchasing this property. Further it was also submitted that the ld. Assessing Officer had asked for necessary details in the questionnaire attached to notice u/s 142(1) of the Act and complete details where filed. Therefore, this transaction has been examined thoroughly by the ld. Assessing Officer. However, the ld. Pr. CIT was not satisfied and he held the order of the ld. Assessing Officer as erroneous and prejudicial to the interest of the revenue for not examining the transaction of purchase of property and directed the Assessing Officer to pass fresh assessment order after examining the transaction of purchase of property in question. The relevant finding of the ld. Pr. CIT reads as follows:- “6. I have carefully considered the facts of the case and gone through the submission of the assessee. On perusal of the assessment record, it is seen that, the primary reason for scrutiny i.e. purchase of property for Rs. 11.41 crores had not been verified at all by the AO. The AO accepted the claim only on the basis of a ledger copy and some bank entries and even, the conveyance deed is not placed on record. On the other hand, the AR of the assessee has stated that, in the course of assessment proceedings, the Assessing Officer has directed assessee to explain the above investment. The same was explained by the Assessee’s Authorized