ASHOK KUMAR,BHARATPUR vs. THE PCIT, VADODARA-1, VADODARA

The ld. Pr. CIT seriously erred in law as well as on the facts of the case in assuming juri iction u/s 263 of the Act by wrongly and incorrectly holding that this renders the order erroneous in so far as prejudicial to the interest of revenue as exemptions have wrongly been allowed in respect of salary income contrary to provisions of income tax law and without conducting any inquiry in the matter.

The ld. Pr. CIT erred in law as well as on the facts of the case in wrongly setting aside the assessment order dated 17.04.2021 despite there being complete application of mind by the AO on the subjected issues and it was nothing but a case of Ashok Kumar vs. PCIT Asst.Year –2018-19 - 2– change of opinion, based on which, assumption of juri iction u/s 263 is not permissible. The impugned order dt. 22.02.2024 therefore, lacks valid juri iction u/s 263 of the Act and hence, the same kindly be quashed.

The ld. Pr. CIT erred in law as well as on the facts of the case in wrongly setting aside the assessment order dated 17.04.2021 relying on the various judgements that are not subject matter of assessment.”

It also revealed from the enquiry made by the Ld. PCIT that the exemption of Rs.4,50,000/- claimed u/s 10(10CC) of the Act and of Rs.4,51,900/- u/s 10(10B) of the Act was not correct and not in accordance with the provisions of law. The deduction u/s 10(10CC) of the Act is available in respect of tax paid by employer for a non-monetary perquisite derived u/s 17(2) of the Act. The employer can’t claim any deduction for such perquisite and the same is liable to be disallowed u/s 40(a)(v) of the Act. The AO didn’t make any enquiry from the employer about payment of perquisite of Rs.4,50,000/- which was claimed exempt u/s 10(10CC) of the Act and had allowed the claim of the assessee. The enquiry made by the PCIT from the employer revealed that neither any perquisite was paid to the assesse nor the employer had made any disallowance u/s 40(a)(v) of the Act. Therefore, the claim of exemption u/s 10(10CC) of the Act made by the assesse was wrong and incorrect. Similarly, the claim for exemption u/s 10(10BB) of the Act was also allowed by the AO without making any enquiry from the employer. Asst.Year –2018-19 - 3–

It is thus evident from the above facts, that the AO had not conducted proper inquiries in respect of the claims as made in the return of income and, therefore, the order was rightly treated as erroneous and pre-judicial to the interest of revenue by the Ld. PCIT. As pointed out by the Ld. CIT-DR, it was held by the Hon’ble Supreme Court in the case of Navnit Lal Sakar Lal (supra) that the amount utilized by the employer for obtaining deferred annuity policy would form part of remuneration payable to the assesse and was chargeable under the head “salaries”. Therefore, the annuity amount of Rs. 15 lakh paid to LIC by the employer was remuneration of the assesse and taxable as salary. As the order of the AO was not in accordance with the decision of the Apex Court the order of the AO was erroneous and pre-judicial to the interest of revenue for this reason as well.

The decisions relied upon by the Ld. AR are all found different on facts and not applicable to the peculiar facts of this case. It is a trite law and a well settled position that non application of mind or wrong assumption of facts or incorrect application of law by the A.O. will make the order erroneous and pre-judicial to the interest of Revenue. Therefore, we do not find anything wrong with the assumption of juri iction u/s 263 of the Act by the Ld. PCIT as the order of the AO was erroneous and pre-judicial to the interest of Revenue for the reasons as already discussed above. We, therefore, upheld the order of the Ld. PCIT. The grounds of appeals taken by the assessee are dismissed.

In the result, the appeal filed by the assessee is dismissed.”