SHRI LOKENDRA PANWAR,INDORE vs. THE PCIT (1) , INDORE
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Per Vijay Pal Rao, JM:
This appeal by the Assessee is directed against the revision order dated 23.03.2023 of Pr. Commissioner of Income Tax passed u/s 263 of the Act for Assessment Year 2018-19. The assessee has raised following grounds of appeal:
“1 That the learned CIT erred in setting aside the order passed by the learned AO u/s 143(3). That the learned AO thoroughly examined the issues raised in notice u/s 263. The seting aside of order again on the issues which have already been considered and discussed by the AO in detail is illegal and wrong. The order u/s 263 therefore required to be quashed.
ITANo.185/Ind/2023 Lokendra Panwar 2. That the learned CIT(A) erred in not giving proper opportunity of being heard to the assessee. This being denial of natural justice, the order so passed therefore, require to be quashed. 3That the learned CIT(A) erred in reopening the case for roving enquiries. The order so passed being illegal and wrong, the same therefore, require to be quashed. 4 That the learned CIT(A) erred in passing the order u/s 263 without verifying the facts of the case and documents filed before AO properly. The order so passed being illegal and wrong, the same therefore, require to be quashed. 5 That the learned CIT(A) erred in invoking provisions of Section 263 against an order passed by NEAC. That as per Faceless Scheme, the order is passed by a team of officials including the rank of commissioner and before getting finality it passes through verification unit also. In faceless regime, invocation of provisions of section 263 is not proper. The order so passed being illegal and wrong, the same therefore, require to be quashed..” 2. The case of the assessee was selected for limited scrutiny of assessment under e-assessment Scheme 2019 on the issue of deduction against the income from other sources. The AO competed the assessment u/s 143(3) on 26.02.2021 by accepting the income returned. Thereafter the Pr. CIT on going through the assessment record found that certain points mentioned for selection of case for limited scrutiny under CASS were not taken into consideration by the AO while finalizing assessment u/s 143(3) r.w. section 143(3A) & 143 (3B) of the Act. He has observed that the AO passed assessment order without making required examination/investigation which has resulted the assessment order being erroneous in so far as prejudicial to the interest of revenue. Accordingly a show cause notice u/s 263 was issued on 21.02.2023. In response the assessee has filed an adjournment Page 2 of 15
ITANo.185/Ind/2023 Lokendra Panwar letter dated 27.02.2023 and hearing of the matter was adjourned to 09.03.2023. Since on the next date of hearing there was no representation on behalf of the assesse therefore, the Pr. CIT has passed the impugned order based on material available on record. While passing the impugned order the Pr. CIT has set aside the assessment order and directed the AO to re-examine the issue in the light of discussion made in the revision order and passed the order as per the law after necessary verification, inquiry and investigation. Aggrieved by the impugned order the assessee has filed present appeal.
Before us the Ld. AR of the assessee has submitted that the AO has issued show cause notice u/s 142(1) dated 13.01.2021 and thereafter another show cause notice u/s 142(1) dated 11.02.2021 and specifically asked the assessee about the deduction against income from other sources. He has pointed out that the AO has raised specific issue of deduction which was duly replied by the assessee to explain the allowable deduction u/s 57(1) of the Act. Ld. AR has submitted that the assessee produced the details of the interest income, details of the deduction claimed against income from other sources. Though the assessee paid interest of Rs.95,72,187/- however the deduction of Rs.92,10,249/- only has been claimed and the assessee suo moto disallowed a sum of Rs.3,61,938/-. The AO was satisfied with the explanation of the assessee after conducting proper inquiry and verification of the
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ITANo.185/Ind/2023 Lokendra Panwar record and claim of the assessee. He has further submitted that this issue is recurring issue and the AO has examined and allowed the claim for last three years. The copies of order for proceeding assessment years were produced before AO to show that no addition on this account was made by the AO even in the preceding assessment years. Thus, ld. AR has submitted that when this issue is not the first time arising for the assessment year under consideration but it is a recurring issue and now the assessment was completed in the faceless regime where 3 teams for assessment has been made i.e: (i)Assessment Unit (ii) Verification Unit & (iii) Review Unit
All the units are headed by a senior official to the rank of JCIT/Addl CIT/CIT. Draft order is passed and is sent to review unit to verify whether any addition is left to be incorporated or vice versa. Therefore, Ld. AO has conducted the due inquiry and after his satisfaction he has allowed the claim of deduction against income from other sources. The AO has allowed these deductions for last three years and therefore, the AO has taken a consistent view for the year under consideration. Once the AO has conducted an inquiry and taken a consistent view as taken in the preceding years then the Pr. CIT cannot be allowed to invoke provisions of section 263. In support of his contention he has relied upon following decisions:
(i) CIT vs. SunBeam Auto 227 CTR 113 (Delhi HC) Page 4 of 15
ITANo.185/Ind/2023 Lokendra Panwar (ii) Reliance Money Infrastructure Ltd vs. Pr. CIT 51CCH0166(ITAT Mumbai) (iii) ITO vs. DG Housing Projects Ltd (ITA 179/2011 (Delhi HC) (iv) (iv) DIT vs. Jyoti Foundation 267/2013 (Delhi HC) (v) (v) CIT vs. Mehrotra Brothers 270 ITR 157 (M.P.)
Thus, Ld. AR has submitted that the impugned order passed by the Pr. CIT is not sustainable in law and liable to be quashed.
On the other hand, Ld. DR has submitted that the order of the
AO is completely silent about inquiry he has conducted on the issue
for which the limited scrutiny under CASS was taken up. Thus, Ld.
DR has submitted that the order of the AO is non-speaking order
and nothing is mentioned about the record which was filed by the
assessee or examined by the AO on this issue. Even the assessee
has not participated in the proceedings before the Pr. CIT therefore,
the impugned order was passed on the basis of the available on
record. Ld. DR has relied upon the impugned order of the Pr. CIT.
We have considered the rival submissions as well as relevant
material on record. The assessment was completed u/s 143(3) r.w.
section 143(3A) & 143 (3B) of the Act under National Faceless E-
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ITANo.185/Ind/2023 Lokendra Panwar Assessment Scheme 2019. The case of the assesse was selected for
limited scrutiny of assessment on the issue of deduction against
income from other sources. The AO has accepted the return income
by making following remarks and observation in the assessment
order as under:
“After taking into account all relevant material available on record and submission furnished by the assessee, an Assessment is completed by accepting the income returned and the sum payable or refund of any amount due on the basis of the assessment is determined as per the notice of demand.”
The AO has stated in the order that after taking into account
all the relevant material available on record and submissions
furnished by the assessee the assessment is completed by accepting
income returned. This statement of the AO clearly manifest that the
inquiry was conducted by the AO on this issue of limited scrutiny
and only after his satisfaction he has completed assessment by
accepting returned income. We further note that the AO issued
notice u/s 142(1) dated 13.01.2021 wherein the AO has raised
various queries as under:
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ITANo.185/Ind/2023 Lokendra Panwar
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ITANo.185/Ind/2023 Lokendra Panwar
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ITANo.185/Ind/2023 Lokendra Panwar 7. Thereafter the AO again issued notice u/s 142(1) dated 11.02.2021 and raised following queries:
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ITANo.185/Ind/2023 Lokendra Panwar 8. Thus, the AO has raised the specific queries about the claim of
deduction made u/s 57(1)(iii) and asked the assesse to explain how
such expenses are laid out or expended wholly and exclusively for
the purpose of earning such income. In the reply the assesse has
given explanation placed at page no.7 & 8 of the paper book as
under:
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ITANo.185/Ind/2023 Lokendra Panwar
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Thus the assessee has explained that the investment/loans in the firm and companies is made from loans taken from various persons and therefore, the interest paid/accrued on unsecured loan taken from persons is claimed by the assessee u/s 57 against the interest income. The assessee has also given all the details of the loans and interest payment, rate of interest as well as the claim of deduction against the income from other sources out of the total interest paid. The assessee has also filed the copies of earlier three assessment orders for assessment years 2017-18, 2014-15 & 2013- 14. Thus, it is matter of record that this issue is a recurring issue
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ITANo.185/Ind/2023 Lokendra Panwar and for the last three scrutiny assessments the AO has allowed the claim of deduction against the income from other sources. By considering all these facts and specifically when this issue is a recurring issue where the AO in the scrutiny assessment for A.Ys.2013-14,2014-15 & 2017-18 has already considered and examined this issue and allowed the claim of the assessee then the order of the AO allowing the claim for the year under consideration is a consistent view taken by the AO as taken in the preceding assessment years. Therefore it is not a case of complete lack of inquiry but the AO has conducted the inquiry on this issue and also considered the earlier assessments wherein an identical issue has been considered and claim of the assessee was allowed. Once the AO has conducted an inquiry on the issue and was satisfied with the explanation and claim of the assessee then the order of the AO cannot be held as erroneous and prejudicial to the interest of the revenue on the ground of lack of inquiry. Accordingly invoking the provisions of section 263 of the Act by the Pr. CIT ignoring all these relevant facts as emerging from the record is contrary to the law as well as settled judicial precedence. Ld. AR of the assessee has relied upon various decisions wherein consistent view has been taken that once AO has conducted an inquiry and was satisfied with the explanation and claim of the assessee then it is not necessary that the AO should give elaborate finding in the assessment order on each and every issue which have been examined during the course of scrutiny. Hence in view of the facts and circumstances of the
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ITANo.185/Ind/2023 Lokendra Panwar case as discussed above as well as various decisions relied upon by the assessee we hold that the impugned order passed by the Pr. CIT u/s 263 of the Act is not sustainable in law and the same is quashed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 14.12.2023.
Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member
Indore,_ 14.12.2023 CPU/Sr. PS
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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