DINDAYAL PARASPAR SAHAKARI SANSTHA,UJJAIN vs. THE PCIT-1, INDORE

Feeling aggrieved by revision-order dated 18.02.2022 passed by learned Pr. Commissioner of Income-Tax, Indore-1 [“Ld. PCIT”] u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of assessment-order dated 22.12.2019 passed by learned ITO-2(1), Ujjain [“Ld. AO”] u/s 143(3) for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds raised in Appeal-Memo.

Heard the learned Representatives of both sides at length and case- records perused.

By the aforesaid show-cause notice, the assessee was asked to explain as to why the assessment-order may not be revised. In response thereto, the assessee made a detailed submission to Ld. PCIT, which is re-produced in Para No. 3 of the revision-order.

However, none of those submissions impressed the Ld. PCIT. The Ld. PCIT further observed that since the section 263 has been amended and Explanation 2, as reproduced below, had been introduced therein, the assessment-order is deemed to be erroneous-cum-prejudicial to the interest of revenue if the same had been passed without inquiries or verification which should have been made:

Finally, the Ld. PCIT concluded that the Ld. AO has not carried out the inquiry/verification which he should have done in the matter of aforesaid issue i.e. deduction u/s 80P(2)(d) and hence the assessment-order is erroneous in so far as it is prejudicial to the interest of revenue. Accordingly, the Ld. PCIT passed revision-order u/s 263 whereby the assessment-order was set aside to the file of Ld. AO with a direction to re- examine the issue.

Aggrieved by such revision-order, the assessee has filed this appeal.

By means of various grounds raised in the Appeal Memo which are not being reproduced for the sake of brevity, the appellant-assessee requires us to adjudicate whether or not the revision-order passed by Ld. PCIT u/s 263 is valid in the eyes of law?

Ld. AR straightaway carried us to a Paper-Book filed by him and submitted that during the course of assessment-proceeding, the Ld. AO has made specific queries to assessee qua the issue raised by Ld. PCIT in the show-cause notice u/s 263 and the assessee has also filed enough details/documents in response thereto, which is very much evident from the following details/documents forming part of assessment-record available with the department:

Ld. AR carried us to Page No. 2 of the assessment-order where the Ld.AO has categorically stated:

With aforesaid submissions, Ld. AR argued that during the course of assessment-proceeding, the Ld. AR has raised adequate query qua the deduction u/s 80P through notice u/s 142(1); the assessee has filed reply; and the Ld. AO has stated his careful consideration in the assessment-order as well. Therefore, there is no lack of enquiry as stated by Ld. PCIT.

Having demonstrated so, Ld. AR also argued one important aspect in the matter i.e. the assessee has claimed deduction u/s 80P(2)(a)(i) which provides deduction “to a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members” whereas the Ld. PCIT has conducted revision on the premise that the deduction had been claimed u/s 80P(2)(d) which provides deduction “in respect of any income by way of interest of dividends derived by the co-operative society from its Dindayal Paraspar Sahakari Sanstha Maryadit Assessment year 2017-18 investments with any other co-operative society”. Thus, Ld. AR submits, the PCIT has proceeded and conducted revision-proceeding on a patently wrong premise. Therefore also, the revision-proceeding u/s 263 is not sustainable.

Lastly, Ld. AR also invited our attention to Page No. 46 of the Paper- Book where a copy of assessment-order dated 30.08.2016 for the preceding AY 2014-15 completed u/s 143(3) is filed. Ld. AR submitted that in that assessment-year also, the scrutiny was done to examine identical issue and the deduction claimed by assessee u/s 80P(2)(a)(i) was allowed. Ld. AR submitted that the said assessment has attained finality and no revision or other action had been taken by revenue-authorities.

Per contra, Ld. DR strongly supported the revision-order.

We have heard the rival contentions and perused the material on record. On a careful consideration of various documents placed in the Paper-Book, as noted in the foregoing discussion, we find that during the course of assessment-proceeding, a specific query was raised by Ld. AO with regard to the issue contemplated by Ld. PCIT and the assessee too made submission. This fact is also borne out of the noting made by Ld. AO in the assessment-order reproduced earlier. We further find merit in the submission of Ld. AR that the assessee/AO had claimed/allowed deduction u/s 80P(2)(a)(i) whereas the Ld. PCIT had conducted revision on a wrong premise that the deduction was claimed/allowed u/s 80P(2)(d). We also observe that identical deduction u/s 80P(2)(a)(i) was also allowed to assessee in scrutiny assessment completed by revenue-authorities u/s 143(3) for AY 2014-15 and that assessment, as informed by Ld. AR, has attained finality. Therefore, considering all these factors, we agree with the Ld. AR that the situation did not warrant conduct of revision-action u/s 263 in present

Resultantly, this appeal of assessee is allowed.