Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI A.D.JAIN & SHRI VIKRAM SINGH YADAV
आदेश/ORDER
PER A.D.JAIN, VICE PRESIDENT
This is Revenue’s appeal for assessment year 2016-17 against the order dated 11.01.2022 passed by the ld. CIT(A) NFAC, Delhi.
The Revenue has raised the following grounds of appeal :
1. Whether the Ld. C1T(A) has erred on facts and in law by allowing the appeal of the assessee without appreciating the facts of the case.
2. Whether the Ld. CIT[A) has erred on facts and law by not deciding the appeal of the assessee on merits and deciding the Appeal merely on the basis of the order passed by the Hon'ble ITAT.
ITA 283/CHD/2023 A.Y.2016-17 Page 2 of 10 3. Whether on the facts and in law, and has not considered the fact that the Pr. Commissioner of Income Tax had categorically enumerated several instances of the lack of proper enquiry and verification which should have been made, that were squarely covered under Explanation 2(a) of Section 263(1) of the Income Tax Act, 1961? 4. Whether on the facts and in law, the Ld. CIT(A) can hold that the satisfaction reached by the Pr. Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 to consider an order erroneous and prejudicial to the interest of revenue, was not objective even where this action was squarely covered under Explanation 2 to Section 263(1) of the Income Tax Act, 1961, and she had enumerated several instances of enquiries which should have been made ? 5. Whether the Ld. Income Tax Appellate Tribunal had erred on both facts and in law by allowing the claim of the assessee by setting aside the findings of the ld PCIT in this regard where he says that the order so passed by the AO is erroneous and prejudicial to the interest of the Revenue for audit objection under section 194C and not carrying out requisite enquiries in this regard? 6. Whether on the facts and in law, the Ld. CIT(A) has erred in not appreciating the fact that the Pr. Commissioner of Income Tax had relied upon several judicial precedents in support of her action, which have neither been discussed nor distinguished? 7. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) misdirected itself in misconstruing the provisions of the Income Tax Act, 1961 resulting into delivering a perverse order contrary to the scheme of the statute and material on record? 8. Whether the ITAT, in its order having dated 06.12.2022, is right in concluding prematurely, and precipitately. based on the in-personam orders of its various other sister benches that a matter not involving limited scrutiny in an earlier proceeding cannot be invoked u/s 263 of the Act, when the only judicially mandated condition of the Hon'ble Courts in ordering revision of assessment proceedings u/s 263 is whether the impugned assessment order was erroneous and prejudicial to the interests of revenue.”
There is a delay of 57 days in filing the appeal. As per the revised application for condonation of delay, the order u/s 250 of the Act in appeal No.NFAC/2015-16/10146338 dated 11.01.2023 was received in the office on 27.02.2023. The ITA 283/CHD/2023 A.Y.2016-17 Page 3 of 10 assessee filed an appeal against the order dated 29.03.2022 of the ITO, Ward 2(1), Chandigarh passed u/s 143(3) r.w.s 263 read with section 144B of the Act and the appeal of the assessee was allowed as the assessment in the said case was completed in consequence to order dated 23.03.2021 passed u/s 263 of the Income Tax Act, 1961 and the same was set aside by the ITAT, Chandigarh in dated 06.12.2021. It is submitted that the ITO was engaged in drafting of appeal to be filed before the Hon'ble Punjab and Haryana High Court against order of ITAT, Chandigarh in ITA No. 30/Chd/2021 dated 06.12.2021 which resulted in delay in filing of appeal before the ITAT against the order u/s 250 of the Act. Further, it is submitted that the order u/s 250 was passed on 11.01.2023, however the same was received on 27.02.2023 and the appeal was filed before the ITAT on 08.05.2023. Also, the said order was not available on the ITBA Portal, hence, there was an inadvertent delay in filing of appeal.
In the revised application for condonation of delay, it . has been submitted that the order u/s 250 of the Income Tax Act, passed by the ld. CIT(A) on 11.01.2023 was received in ITA 283/CHD/2023 A.Y.2016-17 Page 4 of 10 the office of the ITO, Ward 2(1) Chandigarh, on 27.02.2023; that the assessee had filed an appeal against order dated 29.03.2022 passed by the AO u/s 143(3) read with Section 263 read with Section 144B of the Act; that the appeal of the assessee was allowed, as the assessment in the case was completed in consequence of order dated 23.03.2021 passed u/s 263 of the Act and the same was set aside by the ITAT, Chandigarh, vide order dated 06.12.2021, passed in that the ITO was engaged in drafting of appeal to be filed before the Hon'ble High Court against the aforesaid order dated 08.12.2021, passed by the ITAT; that this resulted in delay in filing of the appeal before the Tribunal; it got to be filed on 08.05.2023; that also the said order was not available on the ITBA Portal; and that it was therefore, that the delay of 57 days in filing the appeal got inadvertently incurred, which is entitled to be condoned.
Considering the aforesaid contents of the application for condonation of delay, we find merit therein. The Department, as such, was visited with by sufficient cause in incurring the delay of 57 days in filing the appeal before the Tribunal. Such delay is, accordingly, condoned.
ITA 283/CHD/2023 A.Y.2016-17 Page 5 of 10 6. Coming to the merits of the case, assessment order u/s 143(3) of the Income Tax Act was passed on 25.08.2018, whereby the assessment was completed at an income of Rs.4,71,510/-. Thereafter, the ld. PCIT passed order dated 23.03.2021 u/s 263 of the Act, revising the aforesaid assessment order. Pursuant to the said revisional order, the AO passed order dated 29.03.2022, adding an amount of Rs.59,87,871/- on account of undeclared receipts and an amount of Rs.17,80,798/- on account of wages debited to the Profit & Loss Account. The revisional order passed by the ld. PCIT was, however, set aside by the Tribunal, vide order dated 06.12.2022. In the impugned order, the ld. CIT(A) allowed the appeal filed by the assessee, reversing the assessment order dated 29.03.2022 and deleting the aforesaid two additions made by the AO. Aggrieved, the Department is in appeal.
7. Challenging the impugned order, the ld. DR has contended that the ld. CIT(A) has erred on facts and law by not deciding the appeal of the assessee on merits and deciding the Appeal merely on the basis of the order passed by the ITAT; that the ld. CIT(A) has not considered the fact that the Pr. Commissioner of Income Tax had categorically
ITA 283/CHD/2023 A.Y.2016-17 Page 6 of 10 enumerated several instances of the lack of proper enquiry and verification which should have been made, that were squarely covered under Explanation 2(a) of Section 263(1) of the Income Tax Act, 1961; that the ld. CIT(A) can hold that the satisfaction reached by the Pr. Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 to consider an order erroneous and prejudicial to the interest of revenue, was not objective even where this action was squarely covered under Explanation 2 to Section 263(1) of the Income Tax Act, 1961, and she had enumerated several instances of enquiries which should have been made; that the ld. CIT(A) erred in allowing the claim of the assessee by setting aside the findings of the ld.PCIT in this regard where he says that the order so passed by the AO is erroneous and prejudicial to the interest of the Revenue for audit objection under section 194C and not carrying out requisite enquiries in this regard; that the ld. CIT(A) erred in not appreciating the fact that the Pr. Commissioner of Income Tax had relied upon several judicial precedents in support of her action, which have neither been discussed nor distinguished; that the ld. CIT(A) erred in misconstruing the provisions of the Income Tax Act, 1961 resulting into delivering a perverse order contrary to the scheme of the statute and material on ITA 283/CHD/2023 A.Y.2016-17 Page 7 of 10 record and that the ITAT, in its order dated 06.12.2022, is not right in concluding prematurely, and precipitately based on the in-personam orders of its various other sister benches that a matter not involving limited scrutiny in an earlier proceeding cannot be invoked u/s 263 of the Act, when the only judicially mandated condition of the Hon'ble Courts in ordering revision of assessment proceedings u/s 263 is whether the impugned assessment order was erroneous and prejudicial to the interests of revenue.
8. The ld. Counsel for the assessee, on the other hand, has placed strong reliance on the impugned order. It has further been contended that the order dated 06.12.2022 passed by the Tribunal is presently subject matter of appeal before the Hon'ble High Court.
9. Having heard the rival contentions in the light of the material placed on record, we find the order passed by the ld. CIT(A) to be well versed. Undisputedly, the revisional order passed by the ld. PCIT was set aside by virtue of the said Tribunal order and the assessment order was revived.
While doing so, the Tribunal has observed, inter alia, as follows :
ITA 283/CHD/2023 A.Y.2016-17 Page 8 of 10 6. We have heard the rival contentions and purused the material available on record. Firstly, on perusal of the notices/questionnaire issued by the AO and the responses/submissions filed by the assessee during the course of assessment proceedings, we find that it is not a case of lack of enquiry on part of the AO and rather, we find that the matter has been thoroughly examined by the AO and after going through the financial statements, tax information available on the IT portal (Form 26AS), the tax returns filed under VAT and service tax laws, the contract receipts have been accepted by the AO as duly offered by the assessee in its return of income.
On perusal of the Profit and Loss account, it is noted that the assessee has declared sales/receipts from job work at Rs. 1,36,73,469/- and as per Form 26 AS, the assessee has been shown as having receipts from three Garrison Engineers totaling to Rs 1,30,94,241/- (on which TDS of Rs 2,68,577/- has been deducted) and the difference is on account of receipts totaling Rs 579,228/- on which TDS has not been deducted. There is nothing on record to support the findings of the Id PCIT that the labour charges amounting to Rs 25,50,037/- are not subjected to TDS u/s 194C and are not forming part of receipts of Rs 1,30,94,241/- as shown in Form 26AS. The fact that the labour charges are not treated as works contracts under VAT laws doesn't take the same outside the ambit of section 194C of the Act. The receipts thus disclosed by the assessee in its profit/loss account and correspondingly, in the return of income are thus reconciling and in any case, the receipts reported in the return of income are more than disclosed in Form 26AS and thus, on this account, where the AO has accepted the receipts disclosed in the return of income, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue.
Further, on perusal of records, it is also evident that the assessee has been allotted work by three Garrison Engineers under the Ministry of Defence, namely, Garrison Engineer, Chandigarh, Garrison Engineer, I R& D and Garrison Engineer, Jutogh and the execution of work is spread over two states namely, Punjab, Haryana and UT Chandigarh requiring the assessee to seek separate VAT registrations and file separate VAT returns in these states/UT. As per VAT returns, the total receipts have been shown at Rs 1,11,23,432/- which after adding receipts of Rs 25,50,037/- towards labour charges (not subject to VAT and hence, not part of disclosure under VAT returns) equates with total receipts of Rs 1,36,73,469/- as shown in the profit/loss account. On this ITA 283/CHD/2023 A.Y.2016-17 Page 9 of 10 account as well, we find that there is no error in the order of the AO while accepting the gross receipts as declared by the assessee in the return of income and the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue.
Lastly, we agree with the contention of the Id AR that the matter relating to wages/labour expenses which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s 263 for the first time. It is now a settled position as held by the various Benches of the Tribunal that the matter which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s 263 and thereby enlarging the scope of limited scrutiny and broadening the scope of jurisdiction that was originally vested with the A.O.
In light of the aforesaid discussions and in the entirety of facts and circumstances of the case, we are of the considered opinion that there is no justifiable basis to invoke the provisions of section 263 as the order passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the order so passed by the Id PCIT is hereby set-aside and that of the AO is sustained. In the result, the appeal of the assessee is allowed.” 11.
10. Thus, by virtue of the said Tribunal order, the very basis of the subsequent order passed by the AO, u/s 143(3) read with Section 263 read with Section 144B of the Income Tax Act, i.e., order dated 23.02.2022, was set aside and quashed by the Tribunal. Therefore, the order dated 23.02.2022 itself no longer survived. The ld. CIT(A) has committed no error in deleting the additions on account of undeclared receipts and wages debited in the Profit & Loss Account. The order passed by the Tribunal has not been ITA 283/CHD/2023 A.Y.2016-17 Page 10 of 10 stated to have been set aside or quashed on appeal, which is stated to be hitherto pending before the Hon'ble High Court.
In view of the above, having no error whatsoever in the order passed by the ld. CIT(A), the same is upheld. The grievance sought to be raised by the Department is found to be shorn of merit. It is, as such, rejected.
In the result, the appeal is dismissed.
Order pronounced on 1st February,2024.