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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री दुव्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.186/Viz/2021 (ननधधारण वर्ा / Assessment Year : 2015-16) M/s Nagarjuna Hospitals Pvt. Ltd Vs. Asst.Commissioner of D.No.8-102 Income Tax Kanuru, Vijayawada Circle-1(1) Vijayawada [PAN : AAACN7476J] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)
अपीलधथी की ओर से/ Appellant by : Shri C.Subrahmanyam, AR प्रत्यधथी की ओर से / Respondent by : Shri M.N.Murthy Naik, CIT(DR) सुनवधई की तधरीख / Date of Hearing : 28.06.2022 घोर्णध की तधरीख/Date of Pronouncement : 23.08.2022 O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : Condonation of Delay : This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax [in short, “Pr.CIT”], Vijayawada dated 05.03.2020 for the Assessment Year (A.Y.) 2015-16 with the delay of 522 days. The assessee filed petition for condonation of delay, submitting the reasons for the delay that the assessee was under the bonafide belief, but erroneous view that the appeal can be filed against the consequential
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order, but not the order passed by the Ld.Pr.CIT u/s 263 of the Income Tax Act, 1961 (in short ‘Act’). Later on, the assessee was advised by the Ld.AR to file appeal against the said order explaining the delay. However, since the order u/s 263 was served on the assessee on 05.03.2020 and the assessee was required to file appeal before the Tribunal on or before 04.05.2020, respectfully following the decision of the Hon’ble Supreme Court’s Suo Motu Writ Petition (Civil) No.3 of 2020 dt.08.03.2021 to exclude the period from 15.03.2020 to 14.03.2021 which was further extended from 15.03.2021 till further orders, we condone the delay and admit the appeal for hearing.
Brief facts of the case are that the assessee is a private limited company engaged in running hospital, e-filed it’s return of income for the A.Y.2015-16 on 29.09.2015, admitting total income of Rs.1,45,36,030/-. Subsequently, the case was selected for scrutiny and statutory notices u/s 143(2) and 142(1) were issued and served on the assessee. In response to the notices, the authorized representative of the assessee appeared and produced the information called for by the Assessing Officer(AO). On verification of the information provided by the assessee, the AO assessed the income at Rs.1,50,54,050/- and passed assessment order u/s 143(3) of the Act on 16.12.2017. Subsequently, the Ld.Pr.CIT invoking the powers
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u/s 263 of the Act, considered the assessment order passed by the AO as erroneous and prejudicial to the interest of the revenue and therefore issued a detailed show cause notice to the assessee dated 25.02.2020. In response to the show cause notice, the assessee filed it’s reply on 03.03.2020. Considering the submissions made by the assessee, the Ld.Pr.CIT directed the AO to re-examine the issues with respect to the share premium received by the assessee in accordance with law and complete the assessment de-novo after affording reasonable opportunity to the assessee.
Aggrieved by the order of the Ld.Pr.CIT, the assessee is in appeal before the Tribunal and raised the following grounds of appeal :
That under the facts and circumstances of the case the orders passed under the provisions of section 263 of the I.T. Act is contrary to the provisions of law. 2. The Ld. Principal Commissioner of Income Tax (in short "Pr. CIT") did not give a finding as to what is the mistake committed by the AO in his order passed u/s.143(3) of the IT Act dt.16.12.2017 in the absence of which the impugned order cannot stand the test of judicial review. 3. The Ld. Pr.CIT, in the show cause notice dt.24.02.2020 observed that share premium collected by the assessee company was against provisions laid down u/s 56(2)(viib) of the IT Act read with rule 11U(a) of the ITA rules but in his order passed u/s 263 of the IT Act, duly considering asseessee's reply dt.02.03.2020, gave a finding on a different aspect by directing the AO to find out as to whether the assessee had filed valuation report prepared under rule 11U(a) of IT rules. This demonstrates that the Ld. Pr.CIT has nothing adverse with regards to share premium collected by the assessee company, therefore the impugned order is not sustainable under law. 4. By reading of the directions of the Ld Pr.CIT, at para.5 of his order, the Ld.
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Pr.CIT passed the impugned order without applying himself to the submissions made by the assessee company and his findings are in contradiction to the facts on record. 5. The Ld. Pr. CIT failed to take cognizance of the fact that in the assessment proceedings the AO has applied his mind on the issue in which case the AO order cannot be termed as erroneous for invoking powers u/s.263 of the IT Act. 6. For these and other reasons that are to be urged at the time of hearing of the appeal the appellant prays that the order passed by the learned Pr.CIT is erroneous both on fact and as well as in law, therefore, the same needs to be set aside in the interest of justice. The only issue raised by the assessee is with respect to validity of the order passed u/s 263 of the Act by the Ld.Pr.CIT. The Ld.AR argued that the Ld.Pr.CIT has not given reasons, based on which he considered the order of the AO as erroneous and prejudicial to the interest of the revenue. The Ld.AR further submitted that the records and books of accounts were produced before the AO during the assessment proceedings and has been considered by the AO while framing the assessment u/s 143(3) of the Act. Hence, the Ld.AR pleaded that the order passed u/s 143(3) of the Act dated 16.12.2017 cannot be considered as erroneous and prejudicial to the interest of the revenue within the scope of 263 of the Act.
The Ld.DR pleaded that the AO has not recorded the findings on the share premium received by the assessee in the impugned assessment year. The Ld.DR further submitted that since the AO has not examined the issue
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of share premium, the order is considered to be erroneous to the interest of the revenue.
We have heard both the parties and perused the orders of the authorities below. From the assessment order passed u/s 143(3) of the Act, we observe that there is no finding recorded by the AO or any discussion on the share premium received by the assessee during the A.Y.2015-16. The Ld.Pr.CIT, being the revisional authority considered the order of the AO as erroneous and prejudicial to the interest of revenue. As the Ld.AO has not verified or made any enquiries with respect to share premium received by the assessee company, we are of the considered view that the order passed by the Ld.Pr.CIT u/s 263 of the Act, considering the order passed by the AO u/s 143(3) of the Act as erroneous is in accordance with the provisions u/s 263 and hence the order of the Ld.Pr.CIT needs no interference. Accordingly, we uphold the order of the Ld.Pr.CIT and dismiss the grounds raised by the assessee.
In the result, appeal of the assessee is dismissed.
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Order Pronounced in open Court on 23rd August, 2022.
Sd/- Sd/- (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 23.08.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– M/s Nagarjuna Hospitals Pvt. Ltd, D.No.8-102 Kanuru, Vijayawada 2. रधजस्व/The Revenue – The Asst.Commissioner of Income Tax, Circle- 1(1), Vijayawada 3. प्रधान आयकर आयुक्त / The Principal Commissioner of Income Tax, Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 5.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam